AstraZeneca PLC - Annual Report 2021

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W e a re tireless in seek ing to realise t he po tential of.. . ... w h a t s c ie nc e c a n d o. F ront c ove r and i ns ide f ront c ove r ima ges : Un loc ki ng t he pot ent ia l of the com plemen t system. T he dys reg ul ati on of the complement sys tem, an e ss enti al p ar t of t he im mu ne sys tem , is a ke y d rive r of ma ny dev ast at ing diseases. Targeting and in hibiti ng the complement sy ste m befo re it ca n tr igg er tis sue d amage or destruc tion ca n help r est ore b ala nce . We ar e com mit ted t o co nti nue un loc ki ng t he potenti al of the complement system, t o discov er n ew life -ch angi ng t herapies for e ven mo re pat ient s. Us e of ter ms : I n th is A nnu al Re por t, unless the cont ex t other wis e r equi res, ‘ Astra Zen eca’ , ‘the Grou p’ , ‘w e’ , ‘ us’ a nd ‘ou r’ re fer to A st ra Zene ca P LC a nd it s con soli date d ent iti es. In t his A n n ua l Re por t w e report on t h e prog ress we made in 2021 in pushi n g t he bo unda ries of sc ience t o del iver l ife - c ha ngi ng me dic ine s. Ou r St rate gic Re por t How ou r di seas e area s, a lso k now n as t herap y are as, a nd busi ness pe rfor med i n deli ver ing ou r st rateg ic pr iorit ies i n 2021. See o ur S trat eg ic Rep or t fro m page 2 . Ou r C orp orate Gover nanc e Repor t How we a re ma nage d and t ake dec ision s, inc ludi ng our r epor t on Di rec tors’ re muner ation. See o ur Co rpo rate G ove rna nc e Repo rt f rom p age 71. Ou r Fi na ncia l St ateme nts and Add itional I nform ation De tai led i nfor mat ion on our n anc es, as w ell a s in form ation for s ha reholder s a nd reader s of th is A nnu al Rep or t. See o ur F ina nci al S tat ement s fr om pag e 12 5 and Addit i onal In formation from page 210. Ou r Supplements De tai led i nfor mat ion on ou r De velopment P ipel ine, P atent Ex pi ries a nd Key Ma rkete d Pr oduct s and R is k. See o ur we bsit e, ww w .astra zen eca.com/annualreport2 02 1. W elc ome Corporate Gover nance Ch ai r’s Int ro duct ion 72 Corporate Gover nance Over view 73 Bo ard o f Dir ec tors 74 Se nio r Exe cut ive Tea m 76 Corporate Gover nance Repor t 77 Nomi nation and Gover nance Commit tee Report 86 Sc ienc e Com mit te e Rep ort 88 Sustainab ility Co m mi ttee Re port 89 Audit Commit tee Report 90 Di rec tor s’ Re mune rat ion Re por t 98 Financi al S tat eme nts P repa rat ion of t he F ina nci al St ate ment s and D ire cto rs’ Resp onsibil ities 126 Auditors’ Repor t 127 Consolidate d S tatements 134 Gr oup Ac cou nti ng Pol icie s 138 Not es to t he Gr oup Fi na nci al Statements 14 5 Gro up Subs idiarie s and Holdi ngs 197 Com pany S ta teme nts 202 Com pany A cc ount in g Polic ies 20 4 Not es to t he Com pan y Financi al S tat eme nts 206 Gr oup Fi na nci al Re cor d 209 Addit i onal In formation Sha reholder i nformat i on 211 Di rec tor s’ re por t 213 Sustainab ility su pplem entary in format ion 216 Task force on Cli mate-related Fi na nci al D isc losu res S ta teme nt 217 T rade M ark s 223 Glo ssa r y 224 Cautionary statement regarding forw ard-look ing statements 228 Strate gic Report A str aZ ene ca at a Gl anc e 2 Chair’ s Sta temen t 4 Ch ief E xec utiv e O cer ’ s Rev iew 5 He alt hca re i n a Cha ng ing Worl d 7 Bu sine ss Mo del a nd Li fe -c ycl e of a Med ici ne 10 Ou r St rat eg y and Ke y Per for ma nce I ndic ator s 12 Di sea se A rea R evi ew 16 > O ncolog y 16 > BioPh arm aceutica ls 19 – Cardiovascu lar , Ren al & Me ta bol ism 20 – Re spi rator y & I mmu nolo gy 22 > R ar e Dis eas e 24 > O ther Med icines and C OV I D -1 9 27 Bu sine ss R evi ew 30 R isk O ver v iew 48 Fi na nci al R evi ew 52 Fi na ncia l hi ghl ights T otal Revenue * Up 41 % at a ct ual r ate of exc ha nge to $ 37 , 41 7 m il lio n ( u p 38% at C ER ) , comp ris ing P roduc t Sa les of $ 36 ,5 41 mi ll ion (up 41 %; 38 % at CE R) a nd Coll ab oratio n Revenu e of $ 876 mi ll ion (up 20 %; 2 0% at C ER) Net ca sh ow f rom ope rati ng act ivi tie s Up 2 4% at act ua l rate of exc ha nge to $5,963 milli on 2021 2020 2019 $26,617m $24,384m $37,417m $3 7 .4bn $5,963m $4,799m $2,969m 2021 2020 2019 $6.0bn Rep or ted ope rati ng pro t Dow n 8 0% at ac tu al rat e of exch ang e to $1,0 56 m il lion (dow n 70 % at CER ) Core op erat ing pro t Up 35% a t act ua l rate of exc ha nge to $ 9,92 8 mi ll ion (up 41 % at C ER) 2021 2020 2019 $1,056m $5,162m $2,924m $1.1bn $9,928m $7,340m $6,436m 2021 2020 2019 $9.9bn Repor ted EP S Dow n 97 % at act ua l rate of e xch ange to $ 0.0 8 (dow n 84% at C ER) Core E PS Up 32 % at act ua l rate of e xcha nge to $ 5. 29 (up 37% a t CER ) 2021 2020 2019 $0.08 $2.44 $1.03 $0 . 08 2021 2020 2019 $5.29 $4.02 $3.50 $5.29 D enote s a sc ale br ea k. T hro ughou t th is A nnu al Re por t, al l ba r ch ar t sca les s ta rt f ro m zero . W e u se a sc al e brea k whe re cha r ts of a di ere nt mag nit ude , b ut t he s am e u nit of me asu rem ent, a re pr ese nted a lon gsid e each o the r. For m ore i nfor ma tion i n rel ati on to t he in clus ion of Re por ted pe rfo rm anc e, Core  nan cia l meas ure s an d co nst ant e xch ang e rate (C ER ) gro wt h rate s as u sed i n th is A nnu al Re por t, s ee t he Fi na nci al Re vie w fr om pag e 52 and for more infor mation on the reconciliat ion b etween Re por ted a nd Co re pe rfor ma nce , se e the R eco nci liat ion of Re por te d to Cor e resu lt s in t he Fi na nci al Re vie w on pa ge 56 . * A s deta il ed fr om page 1 39, Tot al Re venue c onsi st s of Pro duc t Sa les a nd Col lab orat ion Re venue . Key For more infor mation w ith in t hi s An nua l Rep ort For more infor mation, see ww w .astrazeneca.com BV Den otes s ustainabili t y in format i on independent ly as sur ed by Bu reau Verit as T his A n nua l Repo rt i s al so ava il abl e on our w ebs ite, ww w .astra zen eca.com/annualreport2 02 1. 1 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Conte nts Co ntent s In s pired by o u r V alues and w hat sci ence ca n d o, we are focused on a cceler ati ng the de live r y o f l ife - c ha ng ing med ici ne s t hat cre a te e ndur i ng valu e fo r patien t s and soci et y . Ou r st rate gic prior ities O ur S tra teg y and Key Perfor manc e I ndic ator s, se e fr om pa ge 12 . Ou r prior it ies ree ct how we are work ing to de liver ou r g row th t hrough i nnovat ion st rate gy a nd ach ieve ou r Pu rp ose of push ing t he bo undari es o f sc ien ce to delive r life -c hang ing med icines . Sc ience and in novat ion-led Research & Development , se e fro m page 3 2. Development Pipeli ne Supplement, se e ww w .astra zen eca.com/ annu alre port2021 . Distinct i ve R& D capabiliti es W e us e our di st inc tive sc ienti c capabiliti es t o del iver a pip eli ne of li fe- cha nging med icines . 17 7 proje ct s in ou r deve lopment pip eli ne 177 171 167 2021 1 2020 2019 Pha se I Pha se I I Late -stage development L ife- cycle ma nagement 1 Inc ludes Ale xion. Globa l R& D c ent res Cam bridge, UK Ga ithers burg, M D, U S Got hen burg, Swede n Ot he r R& D ce ntre s an doc es So uth S an F ra ncis co, C A, U S New York , NY, US New H ave n, CT, US Bo ston , M A, U S Ald erley Park and Ma ccl es eld , U K Shanghai, Ch ina Osaka, Ja pan A dive rsi ed por t folio wit h broad coverage across prima ry , specialty care a nd rar e dis ease ( P rod uc t Sa le s) Onc olog y W e a re lead ing a revolu tion in onc olog y t o re de ne cancer care. BioPha rm aceutic als Cre ati ng a li fe w ithou t lim its fo r bil lions of pe ople liv i ng wit h ch ron ic diseases. Ra re Disea se Tr ansfor mi ng the live s o f people a ec ted by rar e diseases and devastat ing condit ions. Ot her Med icine s W e hav e medi cine s and vac cine s in ot her disease areas tha t hav e an i mpor ta nt imp act fo r patie nts. C OV I D -1 9 Help ing to c ha nge t he cou rse of t he pa ndem ic wit h ou r vacc ine and a long- acti ng anti body . Disease Area Review, se e fro m page 16 an d Res ea rch & Development , see f rom pa ge 32 . $13, 0 4 8 m 36 % of tota l 2020: $1 0,8 50m 2 019 : $ 8 , 6 67 m Sa le s gro wt h of 20 % (18 % at CE R) Card i ovas cular, Ren al & M eta bol ism $ 8 ,02 0m 2 2% of tot al 2020: $7 ,096m 2 019 : $ 6 , 9 0 6 m Sa le s gro wt h of 13 % (10% a t CE R) $ 3 ,070 m 8% of t ota l Revenue includes Alex ion sa les f rom 2 1 July 2 021 $ 2 , 367m 6% of t ota l 2020: $2 ,585m 2 019 : $ 2 , 6 01m Sa le s decl in e of 8% (10% a t CE R) $ 4 ,0 0 2m 11 % of tot al 2020: $2 m Respi ratory & Im munolo gy $ 6,0 3 4m 17% of tot al 2020: $5, 35 7m 2 019 : $ 5 , 3 91m Sa le s gro wt h of 13 % (9 % at CE R) 1. Accele rat e In novat ive Sc ience 2 . Del iver G row th a ndThe rapy Ar ea Leadership 3. Be a Gre at Plac e to W ork 2 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report Astr aZe n eca at a G la nce Glob al st ren gt h, w it h bal anc ed prese nce acro ss regi ons ( P rod uc t Sa le s) O ur Co mme rci al Re gio ns, s ee f rom pa ge 36 . P roduc t Sa les by Di sea se A rea P roduc t Sa les by re por ti ng reg ion Com mit ment to ou r pe ople A foc us on i nclu sion an d diver sit y , as w ell a s lif elong le ar ni ng and development . Pe ople , see f rom p age 41. 8 3 , 10 0 employee s 2020: 76,1 00 2 019 : 7 0 ,6 0 0 4 8 . 1% of ou r sen ior role s a re l led by women 87 % of employees be lieve s tr ongly in Astra Zen eca’ s future directi on and ke y prio riti es 78% of emplo yees b eli eve t here is ee ct ive col lab oratio n between teams Com mit ment to s ocie ty W e re cog ni se the i nter con nect ion be twe en ou r busi nes s, th e need s of so ciet y an d the l im itat ions of ou r pla net. We are h ar nes sin g the pow er of scie nce a nd in novat ion to de liver a p osit ive i mpact t o so ciet y , he alt hca re sy stem s and t he env iron ment t hr ough act ion s for t he long te rm . Sustainabili t y , see fro m pag e 44. Prio rity 1 Access t o h ea l t h care Inc reasi ng acces s to li fe- savi ng treat ments, promoti ng prevention , and s treng the ning global he althc are resi lienc e and sus tainabili ty . Prio rity 2 Enviro n m ental protec tion Acc elerati ng the del iver y of net- zer o hea lthca re, ma nagi ng ou r envi ron ment al imp act, and inv estin g in n atu re a nd biod iversit y . Prio rity 3 Ethics an d tra nsparency Ensuring ethical, open a nd inclusive behavio u r across our o rgan isat ion a nd value c ha in . 8 4% of emplo yees s ay t hey unders tand t heir cont r ibut ions t o our sus tainabili ty prior ities. GLOBAL 100 202 2 T H E W O R L D ' S M O S T S U S T A I N A B L E C O R P O R A T I O N S 7t h o veral l A Li st for C li mate Ch ange a nd Water Securi ty W o rld and Eu rope con st itue nt Glob al 10 0 Most Sus tai na ble Corp orations in t he W or ld 2021 Ca pi tal all oca tio n pri ori ties A ft er prov idi ng for re inve st ment in t he busine ss, suppor t ing the pro gre ssiv e div idend p olic y and ma int ai ni ng a st rong, i nves tment- g rade cr edit r ati ng, we ke ep und er rev iew p otent ial i nves tme nt in va l ue -en hanc ing oppor tu nit ies. F in anc ial R ev iew, see f ro m page 5 2. Div idends $ 3,8 56m 2020: $3, 572m 201 9: $3,592 m R& D ex pen diture (R eporte d) $ 9 ,7 3 6 m 2020: $5,99 1m 2 019 : $ 6 , 0 59 m Cre dit ra ting (S ta nda rd & Poor ’ s) A- Long ter m: St able out look Cre dit ra ting ( M o o dy ’s) A3 Long ter m: Negat ive out look Oncology 36 % BioPharmaceuticals 38% Rare Disease 8% Other Medicines and CO VID-19 17 % Emerging Mark ets 33 % US 33% Europe 21% Established Rest of W orld 13 % On colo gy. Se e fro m page 16 . R are D ise ase . See f ro m page 2 4. BioPh ar mac eut ica ls. S ee f rom p age 19. 3 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report A str aZ ene ca at a Gl anc e $ 2 . 87 Fu ll -year d ividend of $ 2. 87 per s ha re (20 20 : $2 .8 0) W e continu ed on o ur st ron g g ro w t h t r ajectory in 2021 a n d ha ve con  den ce in o u r prospect s fo r f utu re growt h a n d ca sh g enera t i on. Continuing the succes sful implementation of AstraZenec a ’s ‘growth through inno vation ’ str ategy i n 2021 ensu red we were a ble to del iver for p atien ts aro und the wo rld an d, thereby , our shareholders. More broadly , I am pro ud of the r ole we are p laying i n contr ibuti ng to the he alth of s ocie ty an d the pla net. I a m gra teful to Pas cal, S enio r Execu tive T eam me mber s and eve ryo ne in As traZ enec a, who se ef for ts mad e this al l poss ible. A lan dmark ye ar 2021 was a la ndma rk year f or the Co mpany a s we cont inue d on our strong gro w th t rajectory , with industr y - leading R &D productivit y , thirteen blockbuster medicines and the acquisition of Al exion. We als o deli v ere d on ou r promi se of bro ad and e quit able ac ces s to our COVI D- 19 vacc ine. Th e posi tive news fr om our p ipeli ne, including F DA emergency use aut horisation of Evus he ld and th e appr oval of Te z s p i r e , sup por t the ou tlook f or 2022. Reﬂecting increased conﬁdence i n future grow th an d cash g ene ratio n, the Boa rd inte nds to inc reas e the ann ualis ed div iden d by $0. 10 to $2.90, a nd has a pprove d a seco nd inte rim divi dend f or 2021 of $1 .97 , payab le in Ma rch 2022. Th is res ults in a tot al divi dend d ecla red for 20 2 1 of $ 2 .87 . A lex ion acq u isit ion Ou r posit ive outlo ok als o stems , in par t, from our t ransformative acquisition of Ale xion whi ch com plete d in July. W e a re alre ady seeing the beneﬁts across Astr aZeneca in terms of scientiﬁc collaboration and expanding our Rare Disease business which is ac cele rati ng deli ver y of our st rateg y . Our new Chief Financia l O fﬁcer , Ar adhana Sa rin joi ned the B oard i n Augus t from A lexion . Ar adha na is a ta lente d succ ess or to Marc Dun oyer who s tood dow n from th e Board to be come Ch ief E x e cuti ve Of ﬁcer, Alexi on and C hief St rateg y Of ﬁce r , Ast raZ enec a. I am grateful t o Marc for his signiﬁcant contribution and t he Boa rd is ple ase d he is st aying on a s a me mber of t he Sen ior Exe cutive T e am (SE T ) . Al so in Aug ust an d followi ng the Al exion acquisition, w e welcomed Andreas Rummelt to the Bo ard a s a Non- Execu tive Dir ector. As a fo rme r memb er of the B oard of A lexio n, he ha s dee p knowle dge of i ts rar e disea ses bus ines s and ex tensi ve exper ienc e of the pharma ceutical industr y including technical R&D, manufacturing and quality assurance expertise. Mee ting globa l cha lle nges Wit h the ef for ts tha t many , in cludi ng As tra Zene ca, ar e maki ng to overco me COVID - 1 9, i t’ s t ime to pla n for a worl d beyond the p ande mic. I be lieve ther e are le sso ns we can learn about how business, academia and g overnm ent, by wo rkin g t oge ther, can ov ercome major global challenges such as the c limate cr isis a nd the p rovisi on of sustainable healthcare . Th e pande mic is a lso re inforc ing the f act tha t com pani es suc cee d bes t when th ey are tr uly par t of s ocie ty , w hen they a re dri ven by thei r pur pos e ; a pur pose t hat is su stai ned by th e pro ﬁt we make an d our ret urns to you , our sha reho lder s. Th is is at the h ear t of how As tra Zene ca ope rates a nd why I am s o pro ud of our r elen tles s pur suit of th e delive ry of life -s aving me dicin es an d our wid er con tribu tion to so ciet y and t he plan et. Suc cession pl an ning I will h ave ser ved as a D irec tor for te n year s by Ap ril 2022. T yp ical ly , non -exec utive dir ector s woul d step down a fte r nine yea rs’ tenu re, in line w ith UK co rpo rate gover nanc e bes t pr actic e. La st year, the Boa rd asked m e to se ek re -ele ctio n at the AGM to le ad the Board’ s oversight of completion of the acq uisit ion of Al exion. Ag ain thi s year , your B oard b elieve s it would b e in the be st inte rest s of shar ehol der s for me to se rve as Ch air for o ne fur the r year, t o fac ilita t e succession planning and t he transition to a new Ch air , a nd has a sked me to s eek re -el ecti on at the AGM i n Apr il 2022. I am honoured and happy t o acce pt the Board’ s reques t a gain, mindful of my intention to retire fro m the Boa rd at the e nd of the AGM i n 2023. Suc ces sion p lanni ng for th e role of Ch air has c ontin ued to be a f ocus of t he Nomi nation and Gov e rnance Comm ittee’ s work during 2021 , wi th a sea rch tha t is proc eed ing well le d by Philip Br oadley, senio r inde pend ent Non -E x e cuti ve Dire ctor , a s noted in t he Com mit tee’ s re por t fro m page 8 6. Meet ing aga in In Nove mber, it was a ple asu re to be abl e to me et in pe rson to c ele brate th e unveilin g of our D iscove ry C entr e in Camb ridg e, UK with HRH T he Prin ce of Wale s and gu ests f rom across business, academia and government. Whi le much c an be ac hieved by wo rkin g and me eting vi rt ually, there i s also va lue in be ing abl e to meet i n per son. For t he ﬁrs t time in two ye ars , we are pla nnin g to hold thi s year’s AGM in pe rs on and I lo ok for ward to m eetin g as m any of you the re as po ssib le. Leif Johans son Chair “ R ee ctin g this i ncre ase d condence, t he Boa rd h as approved an i n crease in t he ann uali sed d ivide nd. ” 4 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report C h a i r ’s St a tement $ 3 7. 4 b n T otal Revenue 1 (20 20: $2 6.6bn) 22 Reg ulator y approvals and aut hor isat ions i n major m ark ets José B aselga : a vi siona ry le ader 2021 be gan, howeve r , on a ver y sa d note wit h the untim ely de ath of Jo sé Bas elga , my co lleag ue and f rien d. José wa s a brill iant scientist, legendary oncologist and visionary lea der . H e had a pa ssio n for wha t he did an d was a lways cha sing th e next a nd bes t ther apie s. He tr ansfo rme d Astr aZe neca’s Onco logy R &D and accelerated our innov ative science – one of the d river s beh ind our s ucce ss. Du ring hi s brill iant ca ree r , Jos é chan ged the landscape o f cancer treat ment and thousands of pat ient s have bene ﬁted. It wa s José’ s pas sio n and dete rmin ation w hen he wa s at As tra Zene ca that d rove the devel opme nt of our p ipeli ne and th e recr uitm ent of ma ny incredibly tal ent ed scientists . One of the me dicines José championed is Enhertu . Unp recedented results from our DEST INY tri als dur ing 2021 mo re than ju stif y his passion for this unique me dicine . The trials bot h conﬁr m Enhertu ’ s p otentia l as a new treatment for HER2-positive breast cance r and o pen th e door to i ts poten tial us e in ea rlie r lines of t reatm ent an d other H ER2 expressing tu mours. T og ether w ith pati ents a round t he worl d, all of us at A stra Zen eca owe Jo sé a deb t of grati tude and we w ill con tinue to bu ild on hi s lega cy . In 2021 , d espi te the ong oing ch allen ge of the COVID- 1 9 pandemic, AstraZeneca continued to a dvance deli very of our strategy – supplying our m edic ines to pa tient s, as wel l as laun ching new on es an d e xpa nding i nto new ind icati ons. It was a lso an o utst andin g year fo r our pip eline i n prog ress ing the n ext wave of sci enc e and de liveri ng tria l resu lts tha t have the pot ential to redeﬁne care. Du ring th e year , we we lcom ed our c ollea gues fro m Alexi on to the Gr oup. With t heir exp er tise in ra re dis ease s, not on ly is our s cien ce ba se and d rive for g rowt h stren gthe ned, bu t also, mor e impo rt antly, our abi lity to m ake a dif fer ence to p atien ts arou nd the wor ld. At the sa me time, we c ontri buted to th e heal th of so ciet y and th e plane t, nota bly in ou r ef for ts to tac kle the b igge st pub lic hea lth cr isis of o ur life time an d redu ce our c arbo n footp rint. A ll of this wa s unde rpin ned by an o rgan isati on livi ng our V alues, leading change and transforming the way we wo rk. I ca n only tou ch on a few of ou r achi ev em ents in thi s Review b ut, take n togeth er , ou r ef for ts en sure d we contin ued to de liver fo r sha reho lder s in 2021 . T ot al Reven ue grew by 4 1 % (38% at CER) to $ 3 7 ,4 1 7 milli on, including COVID- 1 9 vaccine revenues. Exc luding C OVID- 1 9 r evenue, g rowth wa s 26% (23 % a t CER) and wa s well ba lanc ed acr oss ou r dise ase ar eas. We saw d ouble -d igit growth in all major regions, including Emerging Mar kets de spite s ome hea dwind s in Chin a. We also a chieve d 1 4 pos itive Pha se III readouts acros s nine m edicines during the yea r , and 22 r egul ator y appr ovals an d authorisations in major marke ts includ ing ﬁve ne w mole cular entities (NME). 2021 was ano t h er rema r k able y ea r f or Ast raZ e neca in delivering fo r patien t s and on e i n w h i ch we pla yed a lea d ing ro le in ch anging t h e course of the pande mic. “ In July , we complete d ou r lan dmar k ac qu is ition of A le x ion wh ic h esta blished our rare disea se ca pabil i t y . ” José Baselg a 195 9-2 021, Exec utive Vice -Pre sident, Oncolo gy R& D 1 Tota l Re venue c onsi st s of Pro duc t Sa les an d Coll ab orat ion Re venue. 5 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Ch ief E xec utiv e O cer ’ s Rev iew Chief Executive Oc er’ s Review A vacc ine for t he world Patie nts have a lso be neﬁte d from Va x z evr i a , our C OVID- 19 vacci ne, whic h was ﬁr st approv ed for emergency supply in the UK at th e end of 2020. T o gethe r with o ur glob al par tn ers , we suppl ied ab out 2.5 bill ion vacc ine dos es to mor e than 180 cou ntrie s duri ng the yea r . Of th ese, ap proxim ately t wo-thi rds wen t to lo w- and lower -middle-inc ome countries, and m ore tha n 2 47 milli on were de liver ed to 1 3 0 coun trie s throu gh the COVAX Fa cilit y in 2021 . It i s estim ated tha t Va x zev ri a h as so fa r hel ped p revent 50 mi llion c ases o f COVID - 19, ﬁve mi llion hospitalisations, and helped sav e mor e than on e millio n lives. I t was an ho nour to have thi s achieve ment re cog nise d when we joi ntly re ceive d the 2021 Roy Vagel os Pro Bon o Hum anum Awar d for Glo bal He alth Equ ity a t the Pr ix Gal ien USA Awa rds Ce remo ny . Vaccin es are n ot easy to m anufa ctur e and scaling up supply brought c hal lenges. Neve rth eles s, I am p roud of th e spee d with whi ch we were a ble to buil d twel ve regio nal supply chains around the world, relying on our own ma nufac turi ng cap acit y , an d shar ing our kn ow-how wit h more tha n 20 coll abor ators . For th e futur e, we rema in comm itte d to providing broad and equitable global access to our vaccine. In ad dition to d eliver ing ou r vaccin e to the wor ld, our tea ms ra pidly p rogre sse d the development of Evus hel d , a long-acting antibody (L AAB) combination against COVID - 1 9. It wa s the ﬁr st L A AB co mbina tion to dem onst rate be neﬁt in b oth preve nting a nd treating COVID- 19 and received Emergency Use A uthor izati on fro m the FDA in De cemb er 2021 . T his auth oris ation , which h as be en follow e d by simi lar authorisations in other cou ntrie s, und erli nes the p otenti al of Evu s he ld to make a s igniﬁ cant di ffe renc e for pe ople most in need. A lex ion: A str aZ enec a Ra re Dis ease In July , we complet e d our landmark acqu isition of Al exion wh ich es tabl ishe d our ra re dise ase capabilit y . Rare diseases rep resent a sig niﬁc ant unm et med ical n eed a nd we beli eve Alexion’ s inno vativ e comple ment -biology pla tfor m and ro bust p ipeli ne will c ontinu e to pio nee r the dis cover y and de v elo pmen t of me dicin es for th ese of ten deva stati ng conditions. It repres ents a high-gr o w th opp or tunit y and we a re alre ady st ar ting to s ee the d eliver y of th is poten tial wi th Ult omiris and the other medicines in the Alexion por tfolio , sup por ted by deve lopm ents su ch as th e acquisition of C aelum Biosciences and their pote ntial ly ﬁrs t - in- clas s mAb f or the tre atme nt of amyloid light-chain (AL) amyloidosis. Mor eover , t he res t of Astr aZe neca c an be neﬁt from applying Alexion ’s complement-bi ology platform across our broader early stage pip eline a nd Al e xio n ’ s R &D team c an ta k e advantage of the research capabilities avail able at A stra Zen eca to di scover n ew tre atmen ts for ra re dis ease s. Patie nts wil l also be neﬁt fr om the op por tuni ty to ma k e exis ting and f uture r are di seas e medi cine s availab le in many countries where AstraZenec a a lr eady has a s tron g pres ence, s uch as C hina , where we have es tabl ishe d a Rare D isea se Unit . Br idge s are alr eady b eing b uilt be twee n Al exion an d the res t of Ast raZe nec a as we del iver on th e full po tentia l of this excit ing addition t o our range of c apabi lities. Add ress ing t he cha llenge of cli ma te chang e In addit ion t o understanding what science ca n do for pa tient s, Astr aZe nec a ’s team und ers tand s the pa rt we ne ed to pl ay in se curi ng the fu ture of the p lane t. We re cogni se that t he clim ate cris is is a pu blic hea lth em erge ncy for w hich th ere is n o vacc ine, an d no one is i mmune . As par t of our e ffo rt s, we are a fou nding p ar tner of HRH T he Prin ce of Wale s’ Sust ainab le Markets Initiat ive ( SMI), a g lobal ‘ coalition of the wi lling’ wh o shar e the vis ion aro und the ne ed to acc eler ate glob al pro gres s towards a sus tain able f uture. A s par t of tha t coali tion, we called for c oordinat ed, accelerated action to tackle cl imate change ahead o f the G 7 Lea der s’ Summi t in Cor nwall, UK in Ju ne. Th ose ef for ts co ntinu ed in Novem ber at t he 26th U N Climate C hang e Confe renc e in Gla sgow, UK, wh en I was p roud to lau nch th e SMI H ealth S ystem s T ask forc e as its C hampi on. Ou r ambit ion is to ac cele rate th e delive ry of net- zero, patie nt -ce ntric healthcare. Unveil ing ou r Dis cover y Cent re Al so in Novem ber , it was a p rivil ege to ho st HRH T he Prin ce of Wale s to unveil ou r Di scover y Ce ntre (D ISC) in Cam brid ge, UK. A st ate- of-the- ar t R&D fa cilit y , DIS C can acc ommo date mo re than 2, 200 re sear ch sci entis ts and i s built to t he world’s high est environmental standa rds. DISC i s desi gned to f oster c ollab orati on and dev elop the ne x t generation of science leaders. By acceler at ing AstraZene ca ’s ind ustr y-le ading l evels of p roduc tivit y , it c an drive the nex t wave o f scientiﬁc inno vation and p ower the n ext st age of ou r grow th. W o rki ng for inclu sion and d ivers ity Th e next wave of in novation w ill only c ome fro m orga nisat ions th at are b oth diver se an d inc lusive. W hile th ere is a lways roo m for imp roveme nt, I am pr oud of th e progr ess we hav e made , particularly in ensuring gender balance in our leadership teams. I was th erefo re deli ghted w hen Su san Ga lbra ith and A radh ana Sa rin jo ined th e Se nior E xecuti ve T e am dur ing the ye ar . Su san was a ppoin ted in Jun e to lead O ncol ogy R& D in su cce ssio n to José. S he is an ou tsta nding onc olog ist an d leade r with a tr ack re cord o f delivering breakthrough science and me dicin es that h ave trans form ed ca re and imp roved the l ives of pat ients . Aradhana assume d the role o f Chief F inancial Of ﬁc er in Aug ust fol lowing th e comp letio n of the Alexion acquisition . She has more than 20 yea rs of pr ofess iona l exper ienc e span ning operating roles at Alexion and advisor y roles at global ﬁnancial institutions. Ma rc Dunoyer , our p reviou s CFO, has ta k en over a s Alex ion’ s CEO an d I’ d like to pay t ribute to h im for his tremendou s achievements since he joined As tra Zene ca, an d thank h im per son ally for h is outstan ding suppor t, which continues in his rol e as Chie f Strate gy Of ﬁc er . Ind eed, I wo uld like to clo se by than king everyone at AstraZeneca . Without their continuing and tireles s c ontributions, none of ou r many ach ieveme nts in 2021 woul d have be en pos sibl e and, wi th them, I h ave ever y con ﬁden ce in de liveri ng the nex t cha pter in our success. Pas ca l Sor iot Ch ief Ex ecut ive O cer T he Ter ra Ca rt a Sea l re cog ni ses gl oba l corp orations that are demonstrat ing their comm itment to, and momentu m tow ards, t hecr eat ion of genu ine ly sus ta in abl e m ar ket s. For more infor mation on o ur strateg y , se e Ou r St rate gy a nd Ke y Per for ma nce I ndic ator s fro m page 1 2. 6 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report Chief Executive Ocer’ s Rev i ew c ont inue d T he continued g row th of t he hea lthca re sec tor presents u s wit h bot h cha llenge s and oppor tu nit ies t hat req ui re us to adapt, i nnovate a nd bui ld tr us t. Ou r sec tor’ s t radit i ona l focus on t reatment is sh if t ing towar ds prevention a nd early inter vention. Mea nw hi le, soc ial, e conomic a nd polit ica l cha llenges rem ai n in meet i ng un met med ica l need . I m pac t of global t rend s Global t rends c on ti nue to incre ase t he demand for hea lthc are. T he CO V I D - 19 pa ndemic h as high lighted ch al lenges and acc elerated hea lthc are in novation a nd ch ange. Globa l econo mic rec over y followe d by slowdow n I ncrea si ng burd en of ch ron ic di seas e Grow ing and age ing popul ations Follow ing a str ong re bound i n 2021 , the gl obal ec onomy i s enter ing a pro noun ced sl owdown ami d fres h threa ts fro m COVID - 19 vari ants and a r ise in i nﬂatio n, debt , and inc ome ine qual ity th at coul d enda nger t he rec over y in emerging and developing economies. Global grow th is ex pecte d to dec eler ate mar kedly fro m 5.5 % in 20 2 1 as pe nt-up de mand dis sipate s and a s ﬁsca l and mo neta ry sup por t is unwou nd acr oss the wo rld. T his will coincide with a widening div e rgence in growth rates between advanced economies and emerging and dev eloping economies. (S our ce: World B an k) Non-communicable diseases (NCDs) k i ll 4 1 mi llion pe ople e ach yea r , eq uivale nt to 7 1 % of all deaths globa l ly . NCDs dispropor tionat e ly affect people in lo w- and middle-income cou ntrie s whe re more t han thr ee qua rte rs of glo bal NCD d eath s occu r . Peop le of all a ge grou ps, re gions a nd cou ntrie s are af fe cted by NCD s. Th e risk fac tors c ontri butin g to NCDs in clude d iet, smoking and lack of ex e rcise. (Source: W HO) Peop le worl dwide a re livi ng long er . By 20 30, one i n six pe ople wi ll be age d 60 yea rs or over . B etwe en 201 5 an d 2050, the wo rld’s pop ulati on of pe ople ag ed above 6 0 will nea rly d ouble to 2. 1 billi on. Whil e this sh ift in di strib ution towa rds old er age s sta rte d in hi gh-in come c ountr ies, i t is now low- a nd middle-income countrie s that are experiencing the g reate st chan ge. By 205 0, two thi rds of the wo rld’s popul ation ove r 60 year s will li ve in lo w- and middle -income c ou ntries. (Source: W HO) 4 . 1% Glob al GDP i s fore cas t to gr ow by 4 . 1 % i n 20 22 , slow ing fu rt her to 3. 2% i n 20 23. (S our ce: World B an k) 1bn T here a re now mor e t ha n one bil lion people worldw ide age d 60 a nd over. Mos t of th em live in l ow- and m idd le- in come cou nt rie s. (Source: W HO) 77% 77 % of al l NCD deat hs a re i n low- and m iddle -income co untri es . (Source: W HO) - 4% By 2 023 , out put in eme rging a nd developi ng econom ies wil l rem ai n 4% below it s pre-pa n demic trend. (S our ce: World B an k) 4 26m T he num ber of pe ople age d 80 or olde r is ex pec ted t o trip le betwe en 20 20 a nd 20 50 to re ach 426 milli on. (Source: W HO) 15m Mor e tha n 15 m il lion people age d 30 – 6 9 yea rs d ie fr om NCD s eve ry y ear. 85% of these ‘premat ure’ deat hs o ccu r i n low- and m iddle - in come cou nt rie s. T his c ompa res w it h some 5 . 7 mi ll ion people who h ave die d f rom COV I D-19 sinc e t he sta r t of th e pandemic. (S our ces: W H O and Joh ns Ho pki ns) Healthca re syst em s are having to m eet increasing demand, a ta sk mad e more chal l engi n g by the ongoi ng i mpac t of COV I D - 19. 7 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Strate gic Report Corporate Gover nance He alt hca re i n a Cha ng ing Worl d Healthca re in a Ch a ngi ng W orld Whi le dem ogra phic an d other c hang es are dri ving a n incre ase d dema nd for he alth care, con tinue d advan ces in s cien ce and d igita l technologies are driving inno vation and improvements in healthcare. One example of thi s is the sp eed of va ccin es devel opme nt in re spon se to the COVI D- 19 pande mic. At the s ame tim e, risks r emai n. For ins tanc e, increasing demand is putting pressure on healthcare budgets, exacerbated by the imp act of th e pande mic, le ading to d ownward pre ssu re on pr icing. We al so fac e regul ator y cha llen ges an d the los s of exclus ivit y and genericis at ion. T hes e ri sks a re e xplo red f ur t her i n the R is k Ove rv iew f rom pa ge 48 a nd P ric ing a nd va lue of o ur me dic ine s fro m pa ge 35. A st ra Zene ca’s re spo nse to t he t ren ds we f ace is e xp lore d f ur th er in S tr ateg y an d Key Pe rfo rm anc e Ind ica tors f rom pa ge 12 . The pharmaceutical in dustry has hist orically faced challe nges in building and maintaining its r eput ation a nd the tr ust of i ts sta k eho lder s, as a re sult of i mpro per sa les a nd mar keting pr actic es by som e comp anie s. However , t he se ctor ha s the opp or tunit y to incr eas e publi c conﬁdence by de l ivering on transparent commitments to ethical practice s a nd go od gov ernance. Initial ly , the rapid response and mobilisation of r esources to dev e lop a vaccine in re spon se to COVID - 1 9 c ontri buted to a n inc reas e in tru st in sci entiﬁ c and me dica l institut ions, incl uding the pharmaceutical ind ustr y . H owever , the w ides prea d shar ing of inaccurate or selective information has undermined conﬁdence in scientiﬁc data, and t rust h as, in p ar t, fall en away . More generally , t o be successful, pharmaceu tical companies will need to be a ble to res pond to th e pres sure s and de mand s made on t hem by pat ients a nd caregiver s, he alth authorities, pay e rs, policym ak e rs and other s. Climate change affec ts many de t e rminants of hea lth: cle an air, safe dr inkin g water , s ufﬁ cien t foo d and se cure s helte r . For exam ple, ex treme hig h air temp era tures r aise t he levels of pollutants in the air that e xace rbate cardio vascular and res pirat or y d iseases. Increasin gly variable rainfall pat t erns are likel y to affe ct the s uppl y of fres h water . Thi s can c ompro mise hygi ene an d incre ase the r isk of dia rrh oeal d isea se, whi ch kill s over 50 0,00 0 child ren be low the ag e of ﬁve eve r y year. (Source: W HO) 25 0 , 000 Be twe en 20 30 a nd 2050, climate change is expected t o cause approxi mately 250, 0 00 addi tio nal deat hs p er yea r f rom maln utriti on, malari a, diarr hoe a a nd heat st re ss. (Source: W HO) Up to $ 4 bn The direct dama ge co sts to h ealt h ( excl uding costs in he alth -det ermining se ctor s such a s agri cultur e, w ate r an d san itat ion), is e sti mat ed to be be twe en $ 2- 4 bil lio n pe r yea r by 20 30. (Source: W HO) Cont inue d impa ct of COV I D-19 Th e COVID - 19 pand emic h as dri ven cha nges in he alth sys tem sp endin g that imp act ac ces s to me dicine s. For exa mple, wh ere ho spit al be ds were s carc e, payer s real locate d resources and prioritise d treatments that cou ld hel p k ee p patie nts out o f hospi tal. The pandemic also demonstrated t hat whe n nee ded, he alth care sy stems c an move qui ckly to g rant r apid ac ces s to innovat ive new medicines, such as t he COVID- 1 9 vaccines. 9 4% 9 4 % of cou ntr ies repor ted one or more dis ruption s to essen tial healthcare ser v ice s one yea r int o the p ande mic . (Source: W HO) T he hea lth i mpac t of cli mat e cha nge Gro wi ng imp ort an ce of di git al i n heal thc are Dat a mana geme nt in he althc are is m oving beyond storing data, to focusing on extracting insights on population health management and va lue -bas ed ca re to impr ov e hea lth outcomes and personalised healthcare. Innov ations in t e chnology are allowing people to mon itor the ir own he alth an d bec ome ac tive par ticipants in managing their healthcare. For example, Internet of Things (Io T) applications and technologie s are inﬂuencing patient engage ment strategies and improving patient inte ract ions wi th heal thca re syste ms. $ 4 2 7b n T he dig ita l hea lth marke t ex ceeded $141.8 bi llio n in 2 02 0 a nd is es ti mate d to g row to more t ha n $ 42 6.8 b il lion by 2 02 7 . (Sou rce: Global Ma rke tIn sight s) 38x T he use of telehe alth h as in crea sed 3 8 t imes f rom pre- COVI D- 19 levels. (S our ce: Mc K ins ey) 8 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report Healthca re in a Ch a ngi ng W orld co nt inued Es ti mate d pha rm aceut ica l sa les a nd ma rket g row th t o 202 5 We expec t developing markets, including Africa , the Commonwealt h of Independent St ates (CIS), the In dian subcontinent an d L atin America , to fue l phar mac eutic al grow th. Mar ket grow th in Ch ina is exp ecte d to rem ain b elow his toric al level s at a comp ound ann ual gr owth r ate of 4.5 %. T his is du e to the con tinue d slowdown of t he major hospital sector . 4.2% $ 706bn N or t h A m er ic a 4.3% $ 296bn EU 6.7% $ 74bn O th er Eu r op e ( N on -E U co un tri e s; including UK) - 0.3% $ 85bn J ap an 2.8% $ 18bn Oc ea ni a 4.5% $ 263bn Southeast Asia and E ast Asi a 12.6% $ 109bn L a tin Am er i ca 5.7% $ 31bn A fr ic a 8.6% $ 37bn CI S 4.5% $ 197bn China 4.9% $ 24bn Midd l e Eas t 10.9% $ 50bn Indian s ub co nti ne nt Es ti mate d pha rm ace utic al s ale s – 20 25. Dat a is b ase d on ex-m anu fac tu re r pric es at C ER . Sou rce : IQV IA Estimated phar ma ceutical marke t g row th . Dat a is ba sed on t he c ompou nd an nua l g row th ra te fr om 20 20 t o 202 5. So urc e: IQV I A Ma rket P rog nos is Gl oba l 2 021 to 2 02 5 A g rowi ng pha rm aceut ical s ect or A s a result of i ncreas ed dema nd for healt hcar e, the ph ar maceut i ca l sec tor conti nues to grow . Globa l pha rmac eutica l sa l es g rew by 7 .7% in 2 021. Glo ba l healt hcar e spendi ng is projec ted to incr ease at a n an nua l ra te of 4.8 % from 2 02 0 to 202 5. Gl obal pharma ceu tical sales In 2021 , E stab lishe d Mar k ets s aw an ave rage reve nue inc reas e of 6.4 % a nd Eme rging M arkets reven ue grew at 1 1 .9%. The US, Jap an, Chin a, Ge rma ny and Fran ce are th e world’s top ﬁve pha rma ceuti cal ma rkets by 20 2 1 sa les. In 20 2 1, the US had 4 6.8% of glo bal sa les (2020 : 46.8% ; 201 9: 46 .5 %). 2021 2020 2019 1,101 1,059 1,186 W or l d ( $b n) $ 1,186bn (+7.7%) 2021 2020 2019 115 115 118 Esta b lish e d R O W ( $bn ) $ 118bn (+2.0%) 2021 2020 2019 515 493 555 U S ($b n) $ 555 bn (+7.6%) 2021 2020 2019 255 207 285 E me r ging Mar k e ts ( $b n) $ 285bn (+11.7%) 2021 2020 2019 216 207 228 Eu r op e ( $ bn ) $ 228 bn (+6.0%) Dat a ba sed o n world m ark et sa les u sin g A str aZ ene ca Ma rket de n itio ns on page 22 4. Changes in data subscriptions, ex cha n ge rat es an d su bsc ript ion c over age, a s wel l as r est ate d IQV IA d ata , hav e led to t he re sta teme nt of tot al m ark et va lues f or pr ior ye ar s. Sou rc e: IQV I A, IQ VI A Mi das Qu ant um Q 3 20 21 (in clud ing U S dat a). Re por ted v alu es an d gro wt h ar e bas ed on CE R. Value g ur es are ro unde d to t he nea re st bi ll ion an d gro wt h pe rce ntag es ar e rou nde d to th e nea res t tent h. 9 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report He alt hca re i n a Cha ng ing Worl d I n v e s t m e n t i n d i s c o v e r y , d e v e l o p m e n t , m a n u f a c t u r i n g a n d c o m m e r c i a l i s a t i o n o f p a t e n t - p r o t e c t e d m e d i c i n e s R e v e n u e g e n e r a t i o n R e i n v e s t m e n t o f r e t u r n s In puts > App lyi ng our res ourc es to mee t unm et medical n eed Outputs > Improved healt h > Ret ur ns to sha reholders Ou r Pu rpose R e s e a r c h a n d d e v e l o p m e n t p h a s e s 5 – 1 5 y e a r s L a u n c h p h a s e 5 – 1 5 y e a r s P o s t - e x c l u s i v i t y 2 0 + y e a r s 1 2 3 4 5 6 7 8 9 I nspi red by o ur V a lues a nd wh at scie nce ca n do, we a re foc use d on acc elerat ing t he del iver y of l ife -c ha ngi ng med ici nes t hat cr eate endu ri ng va lue for pat ient s and s ociet y . W e a re com mit ted t o opera ti ng in a way t hat re cog ni ses t he inte rcon nec tio n be twe en bus ine ss gr ow th , the ne ed s of so ciet y and t he l im itat ions of ou r pla net . Our Pur p ose W e pus h the b ound ar ies of s cienc e to delive r life -c hang ing med icines . Ou r P ur pos e unde rpi ns ev er yt h ing we do. It g ives u s a reas on to com e to work eve ry d ay . It re mi nds us w hy we ex ist a s a comp any . It he lps us del iver be net s to pat ient s and c reate va lue for s har eholde rs. O u r Va l u e s Ou r V a lues de ter mi ne how we work tog eth er and t he be hav iour s th at dr ive ou r succ ess . They g u ide our d ecis ion ma k ing an d de ne ou r beli efs. W e fol low the s cienc e. P ush ing t he bou nda r ies of sc ience a nd work in g creat ively w it h pa rt ner s and coll aborators. W e put pat ients  rs t. St r ivi ng to un ders ta nd pati ents’ n eed s a nd cons ider ing t hem i n ever y de cisio n we t ake . W e play t o wi n. Buil ding hig h-pe r f orming , in cl usiv e a nd dive rse te ams a nd ma k ing t he r ight choic es to w in . W e do t he righ t th ing. Employ ing high et hica l sta nda rds when c ar r yi ng out a ll as pec ts of ou r busi ness globa lly . W e a re ent repre neur ia l. Ac ti ng w ith u rgenc y , b raver y , re sil ience a nd t ak ing s mar t r isk s. Ou r Cu ltu re Ou r Cu ltu re is de ne d by our sh are d V a lues a nd P ur pos e. Ac compa nyi ng t his , our c omm itm ent to su sta in abi lit y , pe rfor mi ng as a n ente rpr is e team , li felong lear ni ng, and inclu sion and di versit y m ake s us a gr eat pla ce to work . Bus ine ss Re vie w , se e fr om page 30 . W ho we ar e W h y A straZeneca ? W e inv e st resources t o crea te na n cia l a nd no n‑ nancia l value, bri n g ing b e nets to o u r pa tien t s, o u r wo rld and o u r bus iness. W e are a gl oba l p h ar ma c e ut i c al business wit h a sc ience -le d a nd pat ient-focu se d va lue prop osit ion comm i t ted to excellen c e in the resea r c h, dev elopm ent a nd com mer cia li sat ion of pr esc ript ion me dic ine s. Ou r bus ine ss act iv itie s spa n the ent ire l ife - cyc le of a med ici ne. W hat we do to c reate na nci al value I nvest ment W e inv est i n the d is cover y , deve lopment , man ufacturin g an d co mmer ciali sa tion of our pipel ine of in novative pres cript ion medici nes. Revenu e gener ation W e gene rate re venue f rom Pr oduc t Sa les o f our ex is ti ng med ici nes a nd new med ici ne lau nche s, as w ell a s fro m our col la borat ion ac tiv iti es. O ur foc us i s on cr eati ng med ici nes t hat faci lit ate pro ta ble f utu re rev enue gene ratio n, wh ile br ing in g be net s to patie nts. Reinvestment W e rei nves t in de velopi ng the n ex t generat ion of innovat ive medic ines a nd in o ur bu sine ss to pro vide t he pl atfor m for f utu re sou rce s of reve nue in t he fac e of los ses of ke y patent s. W e a lso as ses s oppo rt un iti es to inv est i n va lue -en ha nci ng add ition s to ou r por tfol io. 10 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 S trategic Repor t Business M odel a nd L ife - c ycle of a M e dicine W hat doe s our bu sine ss model r eq uir e to be suc cess fu l ? 1. Under ta ke sc ienti c re sea rch to ident if y po tenti al ne w med icin es. 2 . P re- cl in ica l st udie s in l abo rator y a nd an im als t o unde rst and i f the pot enti al me dici ne is s afe to int ro duce i nto hum ans . 3 . Pha se I tr ia ls w ith s mal l g roups of hea lt hy huma n volu nteer s (sma l l molec ules) or p atie nts ( bio log ics) to unde rsta nd how t he pote ntia l med ici ne is a bsorb ed i nto the b ody, di str ibute d and e xcreted . >1 0 0 m Ou r ma in D isea se A rea me dic ine s impac t more t ha n 100 m il lio n patie nt live s an nua lly. I n addit ion, A st ra Ze neca a nd ou r global pa r tner s rele ase d for supply s ome 2. 5 bi ll ion V a xzevr ia/Covishield vacc ine do ses i n 20 21. How we add v alue Improv ed healt h Cont inuou s scient i c in novat ion isv ita ltoac hiev in g s ust ai na ble hea lt hca re,wh ichc reate s va lue by: > Improv ing hea lth outc omes and t ran sfor mi ng the l ives o f patie nts who u se our m edic ine s. > En abli ng healt hcar e system s to re duce cos ts a nd incr eas e e cienc y . > Improv ing acc ess to hea lthca re and hea lthca re in fras tr uct ure. > Helpi ng dev elop t he com mun itie s in w hic h we oper ate th rough lo ca l employ ment and par t neri ng. Finan cial val ue Rev enue f rom our P ro duct S ale s and coll aboration act ivit i es generates ca sh ow, wh ich helps u s: > F und ou r inve st ment in s cienc e and t he busi nes s to dr ive long -ter m va lue. > Follow ou r pro gre ssiv e div idend p olic y . > Me et our d ebt ser v ice obl igat ions. Lau nch p has e – durat ion: 5 –15 ye ars 7 . Lau nch new med icine wh ile conti nu ously monitor ing, record ing a nd a nal ysin g rep or ted side e ec ts. 8 . Post- launc h res ear ch a nd development to f ur the r unde rsta nd t he bene t /ri sk pro le of t he medi cine and l ife -c ycle man agement act ivitie s to u nders ta nd its f u ll pot enti al. Pos t-e xclusi vit y – dur ation : 20 + yea rs 9. P atent ex pi ry a nd gene ric med ici ne ent ry. 4 . Pha se I I tr ia ls on sm al l- to med ium -si ze d grou ps of pat ients to tes t ee ct ivene ss and tolera bilit y of the med icine a nd deter mi ne optim al dose . 5 . Phas e II I tr ia ls i n a la rger g roup of pat ient s to gat her in for mat ion a bout e ect ivene ss a nd safe ty of t he med ici ne and e valu ate t he overa ll be net /r is k pro le . 6 . Se ek regu latory approval s f or man ufacturin g, mark eting and sel ling t he medic ine. Li fe- c ycle of a medic ine Re sea rch a nd deve lopment ph ase s – durat ion : 5 – 15 y ear s A ta lente d and di vers eworkf orce W e nee d to acq u ire , reta in a nd dev elop a ta lente d and d iver se work forc e. 4 8 . 1% of ou r sen ior role s a re l led bywom en Commerc iali sation ski lls W e nee d a st rong glob al co mmer cia l pre senc e and s ki lle d peop le to ens ure t hat our me dici nes are ava ila ble when needed a nd th at pati ents h ave acce ss to t hem . >1 3 0 cou ntr ies w here we s ell ou r prod uct s A leade rsh ip posit ioni nscie nce W e nee d to achi eve scie nti c lead ersh ip if w e are to d eliv er li fe- cha ngi ng med icines . $ 9 .7 b n inv este d in ou r sc ience i n 20 21 I ntell ect ua l prop er ty For our i nves tme nts to b e via ble , we se ek to pr otec t new med ici nes f rom be ing co pied for a re aso nab le per iod of t ime t hr ough patent p rotec tio n. >90 cou ntr ies w here we obta ined patent protect ion Underst and ou r sta keholders W e nee d to u nders ta nd the f act ors a nd issu es t hat a re most i mpor t ant to t he many d i erent g roups of st ake holder s wit h whom w e inter act . > 1 1 8 , 000 hea lthca re pract itioner enq ui ries responde d to A robu st supp ly cha in W e nee d a supply of h igh- q ua lit y med icines , whether f rom our ow n ope ratio ns or ou r spe nd on th e purc has e of goo ds, s er vic es a nd act ive pha r mace utic al i ngr edie nts. $22.2b n sp ent wit h supp lier s E ec tive c olla bor ation s Bus ine ss deve lopment , spe ci ca lly pa rt neri ng, supplements a nd st reng thens ou r pipeli ne and our e ort s to ach ieve sci enti c lea dersh ip. > 1 , 000 coll aboration s worldwide Fi nanc ial st reng th W e nee d to be n anc ial ly st rong, in cludi ng hav i ng acce ss to e qu ity a nd deb t  nan cing , to be ar t he na nci al r isk of i nvest ing i n t he li fe- cy cle of a me dici ne bot h i nter nal ly a nd th rough ac qu isit ions . $ 6.0 bn net ca sh ow f rom ope rati ng act ivi tie s 11 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Bu sine ss Mo del a nd L ife -c ycl e of a Med ici ne Ou r a c quisition o f A lexion enables us to cap ita lise on n ew o pport un i t i es, st re ngt hs and sy n ergies as we seek to a cc e ler ate del ive r y of ou r s t rate g y . 2021 2020 2019 $0.08 $2.44 $1.03 $0.08 Report ed EPS 2021 2020 2019 $5.29 $4.02 $3.50 $5.29 Core EPS 2021 2020 2019 $5,963m $4,799m $2,969m $5,963m Net cash ﬂow fr om oper ating acti vities K PI ke y Used for re munerat ion of E xec utiv e Dir ec tors Ou r K PIs a nd remu nerat ion Ou r KPIs are a ligne d to our st rategi c prio riti es and a re the in dica tors ag ains t which we measure our productivit y and success. A num ber of th e KPIs us ed in thi s sect ion are u sed to m easu re the re muner ation o f Exe cutive D irec tors a nd allow u s to discl ose aggregated targets without disclosing sensitive commercial information at t he ind ividu al KPI level. A ny vari ance s bet ween the K PI and valu es us ed in dete rmin ing For more infor mation, se e Fi na ncia l Rev ie w fro m page 5 2. E ec tive de liver y of ou r st rate gic pr iorit ies w il l help us ac hie ve our  nan cia l ta rget s. Ou r capit al a l locat ion pr iorit ies i nclud e inve sti ng in the bus iness a nd pipeli ne, ma int ai ni ng a st rong, i nves tment- g rade cr edit r ati ng, pote nti al va lue -e nha nci ng busi ness develop ment oppor tu nit ies, and supp or ti ng the p rog res sive di vide nd pol icy , ba la ncin g oppor t un itie s for gr ow th w ith a n appropriate level of cover. remuneration are explained in t he Directors’ Remuneration Repor t from page 9 8 . Other ind icator s use d are now i nclud ed in the Bus ines s Review f rom pag e 30. From 2021 , a m etric f ocus ing on th e delive ry of our A mbition Zero Carbon commitments is included in our ex e cutive incentive arrangeme nts, which underlines the impor tance w e place on eliminat ing our Sc ope 1 an d Scop e 2 gree nhou se gas emi ssio ns by 2025. For more infor mation, se e the D ir ect ors’ Remu neration Rep ort f rom pa ge 98 . Ou r st rate gy i s str aight for wa rd. We: > A re sc ience a nd in novat ion le d > A re foc use d on our c hose n di seas e areas: Oncolo gy; Bi oPharmaceuticals (compr isi ng Ca rd iovasc ul ar, Ren al & Met ab oli sm (CV R M ) and Re spi rator y & I mmu nolog y (R & I)); a nd Ra re Di sea se > Hav e a div ersi ed p ort fol io w ith bro ad cove rag e across pri mary , specialty ca re a nd rar e dis eas e > Hav e globa l str eng th w it h bal anc ed prese nce acro ss regi ons > Hav e a com mit ment to p eople a nd soc iet y W e hav e th ree pr ior itie s desi gne d to del iver ou r st rateg y : Ach ieve Group Fi na n cia l Target s 1. Ac celerate I nnovat ive Scie nce 2. Delive r Growt h a nd Ther a py A rea Le adersh i p 3. Be a Great Place to W ork Ac hieve Group Fi na ncial Ta rgets Key Per forma nce Indicators Cas h gen era tion is a key d rive r of long-term shareholder returns and facilitates reinvestment in our pipeline, which is critical for delivering new medicines and future value. Ea rnin gs pe r shar e (EPS) is a n importa n t proﬁtability metric and a key dr iver of s hare hold er val ue. For more infor mation on o ur Core mea su res , see t he F ina nc ial R evi ew f rom pa ge 52 . For d eta il s of how A chi eve Gr oup Fi na nci al Ta rge ts a re con side red whe n ca lcu lat ing t he a nnu al bo nus , se e page 10 8. Ac tu al g row th 2 021 - 97 % 2020 + 13 7% 2 019 - 4 0% CE R gr ow th 2 021 - 8 4% 2020 + 1 42% 2 019 - 4 4% Ac tu al g row th 2021 + 32% 2020 + 15 % 2 01 9 +1% CE R gr ow th 2 021 + 37% 2020 + 18 % 2 019 0 % Ac tu al g row th 2 021 + 24% 2020 +62% 2 01 9 +13 % 12 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report Ou r Strat eg y and Key Pe rform ance I nd icat ors 2021 2020 2019 32 1 36 2 22 3 32 1 Pipeline progr ession events 2021 2020 2019 49 1 53 2 63 3 49 1 Regula tory events 1 2 6 agai ns t our G roup sc orec ar d for det erm in in g an nua l bonu s. 20 21 tota l inc ludes Ale xion. 2 2 5 agai ns t our G roup sc orec ar d for de terminin g annual bon us. 3 17 aga in st ou r Group s core ca rd for de terminin g annual bon us. 1 37 ag ai nst o ur Gr oup sco reca rd fo r det erm in in g an nua l bonu s. 20 21 tota l inc ludes Ale xion. 2 43 ag ai nst o ur Gr oup sco reca rd fo r de terminin g annual bon us. 3 37 ag ai nst o ur Gr oup sco reca rd fo r de terminin g annual bon us. Ou r pr iorit ised i nit iat ives Acc ele ratin g the next wave of n ew mole cula r entities (NM Es) and buildi ng our capabi lities in im munol ogy an d rare di sea ses. Pur suin g the next wave of d isru ptive R&D platforms with new scientiﬁc modalities, such as Pro T ACs epigenetics, oligonucleotides, ant ibody d rug c onjug ates an d cell th erap ies, as we ll as new te chnol ogie s such a s OMICs and knowledge graphs. Driving R&D productivit y through cl inical tri al excell ence a nd the u se of digi tal he alth, ar tiﬁcial i ntelligence (AI) , data-enabled R&D that provide new insights, accelerated processes and an impr ov ed patient experience . How ou r str ateg y resp onds togloba ltre nds T o en sure we ar e able to re spo nd to the increasing burden o f chronic disea se a nd inc orpo rate ad vance s in sci ence a nd digi tal technologies, we are : > Developing an R&D culture of in spiring people with curious minds, harnessing data and technology , working seamlessly and i nclu sively, and alway s lear ning from patients. > Focu sing on i nnovative s cien ce, a ran ge of drug modalities, emerging drug platforms and new t e chnologies in our chosen disease areas. > Driving R&D productivit y by f ocusing on qua lit y rathe r than qu antit y at al l stag es of dr ug dis cover y and de v elo pmen t, and str ength enin g our abi lity to m atch ta rgete d me dicin es to pati ents wh o nee d them mo st. > T ransforming o ur science and l ev eraging technology , including the pro visio n of enhanc ed data and clinical insights, as we ll as digi tal a nd AI ap proac hes. > Collaborating with academia, go vernments, ind ustr y , a nd scie ntiﬁc a nd pat ient organisations to access the best science and patient insights. > See king to a ttr act the b righ t es t minds a nd creating an environment where scie nce can thri ve . How we pro gre sse d in 2 021 Our science > Achieved 49 regulator y e vents: 27 NME and major life-cycle management (LCM) sub miss ions a nd 22 app rovals in m ajor ma rkets (U S, EU , Chin a and Ja pan) > Secured 32 pipeline progre ssion ev ents: 9 NME Ph ase II st ar ts/p rogre ssio ns and 23 NME a nd majo r LCM Phas e III inv estment decision > Our p ipeli ne incl udes 1 77 p roje cts, of w hich 1 61 ar e in the cli nica l phas e of develo pmen t. > At the en d of the yea r , we had 16 NME pro ject s in pivot al tria ls or un der re gulato ry revi ew coveri ng 1 6 in dica tions (20 20: 10). > 1 8 p rojec ts were d isco ntinue d. Our sustainability > We embe d prac tice s into the p rodu ct po rt folio to d rive equ itab le acc ess to healthca re, in cluding digital health, clinical trial diversit y , patient centricit y , in ves t ing in ra re dis ease s, ope n innovati on and intellectual prope rt y sharing. Focu s for 202 2 > Stre ngth en R&D b ridg es bet wee n Astra Z eneca and Alexion. > Drive innov ation oppor tunities in China and bey ond. > Lev erage and embed digital advances across the pipeline. For m ore i nfor ma tion , se e Dis eas e Ar ea Rev iew f rom pa ge 16 and B usi nes s Rev iew f rom p age 3 0. Ac celerate I n novative S cience Key Per forma nce Indicators Our science measures incentiv ise the development o f NMEs and the maximisation of th e poten tial of ex isti ng me dicin es. Pip elin e prog res sion eve nts (P hase I I NME star ts/ progressions and Phase III inv estment decisions) measure innovation and sustainabilit y . Regulatory events (regulatory submissions and appro vals) demonstrate the advancement of t his inno vation to pat ients an d the val ue to the G roup. For more infor mation on performa nce against t he Grou p sco rec ard , se e page 10 8. “ W e seek to a t t r act t h e br ightest mi nd s a nd creat e an envi ro n men t where scie nce c an t h r i v e .” 13 A st ra Zen eca A nn ual R epo rt & For m 2 0- F In for mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Ou r St rat eg y and K ey Per for ma nce I nd icato rs 2021 2020 201 9 $37,417m $26,617m $24,384m $37,417m T ota l Revenue Ou r pr iorit ised i nit iat ives Meeting our growth and pro ﬁtability goals through successful inno vation and commercial ex cellence, as well a s completing the Alexion acquisition . T ransforming healthcare delivery through a foc us on: > Impacting and impro ving the whole patient expe rie nce, fr om dise ase p reventio n and awareness, diagnosis, treatment, po st -tre atmen t to wellne ss. > Data analytics, omnichanne l a nd go-to-market models. > Innov ative value strategies for pricing that foc us on the o utcom es our m edic ines del iver to pat ients a nd hea lthc are sys tems. > Implementing our plans f or ‘smart factories’ and next -gene ration m anufacturing technologies. How ou r str ateg y resp onds togloba ltre nds T o en sure we ar e able to re spo nd to the inc reas ing de mand fo r heal thca re, downwar d pressure on prices and i ncreasing control that pe ople have ove r their ow n heal thca re, we are: > Foste ring a pa tient-foc use d appr oach an d embedding patient insights across our organisa t ion, building integrated therapy area ecosyst e m models and establishing ‘health innov ation hubs’ . > Engaging with policymakers t o suppor t improvements in access, coverage, care del iver y , qu alit y of care a nd pat ient ca re outc ome s. > Lev eraging technology across prevention and aw areness, diagnosis, treatment, po st -tre atmen t and wel lnes s to delive r better patient outcomes. > Partne ring with industr y , gov e rnments and a cade mia to ﬁnd way s to brin g new me dici nes to ma rket mor e quick ly and efﬁciently . > Coll abor ating w ith the fu nder s of hea lthc are to inc reas e the us e of value-ba sed pricing solutions. > Enab ling ou r Emerg ing Ma rkets to de liver better and broader patient access through fas ter sub miss ion as we ll as inn ovative and t arge ted eq uitab le pri cing s trateg ies and pract ices. > Pur suing a s trong p atent st rateg y that bui lds rob ust pa tent es tates to p rotect our p ipeli ne and p rodu cts whi le defe nding and enforcing patent rights. How we pro gre sse d in 2 021 Ou r grow th a nd lea der ship > T otal Rev e n ue, co mprising P roduct Sales and Coll aboration Revenue, increased by 4 1 % (38% at CER) to $ 37 ,41 7 m illion. > Prod uct Sa les gr ew by 4 1 % ( 38 % a t CER) to $36,54 1 m illi on; Collaboration R ev enue inc reas ed by 20% (20% at CER) to $876 milli on. > Onc olog y Produ ct Sal es grew by 20% (1 8% at CER) to $1 3,0 48 milli on, whil e CVRM i ncre ase d by 1 3% ( 10 % at CER) to $8,0 20 million . R&I inc reas ed by 1 3% (9% at CER) to $ 6,034 mi llion. > Follo wing completion of the Alexion acq uisit ion on 21 July 20 2 1 , Ra re Dis eas e me dicin es gen erate d $3,071 millio n, 8 % of T ota l Revenu e, growin g 8 % (9% CER) o n a pro f orma , pro ra ta bas is 1 . > T ota l Revenue g rew in Eme rging M arket s by 4 1 % (36% at CER) to $1 2,281 millio n. In the U S, it grew by 3 8 % to $1 2, 228 millio n and i n Europ e by 45 % (40% at CER) to $8,050 million. Our sustainability > Over 31 mill ion pe ople re ache d throu gh our ﬂag ship ac ces s to heal thca re prog ramm es. > Over 1 1 mil lion pe ople r eache d thro ugh patient access programme s. > Over 199,00 0 hea lthca re worke rs an d other s traine d. Focu s for 202 2 > Advance t he combined AstraZene ca and Alexion pipeline. > Build our new V accines and Immune Th erap ies Un it on whi ch we will be rep or ting se par ately fr om 2022. > Advance dig ital approaches to transform the patient e xp erience. “ W e engage wit h mult iple st a keholder s t o tr ans fo rm hea lt hca re d elive r y , meet o ur g ro w t h and pro ta b il i t y goals and del i ver b et ter and broad er patien t access to ou r me dic ine s. ” Del iver Grow th a nd The ra py A rea Le adersh i p For m ore i nfor ma tion , se e Dis eas e Ar ea Re vie w fro m page 16 a nd Bu sin ess R evi ew f rom pa ge 30 . 1 Gr ow th rat es on R ar e Dis eas e med ici nes ha ve be en ca lcu lat ed on a pr o for ma, p ro rat a basis b y com pa ring post-acquisition rev enues f rom 21 Ju ly 2 021 to 31 D ece mb er 20 21 wi th t he cor re spon di ng per iod i n th e pri or yea r, pre - acq uis iti on as pr ev ious ly pub lis hed b y A lex ion . Pro fo rm a, pr o rata To ta l Reve nue g row th ra tes h ave be en pr ese nted fo r 20 21 R are D ise ase a rea a nd co nst it uent m edi cin es, an d do not i mpac t Gro up tot als . Ac tu al g row th 2 0 21 + 41% 2020 +9% 2 01 9 +10 % CE R gr ow th 2 021 + 38 % 2020 + 1 0% 2 01 9 +13 % Key Per forma nce Indicators Ou r T ota l Revenu e mea sure r eﬂec ts the impor tance of incentivising sustaina ble gro wth i n both th e shor t an d long er ter m. For d etai ls of how T ota l Reven ue is considered when calculating the annual bo nus, s ee fro m page 103. 14 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report Ou r Strat eg y and Key Pe rform ance I nd icat ors co nt inue d 2021 2020 2019 89% 85 % 86% 85% Employ ee belief that AstraZeneca is a grea t place to work ¹ 2021 83% 2020 93% 2019 86% Green Amber Red Blue 83% Sustainability scorecar d performance ² Ou r pr iorit ised i nit iat ives Con tribu ting to the e nter pris e and be ing a gre at pla ce to work , with a foc us on in clusi on and d iver sit y , as well a s lifel ong le arni ng. Evolvi ng how we work a nd col labo rate whi le con tinuin g to embr ace di gital way s of work ing. Con tribu ting to so ciet y by impr oving ac ces s to hea lthc are, env ironm enta l protec tion, a nd ethi cs an d trans pare ncy , a s well as d eliver ing our Ambition Z e ro Carb on progra mme . How ou r str ateg y resp onds togloba ltre nds T o en sure we ar e able to d eliver o ur stra tegy , bui ld trus t in Ast raZ enec a and c ontrib ute to the h ealth o f socie ty a nd the pla net, we a re: > Recruiting the best tale nt, which underp ins our innov ation and growth. > Living our V alues and engendering a high-per f orming t eam and lif elong learning. > Harnes sing different per spectives, talents and i dea s in an inc lusive way w hile en suri ng our e mploye es reﬂ ect th e diver sit y of the com muni ties we se rve. > Empow e ring emplo yees through our Co de of Ethic s to make de cisio ns in the be st inter ests o f the Gro up and s ociet y . > Refu sing to tol erate b ribe ry o r any othe r for m of cor rupti on. > Cont ribu ting to so ciet y in sup por t of the Unit ed Nations Sustainable Development Goals. > Broadening access to sustainable healthca re solutions for life- changing treatment and prevention. > T aking bold action on climate, recognis ing the int erconnection bet w e en the he alth of people, society and our planet. How we pro gre sse d in 2 021 Our people > We conti nue to inves t in our pe ople to ensure we recruit, retain and develop a ta lente d work force . > In 2021 , we de livere d a stro ng per for man ce acr oss th e k ey pr iori ties of ou r Peopl e and Sustainabil ity strat egies. > W e continue to score highly in our Pulse surveys for que st ions relati ng t o our Pur pose, d irec tion, pa tient c entr icit y and employee commitment t o our success. Our sustainability > We achi eved a ‘Gre en’ rati ng for pe rf orma nce acros s our three sus tainabilit y pillars. > We provid ed $1 12 millio n to more tha n 1 , 220 non-proﬁt organisations across 7 4 countries. > Our S cope 1 to 3 a nd lon g-term n et- zer o greenhouse gas emission s re duction ta rgets we re veri ﬁed by th e Scie nce Ba sed T argets initiativ e. > We maint aine d 1 0 0 % of ac tive emp loyees tra ined o n our Co de of Ethic s, bas ed on our Valu es, exp ecte d behav iour s and key policy principles. Focu s for 202 2 > Maintain positive employee engageme nt. > Accelerate digital transformation and activities to drive p roductivity . > Deliver targeted adv a nces across sustainabil ity priorities. For m ore i nfor ma tion , se e Our P eopl e fro m page 4 1 and Sustainabili ty fro m pag e 44. Be a Gr eat P lace to W ork 2 A G reen r ati ng = mor e tha n 70 % of our cat egor ies a re rat ed gr een . Eac h cate gor y con sis ts of s ever al K PI s. We hav e 1 4 pr iori ty go al s. Ac hie veme nt of <9 i s Red ; 9 or 10 is A m ber ; 11 or 12 is G reen ; an d 13 or 14 is B lue. 1 S our ce: Nov emb er P ul se su rv ey for each year. Key Per forma nce Indicators Ou r Grea t Plac e to W or k stra tegy i s built around two priorities: Contribution t o the enterprise and Contribut ion t o society . Ou r Cont ribu tion to th e ente rpr ise KPI i s ba sed on o ur Pul se sur vey me asu re of tho se employees who believe that AstraZeneca is a gre at pl ace to wor k. Ou r Cont ribu tion to s ocie ty KPI i s bas ed on our Sustainability scorecard. I t measures progress on annual and long-t e rm targets ac ross o ur thr ee pil lar s of sus tain abil ity: Access to healthcare, En vironmental protection, and Et hics and transparency . “ Ou r Grea t Place to W or k st ra teg y is b u ilt ar o und two pri ori ti es : Cont ri but ion to the enter pri se a nd Contr i b ut i on to s o c i e t y.” 15 A st ra Zen eca A n nua l Repo rt & For m 2 0- F In for mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Ou r St rat eg y and K ey Per for ma nce I nd icato rs O nc olo g y W e a re leadi ng a revolution in oncolog y to rede ne ca ncer ca re. Ou r am bition is to follow t he science to d iscover , develop a nd delive r life - ch ang ing t reat ments t hat i ncrea se t he potent ial for cu re. For more infor mation, see Accel erat e Innov ative Sc ienc e fr om pag e 31 an d Del iver G row t h an d The rapy A re a Leaders hip from pa ge 35. 2 021 ove r vie w > Perfor ma nce dr iven by rapid and bro ad market p enetrat ion of our new me dici n es w ith 2 53 ma rket approvals . > Tag r is s o (o sime r tinib ) a pp ro ved in 71 ma rkets as a n adj uv ant tr eatment for ea r ly-st age EGF R - m ut ated no n-small cell l ung cancer ( NSCLC) , inc l ud ing i n the E U and Ch in a. > Or pathy s ( savolit ini b) a pproved i n Ch ina for ce rt ai n NSCL C patients –  rs t global reg ulator y approva l, a nd Imn zi (du r va l um a b) app rov e d in C hi na for ex tensive -st age sma ll cell l u n g cancer ( ES -SCLC). > Lyn p ar z a ( ol a pa ri b ) demon strate d posit ive resu lts for the adjuva n t t reatment of ger ml ine BRCA- mutated h igh-ris k early brea st ca ncer i n t he Olympi A t ri al. > Enher t u (tr ast uz uma b der ux tec an) demons trated p ositive resu lts for prev io usly t reated pat ients w i t h H ER 2 -po sitiv e meta st atic br eas t ca ncer i n DES TI N Y -Bre ast 03. > Positive Pha se II I tr ia ls ex pande d our foot pri nt across gen itour ina r y and ga str o intes ti nal c ancer s. > In itiated 2 2 t ria ls acros s Phas es I, I I and I II . P roduc t Sa les $1 3 , 0 4 8 m up 2 0% (18% at C ER) 2020: $1 0,8 50m 2 019 : $ 8 , 6 67 m 16 A st ra Zen eca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 S trategic Repor t Dise ase A rea Rev iew Unme t med ical ne ed a nd world ma rket Source: IQVI A. A str aZ ene ca foc use s o n s pec i c s eg ment s w ith in t his ov era ll di sea se ar ea mar ket. Small molecule tar geted agents $48.6bn Monoclonal antibodies (mAbs) $33.3bn Immune checkpoint inhibitors $31.6bn Chemotherapy $26.3bn Hormonal therapies $15.8bn P ARP inhibitors $2.6bn Other oncology therapies $0.4bn $158.6bn Annual worl dwide market v alue Disease area w orld market (MA T Q3-21) 10 m Ca ncer is the s econd lead ing cau se of deat h globa l ly wit h nea rly 10 mil lion people los ing t heir l ives t o can cer i n 202 0. 1 in 2 pe ople w il l be di agno sed w it h some f orm of c anc er dur i ng the ir li fet ime . Cost s ass oci ated w ith ca nce r place a he av y econo mic bu rden on s ocie tie s, wit h a n es ti mate d globa l tota l cos t of $1.16 tr il lion i n 2010. Ou r st rateg y in O ncolog y We stri ve to push th e boun dari es of sci ence to cha nge the p rac tice of me dici ne and tra nsfo rm the live s of pati ents li ving wit h ca ncer. With thi s visio n in mind, we f ocus on four strat egic priorities: 1 . Scie ntiﬁc p lat forms t hat wor k in two ways – ta rgetin g canc er ce lls dire ctly a nd activating the immune s ys t e m . W e use monotherapy and combination approaches to dri ve deep er , m ore dur able re spo nses: a. T umo ur drive rs an d resi stan ce – ta rgetin g the genetic mutations and resistance me chani sms th at enab le can cer c ells to evade t reatm ent, su rv ive and pr olife rate. b. DN A dam age res pons e (DD R) – targ eting the D NA rep air pr oces s to bloc k canc er cells ’ ability t o reproduce. c. Ant ibody d rug c onjug ates (A DC) – delivering highly potent cancer-killing age nts dir ectl y to canc er ce lls via a linke r att ache d to a targ eted an tibod y . d. Epigenetics – identifying changes in how the g enom e is expre sse d in can cer a nd devel oping d rugs to t arge t key vulnerabilities generated by these changes. e. Immuno-oncolo gy (IO) – activating the bo dy’ s ow n immun e system to h elp ﬁght can cer . f. Cell therapies – harnessing living cells to target cancer . 2. Advanc ing tre atmen t in the ea rly st age s of ca ncer w here t he grea test op por tuni ty for c ure exis ts and b uildin g exper ti se and lea der ship in key tu mour t ype s. 3. Integr ating patient-centric innovation into our programmes through par tnerships that will le ad to permane nt c hanges in healthca re, in cluding blood-based screening, computational pathology , ctDNA testin g, d igital health and data science/ AI. 4. Delive ring a cros s our glo bal foo tprin t to make c ance r ther apie s availab le to ever y eligible and appropriate pat ient. F ul l det ai ls a re giv en in t he D evel opmen t Pi pel ine S uppl ement o n our w ebs ite, ww w .astra zen eca.com/annualreport2 02 1. Key m arke ted produc ts Se e full pr oduc t infor matio n in Patent E xpir ies S upple ment o n our web site, ww w .astrazeneca. com / annualrepo rt 2 021 . Pr oduct Disease Tot al Re venue Co mme nt ary Tag ris so (o simertinib) Lung ca ncer $ 5, 015m , up 16 % (13 % at CE R) Ap prove d in 6 4 cou nt rie s for t he adju vant t re atm ent of pat ien ts w ith e arly -st age E GF R-mut ated ( EG FR m) N SCL C an d in 91 co unt rie s for b oth t he 1s t- and 2 nd- li ne tr eat ment of ad van ced E GF Rm N SCL C. Lyn par z a ( ol ap arib ) Ovarian cance r Bre as t can cer Panc reatic cance r Prostate ca n cer $ 2 ,74 8m , up 2 3% (21% at C ER) Ap prove d in 8 6 cou nt rie s for t he tr eat ment of a dva nce d ova ri an c anc er. It ha s al so be en app rove d in 8 4 cou nt rie s for t he tr eat ment of g BRC Am , hum an ep ider ma l gro wt h fa ctor re cept or 2 ( HE R2 )-n egat ive m eta sta tic b rea st ca nce r and in 6 8 co unt rie s for t he tr eat ment o f gBRC Am m eta st atic pa ncr eat ic ca nce r . I t is now a pprov ed i n 70 cou nt rie s for t he tr eat ment of m eta st atic c ast rat ion -re sist an t pros tat e can cer. Imnz i (du rv alu ma b) Lung ca ncer Bladder cancer $2,412m, up 18 % (16% at C ER ) Ap prove d in t he cu rat ive -i ntent s et ti ng of un re sec ta ble , St age I II N SC LC a fte r che mora diot her apy i n 7 4 c oun tr ies. A lso ap prov ed i n ES -S CL C in 6 3 cou ntr ies a nd fo r prev iou sly t reat ed pat ient s wi th ad van ced b ladd er ca nce r in 17 cou nt rie s. Calquence (a calabrutin ib) Ma nt le cel l lymphom a (MC L) Ch ronic lymphoc ytic leuk aemia (CLL) $1, 238m , up 13 7% (13 6% at C ER) Ap prove d for t he t reat ment o f CL L in 70 c oun tr ies. A l so app rove d for t he tr eat ment of p ati ents w it h MCL w ho hav e re ceiv ed at le ast o ne pr ior t herap y in 3 4 cou ntr ies . Enher tu (tr astuzumab deruxtecan) Bre as t can cer Gastric cancer $ 214m , up 123% (12 3% at C ER ) Ap prove d in m ore t han 4 0 co unt rie s for H ER 2 -po sit ive un re sec ta ble , loca ll y adva nce d or me tas tat ic br eas t can cer fol low ing t wo or m ore pr ior a nti -H ER 2- bas ed re gi men s. Ap prove d in s ever al c ount ri es for lo ca lly a dva nce d or met as tat ic H ER 2- pos itiv e gas tr ic or ga st roe soph agea l ju nct ion ade noc arc ino ma fol low ing a p rior t ra st uz uma b -ba sed r egi men . Koselugo (s el umetinib ) Neuro bromatosis type 1 pl exiform neu ro br oma s ( PN ) $10 8m , up 18 5% (18 6% at C ER) Ap prove d in t he US a nd t he EU f or th e tre atm ent of pa ed iat ric pat ien ts two ye ars of age an d o lder wi th neu ro bro mato sis t yp e 1 (N F1) who h ave sy mpt omat ic , inop era ble P N. Or pathys (s av oli tinib) Lung ca ncer $16 m Ap prove d in C hi na for t he t reat me nt of NS CLC w it h ME T exon 14 sk ipping alterations. Ot he r prod uct s Zolade x (goserelin ac etat eimpl ant ) Prostate ca n cer Bre as tcan cer $96 6m, up 3% (d own 1% at CE R) Arimide x (anastrozol e) Bre as t can cer $139m, down 2 5% (2 7% at C ER) Faslodex (fu lves tra nt) Bre as t can cer $ 431 m, down 26 % (2 7% at C ER) Casode x / Cosudex (bic alutam ide) P rost ate c anc er $14 3m , down 17% (21% at C ER) Ires sa (ge tinib ) Lung ca ncer $183 m, down 32 % (35 % at CE R) Ot hers $50m, u p 1% (dow n 1% at CE R) 17 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Di sea se A rea R evi ew / O nco log y 2 021 rev iew – st rateg y in ac tion 2021 saw st rong gr owth, u nder pinn ed by positive data news ﬂo w acros s ou r late -stage pipeline assets. Lung cancer Scientiﬁc advances are strengthening the pote ntial of o ur me dicine s to off er cur e and lon g-ter m sur vivor ship in l ung ca ncer w ith a foc us on ea rly de tecti on and p reci sion me dicin e. W e are l eade rs in dr iving a s tage shift at diagnosis, through adv ocacy for acc ess to l ung ca ncer s cree ning, b ioma rker tes ting an d improve d quali ty ca re. > T agrisso has b een u sed to tre at mor e than half a million patients worldwide with EGFR -mut ated NSC LC . T agrisso co nt inues to be inve stiga ted acr oss st ages a nd treatment set tings, and in combinations as a p otentia l mean s to addre ss tum our mechani sms of re sistance. > Imﬁnzi is being e x plored in c ombinations and bey ond its established lung cancer ind icati ons in un rese cta ble St age III NS CLC and ES -SC LC . In 2021 , we a nnou nced po sitive re sult s for Imﬁnzi with tre melim umab in S tage I V NSCLC, an d with no vel immunot herapies oleclumab or monali zumab i n unresectable Stage II I NSCLC . > Enhertu continued to show potential as the ﬁ rst HE R2-dir ecte d ther apy to show a str ong tum our res pons e in pati ents wi th HER2-mutant and HER2-overexpressing met ast atic NSC LC with re sults f rom the DEST INY -L ung 0 1 P hase II t rial. > Savolitinib re ceived its ﬁrst global regulator y app roval in Ch ina und er the b rand n ame Or pathy s in NSCLC pa tient s with ME T exon 1 4 sk ippin g alter ation s. Savoli tinib is a n or al, poten t and hig hly se lect ive MET tyro sine kinase inhibitor being in vestigated in collaboration with HUT CHMED. > Dat opotamab d eruxtecan, an anti- tro phobl ast ce ll sur fac e antig en 2 ( TROP 2)- dire cted A DC, ini tiated n ew tria ls in lung cancer: TROPION-Lung 08 in patients who se dis ease i s not dri ven by acti onab le genomic alterations, and TROPION-Lung01 , a Pha se III he ad-to- head t rial ve rsus doceta x el in patients with adv a nced NSCL C. Breast cancer We are exp andin g into new su bty pes of breast ca ncer and aiming to b ring impactful the rapi es whe re the re is mor e oppo rtu nity for cure. > Full res ults fr om the O lympi A Phas e III tri al sh owed L ynparza reduced the risk o f cancer re curre nce by 42% in the a djuvan t treatm ent of patients wit h germline BRCA-mutated high-risk early breast cancer . > Full res ults fr om the he ad-to -hea d DEST INY -B rea st03 Ph ase III t rial s howed Enhertu red uce d the ris k of dise ase pro gres sion o r deat h by 7 2% in patie nts with HER2 -positive metastatic breast cancer versus trast uzumab emtansine ( T- D M 1) . Enhertu was g rante d Brea kth rough Therapy Designation and Priority Review b y the US F D A in Oc tober 20 2 1 and J anua ry 2022 r espe ctive ly , for th ese pa tient s. Blood cancer s Calquence , our next -gener ation B rut on’ s t yrosi ne kina se inh ibitor ( BTKi ) , i s now the the rapy of ch oice fo r more t han 40% of patients initiating a BTKi treatment in 1 st-line CLL i n the US. Re al wor ld safe ty dat a is sup por ted by th e data fr om the ELE VA T E-RR Phase III head-to-head trial in prev iously tre ated CL L, whi ch both s how les s cardiovascular t oxicity and few er dis conti nuatio ns due to a dvers e events th an other commonly pre scribed BTKi treatments. Prostate cancer It is a n ew era of p ers onali sed me dici ne in advan ced prostat e cancer wit h L ynparza mon other apy as a 2nd -line t reatm ent for cer tain patients w ith advanced disease based on th e PROfou nd Phas e III tri al. We are now expanding into the 1 st-line setting with combinations, allowing us to re ach a broad population of pat ients regardless of biomarker st atus an d offe ring h ope for p eopl e livin g with this a ggressive disease. > L ynparza in combination with standard-of- ca re abir atero ne dem onstr ated a statistica lly s igniﬁcant and clinically meaningful improvement in radiogra phic progression-free survival v ersus abiraterone alone as a 1 st -line treatment f or patients with metastatic castration-resistant pro state c ance r with o r withou t homologous recombination repair (HRR) gene mutations in the PROpel Phase III trial. Gastro int e stinal ( G I) c ancers With positiv e results across mult iple medicines and a robust dev elopment programme, GI cancers hav e become a new c ritic al are a of grow th. > Enhertu demonstrated a clinically meaningful and dur able response in patients with HE R2-positive advance d ga stric c anc er in the D ESTINY - Ga stri c02 Phase II trial . Additional trials are ongoing in gast ric and colorectal cancers. > Posit ive resu lts fro m the HIM AL A Y A Pha se III tri al showe d a singl e, high p rimin g dos e of trem elimu mab ad ded to Imﬁnzi dem onst rated i mproved ove rall s urv ival (OS) versus sorafe nib in 1 st-line unresectabl e hepatocellular carcinoma (HCC) . > Posit ive resu lts fro m the TOPAZ - 1 Ph ase III tri al sh owed Imﬁnzi plus chemo therapy improved OS versus chemotherapy alone in 1 st-lin e advan ced bi liar y tra ct can cer . > We conti nue to test Imﬁ nzi in var ious combinations in other GI cancer settings. Follo wing completion of the Alexion acquisition, we rea ligne d our po rt foli o. With ef fec t from 1 Jan uar y 2022, we move d our ra re dise ase medicine K oselugo from our O ncology Bus ines s Unit to ou r Alex ion Rar e Dise ase Group. This realignment combines Alexion and A stra Zen eca’s exper tis e in rar e disea ses , in co llabo rati on with M SD, to reach m ore patients impacted b y the rare disease NF1 . Ou r robus t pipel ine acro ss ca ncer s Ou r diver se por t folio an d pipe line encompas ses molecules and modalities de signe d to kill c ance r cell s prefe renti ally , at ever y st age of th e dise ase ac ross m ultipl e ca ncer t ype s. We are exp andin g our dis cover y capabilities t o explore ne w targets and r apid ly progres s the most promis ing p rogrammes, including potential ﬁrst- and best-in-clas s treatments. We are: > Inv e sting heavily in IO , inclu ding novel bispeciﬁc antibodies and other checkpoint inh ibitor s, as wel l as cel l ther apie s. > Advan cing nex t wave DDR a sse ts incl uding P A RP1 sel ecti ve agent s. > Accelerating ADCs including our proprietary as set A ZD820 5 (B7H4) into the cli nic. > Exploring combinations focusing on complementar y mechanisms t o drive deepe r treatment respo nses. F ul l det ai ls a re giv en in t he D evel opmen t Pip eli ne Supplement on our website, ww w . astra zeneca.com / annu alre port2021 . 18 A str aZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 St ra tegic Repor t Disease A rea Re v i ew O ncolo g y c ont inu ed B i o P ha r ma ce u t i ca ls W e wa nt to cha nge the l i ves of bi llions of people l iving w it h chron ic dis eases for the b ette r , ena bli ng them to live l ife w i t ho ut li mits . W e are addr essi ng some of the biggest hea lthc are cha lleng es faci ng hum an k ind by fol lowi ng the scienc e to uncover a nd ta rget t he dr i vers of t he most com mon ch ronic d iseas es. Ou r am bition is to stop t he progr ess of t hese of ten degenerat ive, debil itat ing and li fe -t hreate ni ng cond itions , ach ieve rem ission a nd, one day , cu re the m. BioPha rm aceut ica ls is re spon sible for Car diovasc ula r , Ren al & Met abol ism and R espirator y & I mmu nolog y . For more infor mation, see Accel erat e Innov ative Sc ienc e fr om pag e 31 an d Del iver G row t h an d The rapy A re a Leaders hip from pa ge 35. W e h a ve a r elentles s f ocu s on developi ng a nd deliver i ng in novat ive, li fe -c ha ngi ng medic ine s and s o lutions for t he mi ll i on s of p eople a ec ted by t he complex spe ct ru m of car diovasc ula r , ren al and met ab olic ( C VR M ) di seases – so t hey ca n live li fe wit ho ut li mits . P roduc t Sa les $ 8 ,02 0m up 13% (10 % at CE R) 2020: $7 ,096m 2 019 : $ 6 , 9 0 6 m P roduc t Sa les $ 6,0 3 4m up 13% ( 9% at CE R) 2020: $5, 35 7m 2 019 : $ 5 , 3 91m Card io va scula r , Rena l & Meta bo lism Re spir ator y & I mmu nolog y Ou r bold am bition is to rew r ite the f utu re of respirator y a nd immu no log y cond ition s, evolv ing f rom pu re sy mptom control to d iseas e mod icat ion, rem ission a nd, one day , cu re. 19 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Di sea se A rea R evi ew / B ioPh ar mac eut ica ls Disease A rea Re v i ew Ou r st rateg y in C V R M Ou r ambit ion is to sto p , rever se an d cure CVR M disea ses by m axi misin g the valu e of our medicines, delivering inno vative solutions and a dvanc ing our p ipeli ne to tran sfor m CVR M care. We do th is by: > Unr av elli ng the un derl ying c ause s of thes e dis ease s by iden tif ying nove l targ ets linke d to dis ease b iolo gy to crea te the nex t generation of medicines. Unme t me dica l n eed and worldma rket C VR M d ise ase s are t he lea di ng caus es of deat h ac ross t he glob e, ki ll ing m ore t han 2 0 mil lio n peop le each y ear. Cu rr entl y the re ar e: 5 37m people l ivi ng wit h dia bete s. 6 4m pe ople liv i ng wit h hea r t fai lur e (H F ). 84 0m people l ivi ng wit h ch ronic k idney disease (CK D ). 2 021 ove r vie w > Far xi ga was the primary gro w th driv er w ith c hro nic k idne y dis eas e (CK D) adde d to t he la bel . > Lokelma se cu red la be l ex tens ions to in clude pat ient s wit h hy perk al aem ia (H K ) on ha emodialysis. > Ou r pipe li ne rema in s st rong, we ll ba la nce d a nd grow s wit h ex is ti ng produc ts , LC Ms and mu ltiple NM Es . > Driving a precision medicine approach that enables us to de velop diagnostic s t rategies and m ore ef fec tive tre atmen ts by focu sing on th e right p atien ts for a sp eciﬁ c ther apy . > Devel oping a p ipeli ne that go es beyo nd sma ll mol ecule s, mA bs an d pepti des to inc lude new m odal ities s uch as oligonucleotides, mRNA and cell ther ap y , and a lso se eks to dr ive value b eyond the ﬁrst indication. > Pursuing r eal-world evidence programmes tha t improve un der stan ding of di seas e epidemiology and burden, treatment ef fec tivene ss an d safet y , an d heal th economic s. > Bringing medicine s to market more quickly thr ough ou r CVRM Cli nica l T ria ls of the Fut ure programme. F ul l det ai ls a re giv en in t he D evel opmen t Pi pel ine S uppl ement o n our w ebs ite, ww w .astra zen eca.com/annualreport2 02 1. Key m arke ted produc ts Se e full pr oduc t infor matio n in the Pate nt Exp irie s Supp leme nt on our we bsite, ww w .astrazeneca. com / annualrepo rt 2 021 . Pr oduct Disease Tot a l Rev enu e Co mme nt ary Far xiga / For xiga (d apa gliozin ) Ty pe-2 dia be tes (T 2D) Ty pe- 1 diabetes (T 1D) He ar t fa ilu re wi th reduce d eje ction frac tion (H FrEF ) Ch ronic kidne y disease (CKD) $3, 005m, down 23 % (2 3% at C ER) Ap prove d in o ver 10 0 cou ntr ies t o impr ove gly cae mic co ntro l in adu lt pa tie nts w ith T 2D a nd for H F rEF i n pat ient s w ith a nd w itho ut T2 D. Fi rst- in- cl as s appro val f or CK D i n pat ien ts w ith a nd w itho ut T2 D in t he US , EU, U K , Japa n and othe r count ries. Br ilinta / Br ilique (ti cag relor) Acute corona ry sy ndromes (ACS) $1,47 2m, down 8% (10% a t CE R) Ap prove d in o ver 115 c ount ri es for AC S an d in 8 0 cou ntr ies for h igh -ri sk pat ien ts w ith h ist or y of hea rt a tt ack . Appr ove d in t he US to red uce th e r is k o f a r st hea rt at ta ck or st roke in h igh -ri sk pa tie nts. Bydur eon (exenat ide XR injec table suspension) Ty pe-2 dia be tes $385m, down 14% (15% a t CE R) Onglyza (sa xagl ipt in) Ty pe-2 dia be tes $360m, down 37% (2 6% at C ER) Roxa dustat A nae mia o f CK D $180 m, up 493% (4 48 % at CE R) Lokelma (sod ium zirco nium cy clos ili cate) Hyp erkalaem ia $17 5m , up 13 0% (13 0% at C ER ) Ap prove d in 47 c oun tr ies. L a bel e xte nsi ons se cu red i n 45 c oun tr ies i nclu din g pat ient s on hae mod ia lysi s. Byet ta ( e xenatide inje ct ion) Ty pe-2 dia be tes $55m , down 2 5% (2 4% at CE R) Ot he r prod uct s Cre stor (rosuv astat in ca lcium ) Dys lipidaemi a Hy p er- choles terolaem ia $1,0 98m , down 7% (10% a t CE R) Seloke n / Top rol -XL (metoprolol suc cin ate) Hype rtension Hear t failure Angina $953m , up 16 % (11% at CE R) Atac and / Atac and HC T /Ata cand Plus (cand esarta n cile xiti l) Hype rtension Hear t failure $97m, down 6 0% (6 0% at C ER ) Ot hers $196 m, up 3% (down 2% at C ER) Diabetes $114.2bn High blood pr essure $37.5bn Abnormal levels of bl ood cholest erol $17.7bn CKD $10.4bn Thrombosis $7.4bn CKD associated $6.5bn Other CV $52.2bn Hyperkalaemia $0.6bn $229.6bn Disease area w orld market (MA T Q3-21) Annual worl dwide market v alue Card io va scula r , Rena l & Meta bo lism A str aZ ene ca foc use s o n s pec i c s eg ment s w ith in t his ov era ll di sea se ar ea mar ket. Sa les f or CK D ($10. 4 bil lion ) and C K D- as soc iate d an aem ia ($ 6. 5 b il lion) f al l o utsi de t he C VR M tot al ma rket . A ll sa les for CK D -a sso ciat ed an aem ia ($ 6. 5 b il lion ) f al l wit hi n the CK D ma rke t a nd shou ld not be doub le-c ounted. C VR M di sea se are a worl d m ar ket tot al ex clud es sa les f rom the H IF- PH I + E SA ma rke t. 20 Ast ra Ze nec a An nua l Rep or t & F or m 20 -F I nf orm ati on 20 21 St rategic Report Dise ase A rea Rev iew BioPh a r m ac eut ic a ls co nt inue d 2 021 rev iew – st rateg y in ac tion Cardiovascular disease Wit h an amb ition to e limina te CV resid ual ri sk and s top dis ease p rogr essi on, we are m akin g a dif fer ence fo r patie nts wit h Brilinta a nd developing a next - generation PCSK9 inhibitor . In 2021 , Br ilin ta rece ived exp ande d use in th e US beyo nd car diovas cular d isea se to pati ents wit h mild-to -mod erate s troke. Ad dition ally , res ults f rom ALE THE IA, a n obse rva tiona l tria l in pa tient s with a his tor y of hea rt a tta ck bein g tre ated wit h Brilinta 6 0mg i n a real -world setting, showed bleeding rat es remained low overa ll and r einfor ced th e role of Brilinta in this patient population. Posi tive Phas e IIa res ults f rom the EPI CCURE tri al, the ﬁr st cli nica l trial to i njec t naked m RNA directly into the heart of patients undergoing ele ctive c oron ar y ar ter y bypas s surg er y , dem onst rated t hat A ZD86 01 met the p rima ry endpoint of safety and tolerab ility in patients wit h hear t fa ilure. Phase I results for monthly administered A Z D8233 demonstrated that the therapy was g ener ally s afe and we ll toler ated an d re duce d PCSK9 leve ls by up to 95% and LDL - C level s by more th an 70 % over the entire dosing interval. Hear t failure In 2021 , Fo rx iga gaine d a not her major market approval in China with continued launche s in HFrEF c ontri butin g to stron g grow th for the br and in 2021 . T he la rge ra ndomi sed DE LIVER Pha se III tri al, evalu ating Fa rx ig a in heart fai lure wit h pres er ved eje ctio n frac tion (HFpEF ), is exp ecte d to read ou t in the ﬁr st hal f of 2022. HF pa tient s are of ten pr escr ibed l ife- saving renin-angiotens in-aldosterone system inh ibitor s, whi ch lead to e levated p otas sium level s. The se pati ents h av e an in crea sed r isk of deve lopin g HK, a se riou s cond ition cha rac teris ed by eleva ted pot assi um levels i n the blood associated with cardio vascular , renal and metabolic diseases, which can be life threat e ning if lef t unt reated. F or the ﬁrst time, a globally recognised cardiology gui delin e, the 2021 Europ ean S ocie ty of Cardiology-HF guidelines, listed no vel K + binder s, including Lok elma , as op tions to manage HK. Renal diseases CKD i s a prog ress ive dise ase th at can event ually l ead to en d-st age ki dney dis ease (ESK D), with the p otenti al for dia lysi s and serious life-threatening complications. Based on la st yea r’ s gr ound -bre aking DA P A- CKD Pha se III tri al res ults, Fa r xig a was a ppr oved in the U S, EU, UK and Ja pan fo r the tre atmen t of CK D in patie nts wi th and wi thout T 2D . Roxad usta t is an or al hypoxi a induc ible fa ctor pro lyl hydrox yla se (HIF- PH) inhi bitor th at has the p otentia l to tran sfor m the lives o f peop le livi ng with a naem ia of CKD, bot h on dial ysis and n ot on dia lysi s. Roxadu stat is t he ﬁrs t HIF-PH inhibitor currently approved in China, Jap an, Chil e, Sout h K ore a and in th e EU unde r the n ame Evr enzo fo r the tre atmen t of anaemia in CKD in non-dialysis depende nt (NDD) and d ialysis-dependent (DD) adult pati ents . In the thi rd quar ter o f 2021 , the US Food a nd Dr ug Admi nistr ation ( FDA) iss ued a com plete re spo nse let ter (CR L) reg ardin g the n ew drug a pplic ation ( NDA) for r o xadu stat for th e treat ment of a naem ia of CKD, in b oth ND D and DD a dult pat ients . The CR L re ques t ed a n addit ional c linic al tri al on the saf ety of r o xadu stat . Astr aZe neca i s worki ng wit h its col labo rator Fib roGe n, and t he FDA to evalu ate next s teps. R o xadu stat i s also i n clinical dev elopment for anaemia associated with m yelodysplastic syndrome and for chemotherapy-induced anaemia. Peop le livi ng with CK D are at a n incr ease d risk of de veloping HK. The evidence ge nera ted fro m the CRYST ALI ZE prog ramm e will provide insights into p atient - centric ma nagem ent of HK w ith Lok elma , includin g the Ph ase III D IALIZ E-Ou tcome s tria l to evalu ate the ef fec t of L okelma on arr h ythmia- rel ated CV ou tcome s in pati ents on c hron ic hae modi alysi s with re cur rent HK . In the fo ur th qua rte r of 2021 , As tra Zene ca was gr anted Fast T rack De signat ion in the US for the inv estigation of L okelma in the DI ALIZE- Ou tcome s tria l. The Pha se III ST A BILIZE C KD tri al will eva luate the e ffe ct of Lokel ma on CKD p rogr ess ion in pat ient s with CKD a nd HK or a t risk of H K. T o he lp addre ss the u nmet m edic al nee d in CKD, we a re explo ring th e clinic al sci enc e behind our medicine s with D ELIGHT , an expl orato ry Ph ase II /III tr ial, al so par t of the DapaCare programme. T he trial ev aluat es the pot ential albuminuria-lowering effect of Far x iga in t he trea tment o f CKD an d T2D. ZENI TH- CKD, our Ph ase II tr ial of zi botent an and d apag liﬂozin i s unde rway fo r the tre atmen t of CK D patie nts, re ducin g mor tal ity a nd del aying p rogre ssi on to ESKD. We will al so be exp lori ng Zibo Dapa fo r the tre atmen t of cir rho sis with f eatur es of por t al hype rte nsio n. Metabolism Non-alcoholic steatohepat itis (NASH) preva lenc e is growi ng and i s a major p ublic hea lth bu rden. T he Phas e II PROXY MO tri al demonstrated that, on a background of acceptable sa fety , cotadut ide deliv ers signiﬁcant beneﬁts on hepatic fat fraction and amino transferases. It also delivers imp roveme nts in ma rker s of inﬂam matio n and ﬁbrosis in the target population of pat ients with biopsy -p ro ven non-cirrhotic NASH with ﬁbrosis. AZD4831 , a myelopero xida se inhibitor , has moved int o NASH following strong pre- clinical data demonstrating a reduction in inﬂammatio n a nd ﬁbrosis in a die t - induc ed NA SH mode l. In 2021 , t he indi catio n for For xig a was volun tar ily rem ov ed i n the EU for the t reatm ent of adu lts wit h insuf ﬁc ientl y contr olled T1D . This decision did not i mpact the indication out side th e EU and di d not impa ct othe r ap prove d For xiga indi cations within or outside the E U. T his de cision follo ws discussions wit h the EMA re gard ing pro duct i nform ation cha nges a fte r appr ov al fo r For xiga 5mg for T1 D. Th is was to add res s potenti al con fusi on among physicians treating patients with T2 D, HFrEF o r CKD. It was no t due to any new saf ety o r efﬁ cacy co nce rns in T1 D or a ny other ind icati on. In the EU, For xi g a received app roval for t he trea tment o f T2D in the paediatric population. Bey ond research We have mad e a long-te rm inves tment to imp rove CVRM pa tient c are thr ough a multi-disciplinary programme called Accelerate Change T ogether (AC T ) . ACT on HF a ims to imp rove lives by ha lving H F hospitalisations and improving ﬁv e - year sur vi val rate s b y 20% by 2024. T o d ate, approximately 1 40, 00 0 healthcare provider s and 2. 5 million p atien ts have be en pos itivel y impacted by the projec t. ACT on CK D see ks to tran sform k idney h ealt h and reduce the number of patie nts developing kid ney fail ure by 20% by 2025. Our e ffo rt s in 2021 res ulted i n 1 1 . 5 millio n patie nts be ing screened. A CT programmes ha ve been imp leme nted in m ore tha n 40 coun trie s. We als o invest in p rogr amme s to improve pati ent ac ces s. The se inc lude He althy H ear t Afr ica , which a ddres ses hy per ten sion an d the inc reas ing bur den of CV di sea se. For m ore i nfor ma tion , se e page 4 5. Add itiona lly , we h av e for med st rateg ic collaborations with healthcare innov ator s to fur the r unde rst and CV RM dise ase s, with the aim o f harnessing data, new technologies and d igita l hea lth to tra nsfor m the live s of pa ti ent s a nd clin ical p racti ce. Th is year , our digital health c ollabo ration s continu ed. Collaborati ons inc lude : > Eko Hea lth and U s2.ai in HF > Renaly t ix AI i n CKD > the NH S throu gh Impe ria l Colle ge Hea lth Partners (London, UK) on Discover -NOW , the H ealth D ata Re sea rch Hub fo r real wor ld evide nce in T 2D and HF . 21 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Di sea se A rea R evi ew / B ioPh ar mac eut ica ls / Car diov asc ul ar, Re na l & Met abo lis m Asthma $23.4bn COPD $18.7bn Other $35.7bn $77.8bn Annual worl dwide market v alue Disease area w orld market (MA T Q3-21) Chronic obstructive pulmonary disease (COPD ) Ou r ambit ion is to el iminate C OPD as a lea ding ca use of de ath by slow ing an d ultimately reversing the progressio n of the di sea se. Our s trate gy is to: > drive broad, early diagnosis and ﬁr st-line u se of the b est the rap ies to impro ve patient outcomes > modify disease th rough in vestment in therapies that repair the lung to hal t stru ctur al dam age an d lung function decline > stre ngthe n our a bilit y to moni tor progression Ou r st rateg y in R espi rator y & I mmu nolog y Ou r aim is to de fy th e natur al cou rse of disease, dri ve disease modiﬁcat ion and ultimately remission, so that patients can live life without limits. We will re alis e our amb ition by fo cusi ng on three core areas: > reaching more patients earlie r by driving broad diagnosis and accelerating access > slowi ng disease progression and driving rem issi on by tar getin g core di seas e drive rs > achieving greater efﬁcacy through new modalities and nov e l c ombinations. > target our medicines through no vel, enhanced diagnostics and endpoints that ena ble us to a ct ea rlier i n the dis ease . Asthma Ou r ambit ion in as thma i s t o eli minate exacerbations and achiev e clinical remission, even in p eopl e with th e most s evere as thma. We continue t o advance our inha led portfolio. This includes es tablishing our anti- inﬂammatory relievers as the backbone of ca re acro ss all s everit ies, in a dditi on to developing nov el biologics that deliv e r dise ase con trol an d allow re duc tion or eve n elimi nation of back g round m edication i n sev ere disease. Ou r rese arch p ushe s the bou ndar ies of Re spir ator y & I mmu nolog y Key m arke ted produc ts Se e full pr oduc t infor matio n in the Pate nt Exp irie s Supp leme nt on our we bsite, ww w .astrazeneca. com / annualrepo rt 2 021 . Pr oduct Disease Tot al Re venue Co mme nt ary Sy mbicort (budes onide/ formo terol) Asth ma COPD $ 2,7 28 m, st ab le at 0% (down 2% a t CE R) Con ti nued gl oba l volum e and v alu e leade rsh ip of t he in ha led corticosteroid/long-acting beta2-agonist (ICS/L ABA) class; de cli ne i n the E U an d Est ab lis hed R est of Wor ld pa rt ia lly o set by gr ow th in th e U S a nd Eme rg ing Ma rket s. Pr ici ng pre ss ure i s ex pec ted t o cont inu e in ma jor te rr itor ies s uch a s t he US , EU, Ch in a and J apa n. Fasenr a (benral izumab ) Severe asth ma $1, 258 m, up 3 3% (31% at CE R) Ac hie ved b lock bu ster s tat us a nd co nso lid ated it s po sit ion as t he le adi ng nove l biolo gic i n tot al a nd new t o bra nd pre scr ipt ion s in s eve re as th ma i n key ma rke ts a roun d the w orld . Pulmic ort (budes onide) Asth ma $962m , down 3% (8 % at CE R) I n-ho spit al p aed iat ric u se of ne bul is ed Pulmic ort in Em ergin g Ma rke ts cont inu ed to be sign i ca ntl y a e cte d b y C OV ID -19 in t he rs t ha lf of the ye ar and by t he im pleme ntat ion of volu me -ba sed p roc ure ment f or th is fo rmu lat ion i n Chi na i n t he fou rt h qu ar ter. Dal iresp / Daxa s (roum ilast) COPD $227m , up 5% (4% at C ER) St ab le sa les d riv en by t he US , wher e a 20 21 pr ice i ncre ase o set sl ight ly lower de ma nd. Brezt ri (budes onide/ glycopyr rolate/ formo terol) COPD $20 3m, up 6 37% (6 23% a t CER ) New l aun che s acro ss 14 co unt rie s. S ale s acc eler ated i n Japa n fol low ing R yot an ki l if t in t he fou rt h q ua rte r of 20 20 . St rong sa les a nd m arke t lead ers hip i n Ch ina f ollo wi ng inc lus ion on t he Nat iona l Rei mb ur seme nt Dr ug Li st . St rong p erf orm anc e in t he U S, ex cee di ng com pet itor s’ tot al p res cri ptio ns up ta ke in t he rs t si x m ont hs fro m l aun ch, on a ti me- al ign ed bas is. Beve spi (glycopy rrolate/ formo terol) COPD $54m, up 12% (12 % at CE R) La unc hed i n 18 cou nt rie s to dat e, in clud ing I ta ly in M ay 20 21. Saphnelo ( anifro lumab ) SLE $8m Fi rs t-in -c las s appr ova l in t he US a nd Japa n for t he t reat me nt of mo dera te to se vere S L E. Re com men ded fo r appro val i n th e EU a nd u nder r eg ul ator y rev iew f or SL E in ot he r cou ntr ies worldwide. Source: IQVI A. A str aZ ene ca foc use s o n s pec i c s eg ment s w ith in t his ov era ll di sea se ar ea mar ket. Unme t me dica l n eed and worldma rket 550 m Nea rly 550 m il lion people worldw ide live w ith c hro nic re spir ator y dis eas e. U p to 1 0 % of pat ient s wit h as th ma hav e sever e as th ma a nd acc ount for ap prox imat ely 50 % of as th ma- rela ted co sts . 1 in 1 0 Ch ron ic obs tr uct ive pu lmo nar y d ise ase is t he th ir d lead ing cau se of de ath wo rldwid e, a ec ti ng o ne i n 10 p eople over th e age of 40. 5m At lea st ve mi ll ion peopl e wo rldwid e hav e a form of lup us, ye t only t wo new t reat ments fo r sys temi c lupus ery thema tosus ( SL E) hav e bee n appr oved i n the l ast 6 0 yea rs . 2 021 ove r vie w > T he resp irato ry m arke t has b een pa r tic ula rly a ec ted by COV I D-19 due to respirator y physician s f ocu sing on t he pa ndemi c, a re duct ion in p atie nts att ending ho spital v isits a nd self-is olation re duci ng exac erbat ion rate s. > Des pite ongoing c hal lenges cre ated by the COV I D-19 pan demi c, ou r Pro duct S ale s g rew by 13 % (9% at C ER). K ey gr owt h d rive rs were Fasenra (ben rali zum ab) , S ymbicor t (bude sonide/for moterol) and Brez tri ( budesonide / glycopy rrolate/ for moterol). > Te zs pir e (teze peluma b ) wa s a ppr oved f or t he tr eatm ent of seve re as th ma i n the U S. > Saphn elo ( an if rolu ma b) was appr oved for t he tr eatm ent of SL E in t he US , Japa n a nd als o rec eived r ecom mend atio n for appr oval i n th e EU. > PT 027 (albuterol / budesonide) demonst rated positive high-level resu lts in t wo Ph ase I I I tr ial s in a st hma . 22 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report Dise ase A rea Rev iew BioPh a r m ac eut ic a ls co nt inue d dis ease c ontro l in unc ontro lled seve re ast hma by combining precision medic ines with new delivery modalities. Immunology Ou r ambit ion is to di srupt i mmuno logy by focusing on areas o f high unmet medical need in rheumatology , gastroenterology and dermatology to dr iv e clinical remission and event ua l ly cure . We have be en tar getin g a variet y of dis eas es whe re ty pe 1 inte rfe ron pl ays a role wi th rec ent app rovals in t he trea tment o f SLE an d purs uing programmes in cutaneous lupus ery t hematosus , lup us nep hriti s and myos itis. We ar e also targeting diseases in gastroenterology , such as ulcerative colitis and Crohn’ s disease, whe re IL -23 and T h 1 7 pl ay a role. We are also advancing immune therapies whe re they s hare co mmon p athways or biological mechanisms (for example, eosinophilic/ epithelial immune d y sfunction disorders) with respiratory diseases. F ul l det ai ls a re giv en in t he D evel opmen t Pip eli ne Supplement on our website, ww w . astra zeneca.com / annu alre port2021 . 2 021 rev iew – st rateg y in ac tion Asthma In 2021 , Symbicor t launched in China as the ﬁrst dual-combination therap y appro ved f or mil d, mode rate an d severe di seas e. The anti-inﬂamma t o ry reliever indication has been app roved in 4 3 count ries . Our second anti-inﬂammat or y relie ver , PT027 , is a pot e ntial ﬁr st -in -class shor t -acting beta2-agonist ( a l buterol)/ICS (budesonide) res cue tr eatme nt for as thma in t he US. Positiv e high-level results from the MAND A LA and D ENA LI Phase I II tria ls showe d PT027 met all primar y endpoints, demonstr ating statistically signiﬁcant beneﬁts in patients with asthma versu s individual components albuterol and budesonide. Brez tri , o ur trip le the rapy , i s being s tudie d in as thma , and re crui tment i n two Pha se III pivot al tri als, K A L OS an d LOGOS, i s ongoi ng. Fasenra , ou r ﬁrs t respi rator y bi ologi c, is now app roved in ove r 65 cou ntrie s and ha s reached more than 1 00,00 0 patients with severe, e osinophilic asthma. Around half of all pat ients now self-administ er Fasen ra . Our patient support programme, Connect 360, increas ed enrolment by more than 60% in 20 2 1. In De cem ber 2021 , Te z s p i r e was a pprove d in the US f or the ad d-o n mainte nanc e treat ment of adult and paediatric patients aged 1 2 years and a bove with s evere as thma – th e ﬁrst a nd onl y biolo gic for s evere as thma to b e approve d without phenotypic or biomarker limitations. Ap proval wa s base d on res ults fr om the P ATHFIND ER clini cal tr ial pr ogra mme, inc ludin g posit ive resu lts fro m the Pha se III NAVIG A TOR tri al. Thi s followed t he gra nting of Pri orit y Review f or Te z s p i r e for the treatment of as thma by th e FD A in Jul y 2021 . COPD In Ja nuar y 2022, we in itiate d two Pha se III tri als, O BERON a nd TIT A NIA , of tozora kima b (MEDI3506), an inv e stigational , biologically dif fer entia t ed m Ab wi th dual p athway inhib ition ta rgetin g IL -33 in p atien ts with C OPD. Immunology In the s eco nd half o f 2021 , Saphnelo was app roved in th e US for th e treatm ent of ad ult pati ents w ith mod erate to s evere SLE w ho are r ece iving s tanda rd the rapy . It was a lso app roved in J apan fo r the tre atmen t of adult patients with SLE who show ins ufﬁcient respons e to currently av ailable treatment. Th ese ap provals we re bas ed on da ta fro m the Saphnelo clinical dev elopment programme, inc ludin g two TUL IP Phas e III tria ls and t he MUS E Phase I I trial. T hes e are the ﬁ rst re gulator y ap proval s for a ty pe I inte rfe ron re ceptor a ntag onist a nd the o nly new tre atmen t appr ov ed fo r SLE in m ore tha n 1 0 year s. In D ecem ber 20 2 1, the Euro pean Medicines Agency’ s Committee f or Medicinal Products recommended the app ro val of Saphnelo in the EU as a n add- on the rapy fo r the treatment o f adult patients with moderate to sev ere, a ctive autoantibody-posit ive SLE, despite receiving standard t herapy . Fasenra i s being i nv es tigate d in eigh t Phase I I and P hase II I trial s in eos inop hilic dis eas es beyon d severe a sthm a, COPD a nd chro nic rhinosinusi tis with nasal polyps. The se include atopic dermatitis, bullous pemphigoid, chronic spontaneous urticaria, eosinophilic esophagitis (EoE) , eosinophilic gastritis/ eo sinop hilic g astro enter itis (EG /EG E), eosinophilic granulomatosis with polyangiitis, hypereosinophilic s yndrome and non-cystic ﬁbrosis bronchiectasis. In Nove mber 20 2 1, the FDA gra nted Fasenra Or phan D rug D esig natio ns (ODD s) for the tre atmen t of EG and EG E as well as a Fa st T ra ck Des igna tion for EG w ith or wi thout EG E. In Oc tobe r 2021 , tezep eluma b was gra nted an O DD by the FDA for th e treat ment of Eo E. Respirator y infectious diseases Nirsevimab is the ﬁrst pot e ntial immunis ation to show p rotec tion ag ainst r espi rator y syn cyti al vir us (RSV ) in th e gene ral in fant pop ulati on in a Pha se III tri al and i s bein g devel oped by A stra Zen eca an d Sano ﬁ. Posi tive res ults fr om the MELO D Y Ph ase III tri al, rep or ted in Ap ril 2021 , s howed nirsevimab met its prima ry endpoint of a statistica lly s igniﬁcant reduction in the incidence of medically-a ttended lower res pira tor y trac t infec tions c ause d by RSV ver sus pl aceb o in hea lthy late p reterm a nd ter m infan ts (35 wee ks or mo re) durin g their ﬁrst RSV se ason . Nir sevim ab buil ds on the e fﬁ cacy of fere d by the cu rre nt sta ndard o f care, Syna gis (palivizumab) , which is indicated for high- risk infants and requires up to ﬁve m onthly inj ecti ons to cover a t ypi cal RSV s easo n. In Jun e 2021 , res ults fr om the MED LEY P hase II / III tr ial eval uating t he safe ty an d toler abilit y of nir sevim ab ver sus Synagis in infants with chr onic lu ng dise ase, c onge nita l hear t dis eas e and / or p remat urit y , an d there fore at hi gh ris k of RSV e nterin g their ﬁ rst R SV seas on, showe d a simil ar oc curre nce of t reatm ent emerge nt adverse events or treatment emergent seriou s adver se events between the two treatments. Early science Compounds in early -stage de velopment include A ZD 1 402, an inhaled Antica lin ® prot ein de veloped with our collaborat or P ieris Pha rmac eutic als fo r mode rate to seve re as thma an d a potent ial ﬁr st-in- clas s ora l the rapy A ZD571 8 FL AP , t arge ting a novel inﬂammat ory endotype in asthma. In ou r earl y rese arch a nd devel opme nt for immune-me diat e d dise ases, w e are focusing on th ose wit h great u nmet m edic al nee d. We ente red a lic ensi ng agre eme nt with F- Sta r Th erap euti cs, Inc., fo r exclusi v e acc ess to novel pre-clinica l STIN G in hibit ors to inv estigate their potential. 23 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report Di sea se A rea R evi ew / B ioPh ar mac eut ica ls / Resp ira tor y & Im muno log y R a re Di sea se On 21 July 2 021, we completed t h e acq ui sition of A le xion Ph ar maceu tica ls, Inc . and cre ated A lexion, A st ra Zeneca R are Di sease, a new d isea se are a w i t hin ou r compa n y . Ou r mis sion is to tra nsfor m the live s of p eople a ec ted by ra re di sease s and deva stat ing condit ions. By u ndersta ndi ng patients’ u niq ue nee ds, we ca n resea rch a nd develop in novat ive med icine s, suppor t acce ss and advoc ate for the ra re disea se c o mmun i t y . For more infor mation, see Accel erat e Innov ative Sc ienc e fr om pag e 31 an d Del iver G row t h an d The rapy A re a Leaders hip from pa ge 35. 2 021 ove r vie w > Ra re Dise ase T ota l Revenue gre w by 8% ( 9% at CE R) on a pro form a, pro rata basis 1 . > In t he US, s ales of S olir is bene ted f rom grow ing use i n neurolog y ind icat ions, ge nera lise d myast hen ia g ra v is (gMG ) a nd neu romyelit is optic a spe ct ru m d isorder (N MOS D ), o set by the succes sfu l c on version to U ltomir is i n haematolog i ca l in di cati on s par oxys mal n octurnal haemo g lobi n ur ia (PN H ) a nd at ypic al h aemoly t ic urae mic sy nd rome (a HU S). > Acq ui red Caelum Bioscience s a nd its lead ca ndid a te C A EL - 10 1, a potent ial rs t -i n- clas s t herapy for light cha in (A L) a my loidosis. > Repor ted po sitive Phas e II I resu lts for A L X N184 0 i n W ilson dis ease. > Repor ted po sitive Phas e II I resu lts for Ultomir is in gMG . A s a r esult , we  l ed for reg ul atory approval in the US, EU and Ja pa n. > Sec ure d an ex pa nsion of our approval of U ltomir is in t he US and EU to i nclude ch ild ren a nd adolescent s w ith PN H. > Disc on t inued CH A M PION-A LS , t he global Phase II I t ri al o f U ltomir is in adu lts w ith a m yotroph ic lateral sclero sis ( AL S) d ue to lack o f ec acy i n t hat disea se. P roduc t Sa les $ 3 ,0 70 m Rev enue in cludes A le xion s ale s f rom 21 Jul y 2021. Disease A rea Re v i ew 1 G row th r ates on R ar e Dis eas e med icin es hav e bee n ca lcu lat ed on a pro f orm a, pr o rata b asi s by com par in g po st-ac qu isit ion r evenu es fr om 21 Jul y 2021 t o 31 Dec em ber 2 021 w ith t he cor re spon di ng per iod i n the pr ior yea r, pre -ac qu isit ion a s prev ious ly pu bli shed b y A lex ion. P ro for ma , pro ra ta Tot al Re venue g row t h rates hav e bee n pres ente d for 20 21 Ra re Di sea se a rea a nd con st itu ent med ici nes , and d o not imp act G roup to ta ls. 24 A str aZ ene ca An nua l Rep ort & For m 20 - F In for mat ion 2 021 St rategic Report Ou r st rateg y in R a re Dise ase Alexion’ s pioneering legacy in rare diseases is ro oted in b eing th e ﬁrst to t rans late the complex biology of the complement syst em into transformative medicines. By driving innovat ive research and development across new di seas e targ ets an d moda litie s, we have diversiﬁed our pipeline int o additional rare dis ease s over the l ast seve ral yea rs. T o day , as par t of A stra Zen eca , we are buil ding b ridge s acr oss ou r scie ntiﬁc p lat forms w ith a foc us on bringing more innovative m edicines to people worldwide. Follow ing the c lose of t he acqu isiti on, we have evolve d our ra re dise ase s trateg y to focu s on three core prio rities : 1. Acce lera te by creat ing sma rt a nd ef ﬁcie nt str ategi es to spe ed ac ces s to our medicines for patients. 2. Innovat e by investin g in sci ence, p lat forms and capabilities, including using Astra Z eneca technologies and research capab ilities. 3. Reac h beyond our current geographic foot print to a s many ra re dis ease p atien ts as possible. Unme t me dica l n eed and world m arket 2 021 rev iew – st rateg y in ac tion Complement We have con tinue d to grow Ultomiris ’ leaders hi p position in our three largest ma rkets – the U S, Ger many an d Japa n – as we e stab lish th e medic ine as th e sta ndard of ca re (SoC) fo r both PNH a nd aHUS , two chronic and potentially life-threatening diseases that can lead to serious health complications inc luding organ da mage . Du ring 2021 , o ur advan cem ents have e nsur ed mor e patie nts will b e able to a cce ss Ultomiris , whi ch of fers a r educ ed dos ing fr eque ncy com pare d to Soliris . Ultomiris was app roved in 2021 for c hildr en and a dole scen ts with PNH in the U S and EU, expa nding o n its prev ious approvals for adults. Addi tiona lly , w ith the ap proval of Ultomiris 1 0 0m g/ml in Ja pan an d the ﬁlin g of Ult omiris subcutaneou s for mulat ion and device com binat ion in th e US, we are ma king f ur ther adva nces to l ess en the tr eatme nt bur den on patients. Ne urolo gy is a key grow th ar ea. T his is dr iven by our clinical development programmes as well a s the inc reas ed us e of Soliris by patients wit h gMG, a pr ogre ssive au toimmu ne neu romu scula r dise ase, a nd NMOS D , a n auto immun e disor der of th e cent ral ne rvo us syste m that af fec ts the o ptic ne rve a nd spinal cord. We comp leted e nrol ment in t he Phas e III tria l of Ultomiris i n NMOSD i n Marc h 202 1 and expe ct to have hi gh-leve l resu lts in 202 2 . In Jul y 2021 , we rep or ted the hi gh-l evel res ults of ou r Phase III t rial of Ultomiris in gMG. The tri al met i ts prim ar y endp oint of c hang e from baseline in the myasthenia grav is-activities of dai ly livin g proﬁl e total sc ore at we ek 26. As a res ult, we have ﬁl ed for r egula tor y appr oval in the US , EU and Jap an. We are al so expl oring t he abil ity to tr eat ea rlie r -li ne pati ents wi th gMG wit h AL XN1 720, an internally discovered potential third- generation C5 i nhibitor . Pending successful com pleti on of the Ph ase I tr ial, we inte nd to ini tiate a Pha se III tri al in gMG . W e l aunc hed a Pha se I pro gram me for AL X N 1820, an internally discovered bispe ciﬁc anti-properdin minibody . 4 0 0 mi ll i on people a round t he world are a ec ted by a r are di sea se, ha lf of whom a re c hi ldre n. > 7 , 000 ra re dis ease s ar e k now n to ex is t to day but on ly 5 % h ave tre atm ent s. 3 in 1 0 ch ild ren w it h a rar e dis eas e don’t l ive to se e th eir  ft h bir th day . Key ma rketed produc ts Se e full pr oduc t infor mation i n the Paten t Exp irie s Suppl eme nt on our we bsite, ww w .astra zeneca.com/annualrepor t202 1 . Pr oduct Disease Tot a l Rev enu e 1 Co mme nt ary Solir is ( eculizumab ) PNH aH US gMG NMO SD $1 ,8 74 m > Ap prov ed in n ear ly 50 c ount ri es for t re atme nt of pat ien ts w ith PN H , in clud ing t he US , E U and Jap an . > Ap prov ed in 4 0+ cou nt rie s for t reat men t o f a HU S, in clud ing t he US , E U and Jap an . > Ap prov ed in t he US as tr eat ment for gM G i n adu lts who ar e ant i-a cet ylc holi ne rec ept or ant ibo dy pos iti ve. > Ap prov ed in t he EU and Jap an as t rea tme nt for re fra cto ry gMG i n adu lts wh o a re a nti- ace tyl chol in e r ece ptor antibody pos itive. > Ap prov ed in t he US, E U, C an ada an d Japa n as tr eat ment for N MOS D in adu lts wh o a re an ti- aq uapo ri n- 4 ant ibo dy posit ive. Ultomir is (r avulizumab) PNH aH US $688m > Ap prov ed in 35 + cou ntr ies fo r t re atme nt of adul ts wit h PN H , in clud ing t he US, E U, Ca nad a and Jap an. > Ap prov ed in t he US and E U f or tre atm ent of ch ild ren a nd ado lesc ent s wi th PN H . > Ap prov ed in t he US , EU a nd Japa n f or tre atm ent of aH US . Stren siq (as fota se al fa) Hyp ophosphatas ia (H PP) $378 m > Ap prov ed in 4 0+ cou nt rie s, inc lud ing t he US, E U, J apa n an d Ca nad a. Ondex xya (an dex ane t a lf a)/ Ande xxa (co agu lat ion fac tor X a (r eco mbi na nt), inactiva ted-zhzo) Fac tor Xa in hi bit or reversa l agent $68m > Ap prov ed in t he U S und er th e acce ler ated ap prov al pat hwa y f or adul ts tr eate d wit h FX a in hi bit ors api xa ba n an d ri var oxa ba n. Cond it iona l appro val i n t he EU for adu lts t rea ted wi th F Xa in hi bito rs api xa ban a nd riv aro xaban. Kanuma (sebelipase al fa) Lysosomal a cid lipase de cie ncy ( LA L -D) $62m > A ppro ved in 4 0 cou ntr ies i nclud in g t he US , EU, Jap an an d Ca nad a. 1 Tota l Re venue i nclud es A lex ion sa les f rom 21 Ju ly 2 021. 25 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Govern ance Additiona l Infor mation Finan cial Statem ents Di sea se Ar ea Rev iew / R ar e D ise ase Beyond gMG and NMOSD , we are continuing ef for ts to expa nd the u se of our ex istin g medicine s into ne w diseases. Thi s includes add ition al clini cal tr ials of Solir is a nd Ultomiris in a nu mber of d isea se are as whe re the com plem ent pa thway is thou ght to play a rol e. A full li st of ong oing tr ials c an be found within the Dev e lopment Pipeline Supplement on our website, ww w .astra zeneca.com/annualrepor t202 1 . We discontinued CHA MP IO N-ALS, the global Pha se III tri al of Ultomiris in adu lts wit h ALS in Au gust 2021 du e to lack of ef ﬁc acy in that disease. Facto r D is a comp one nt of the co mple ment alte rnat ive pathway an d has a cr itic al role i n multiple complement-mediated rare diseases. T ar geting Fa ctor D ca n potent ially a ddre ss a wid e rang e of ther apeu tic ar eas of in teres t including haematology , nephrology and ophthalmo logy . AL XN 2040 an d AL XN205 0 are inves tigat ional, or al, Factor D i nhibito rs. A Ph ase III tr ial of AL XN 2040 as a n add- on the rapy fo r PNH patients with ex t ravascular haemolysis is und er way . We have init iated a Ph ase II tr ial of AL XN 2050 mon othe rapy in PNH p atien ts and pla n to initi ate proof- of-c once pt studi es in rare r enal d iseases. We have als o conti nued to p rogre ss ou r ef for ts to expa nd our r are di seas e focus beyon d comp leme nt with n ovel ass ets. AL amyloidosis AL amyloidosis is a rare disease in which misfolded amyloid proteins bui ld up in organs thr ougho ut the bo dy , in cludi ng the he ar t and kidneys, causing signiﬁcant organ damage and f ailur e that may u ltimate ly be fa tal. Alexion acquired Caelum Biosciences to advance and accelerate ongoing Phase III clin ical d evelop ment of CA EL - 101 , a pote ntiall y ﬁr st-in- clas s ﬁbr il-re active m Ab fo r the treatment of A L amyloidosis. C A E L - 1 01 is currently be ing evaluated in the Cardiac Amyloid Reaching for Ex t e nded Survival Pha se III clin ical p rogr amme i n combi natio n wit h SoC the rapy in A L amylo idos is. T wo par alle l Phase I II tria ls in pati ents w ith Mayo stag e IIIa and stage IIIb disease, respectively , are ongoing. T ransthyretin amyloidosis (A TTR) A T TR c ardio myopathy ( A T TR- CM) is a systemic , progressive and fatal condition t hat lea ds to pro gres sive he ar t failu re and hi gh rate of fat alit y with in four ye ars fr om diag nosi s. Alexion has entered into an ex clus iv e globa l col labo ratio n and lic enc e agre emen t with Neurimmune AG f o r NI 006, an in vestigational hum an mA b curr ently i n Phase I b develop ment for th e treat ment of A T TR- CM. NI0 06 speciﬁcally targets misfolded transthyret in and i s desi gned to d irec tly add ress t he pat holog y of A T TR- CM by ena bling r emoval of amy loid ﬁb ril de posi ts in the h ear t, wit h the potential t o treat pat ients with adv anced A T TR- CM. T he tran sac tion is exp ecte d to close followi ng satisfaction of customar y closing conditi ons and regulat or y clearances. Additionally , Alexion holds an ex clusive licence from Eidos Therapeutics to dev e lop and commercialise AL XN2 0 60 ( aco ramidis ) in Ja pan. Al exion is c ondu ctin g a Phase III br idgin g trial o f AL XN20 60 for p atien ts with A T TR- CM in Ja pan. Wilson disease Wil son dis eas e is a rare a nd pro gres sive ge netic c ondit ion in whi ch the b ody’s pathway for re movin g ex ce ss cop per is c ompr omise d. Damage from t oxic copper build-up in tissues and organs leads t o liv er disease, psy chiatric and/ or neurol ogical s ymptoms. AL XN1 8 40, a pote ntial ne w once da ily , o ral me dicin e that we are s tudy ing in Wil son disease, d emonstrated appr oxima tely three time s gre ater co pper m obilis atio n than So C tre atmen ts in the Fo Cus Pha se III tri al. Hypophosphatasia (HPP) We are progressing our next - generation alkaline phosphatase enzyme replace ment therapy into clinical trials, with the int e ntion of he lping m ore pe ople li ving wi th HPP . We laun ched a Ph ase I tr ial for A L XN 1 8 50 in ad ult pati ents w ith HPP . Factor Xa bleeds In Oc tobe r , Alex ion rec eive d a Compl ete Re spons e Let ter fro m the FDA for it s sBL A for And exxa , whi ch exte nded th e indic ation to inc lude pa tient s treate d with e doxaba n or enoxaparin when re versal of anticoagulation is ne ede d due to life -thre ateni ng or uncontrolled bleeding. Follo wing completion of the Alexion acquisition, Ondex xya/Andex xa has m oved to the CV RM por t folio wi thin our BioPharmaceuticals Busines s Unit. 26 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 S trategic Report Dise ase A rea Rev iew R are D isease c ont inue d O t he r M e d ic i ne s a n d C O V I D -1 9 W e have med icine s a nd vacc ines in ot her d isease a reas t hat h a ve an i mpor ta nt impact for pat ien ts. A s such, we a re selec tively act ive in t he are as of in fec tion , neur oscienc e and gast roenterolog y , where we follow an oppor tu nit y-d riven approach and of ten work t hr ough c oll ab oratio ns. W e are wor k ing to defeat t he COV ID - 19 p andem ic. Wit h V axze vri a and Evu sheld , we a re si gnic antl y con trib utin g to globa l pu blic hea l t h. For more infor mation, see Accel erat e Innov ative Sc ienc e fr om pag e 31 an d Del iver G row t h an d The rapy A re a Leaders hip from pa ge 35. 2 021 ove r vie w > Flue nz Te t ra / F luMi st Qua driv ale nt pe r f orm ed str on gl y dri ve n p rimaril y by heightened fo cus on inc rease d vacci nation c overage as a mea ns to f ur t h er li mit t he healt hca re bur den g iven t he ongoing COV ID - 19 pa ndemic . > Th rough an ag reement w ith Ox ford Universit y in 2 02 0, V axzev ria wa s developed a nd di str ibute d by Ast ra Zenec a. I n 20 2 1, A st raZ eneca and o ur glo ba l pa rt ners rele ased for supply more t han 2. 5 bi ll i on do ses of COVI D - 19 vacci ne to over 18 0 cou n t ries wit h a bout t wo t hi rds o f t hese doses going to low- a nd lower-midd le- inc ome cou n tr ies (L MICs). P roduc t Sa les $ 6, 36 9m up 146% (142 % at CER ) 2 020 : $2 ,5 87m 2 019 : $ 2 , 6 01m 27 Corporate Govern ance Additiona l Infor mation Finan cial Statem ents Strateg ic R eport A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 D ise ase A rea Re vie w / Ot her Me dic ine s a nd COV I D-19 Disease A rea Re v i ew Key ma rketed produc ts Se e full pr oduc t infor matio n in the Pate nt Exp irie s Supp leme nt on our we bsite, ww w .astra zeneca.com/annualrepor t202 1 . Pr oduct Di sease Tot al Re venue Co mme nt ary Ot he r M edi cin es Infecti on Syn agis (pali vizumab ) RSV $ 410m , up 10% (13 % a t C ER ) Com mer cia l righ ts to Syna gis ou tsid e t he US rev er ted bac k to As tr aZ enec a on 1 Ju ly 202 1. A gr eeme nt wit h So bi for r ights to Synagi s i n U S u na e cte d. Flue nz Tet ra / Flu Mist Qua driv ale nt (l i ve attenuated inue nza vaccin e) In uenza $253m , dow n 14% (17% at C ER ) Ap prove d in the US , EU, Ca nad a, Is rael a nd H ong Kon g. Da iic hi Sa nk yo hold s ri ghts to Flu Mist Qu adri valen t in Jap an. Neuro science Seroquel IR/ Seroquel XR (q uet iapi ne fu ma rate) Schizop hrenia Bipo lar disease $92m, dow n 21 % (2 0% at CE R) Di vest ed rig hts in Eu rop e a nd Rus sia in Oc tob er 2019 an d i n t he US an d C an ada in De cem ber 2 019 t o C hepl aph ar m. Luye Ph ar ma hol ds ri ghts t o Seroquel and S eroquel X R in t he U K, Ch in a a nd ot her int ern ati ona l m ar kets . Th ere is an ag ree ment in p lac e wit h As tel las w it h res pec t to t he ri ghts t o Seroquel an d S eroquel XR i n Japa n. Gastroentero logy Nex ium (esomepra zole) Proton pu mp in hi bit or to tr eat acid-re lated diseases $1,4 24m , dow n 7% (8 % at C ER) Di vest ed Eu rope an ri ghts to Gr üne nth al in Oc tob er 2018 . Losec/ Pril osec (omeprazole) Proton pu mp in hi bit or to tr eat acid-re lated diseases $180 m, dow n 2% (7 % a t C ER ) I n O cto ber 2019 , d ive ste d gl oba l c omm erc ial r ights , ex clud ing Ch in a, Japa n, t he U S an d M ex ico to Chep laph ar m. C OV I D -1 9 V axzevri a (ChAdO x1 - S [Recombinant]) C OV I D -1 9 $ 3,9 81m T hrou gh an a gre eme nt wit h Ox for d Univ ers ity i n 20 20 , V axzevri a wa s d evel ope d a nd dis tr ib uted by A str aZ ene ca. Mor e t ha n 2. 5 b il lion do ses hav e b een re lea sed for sup ply to ove r 18 0 cou ntr ies . Evusheld (tix ag evimab co -p ack aged w ith cilg avimab) C OV I D -1 9 $135 m T he r st long- ac ti ng a nt ibo dy com bin at ion to dem ons tra te be ne t i n bot h prev ent ion and t reat ment of COV I D-19. Evusheld i s aut hori se d for eme rge ncy u se for t he pr event ion of COV I D-19 in the US a nd se vera l ot her cou nt rie s. Ou r st rateg y in O t her Dis ease A re as Ou r appro ach in th ese oth er dis ease a rea s loo ks to ma ximis e revenue o f on-m arket medicines, divest medicines where this enhances sharehol der v alue and advance the nov el medicine pipeline with collaborations where approp riate , while preser ving a ﬁna ncia l stake in th e most p romi sing as set s. For 202 2 , we w ill be re por ting s epar ately o n our new V ac cines and Immune Therapies Unit. Thi s will in corp orate reve nues f rom Va x ze vr i a , Evu she ld , Fl uMist , Synagis and nirsevima b . For 2021 , t hese a re all in clude d in the O ther Me dicin es and C O VID - 1 9 D isea se Ar ea. F ul l det ai ls a re giv en in t he D evel opmen t Pip eli ne Sup plem ent on our web site , w w w.as tra ze nec a.c om / annu alre port2021 . Unme t me dica l n eed and world m arket 39 0m T he Jo hns Hopk i ns Dise ase Tr acker ha s r ecor ded more th an 39 0 mi lli on con  rme d ca ses of COV I D-19 a nd more t ha n 5.7 mi ll ion deat hs globa lly. So urc e: Joh ns Hop ki ns COV I D-19 Da sh boa rd htt ps://coronav ir us.jhu.edu /map. html 1bn T he W HO es ti mate s t hat sea son al in ue nz a m ay r esu lt in nea rly one bil lion ca ses of in uen za and 2 90, 00 0 to 65 0,0 0 0 deat hs eac h y ear due to in uen za -rela ted respirato ry disea ses. 2 021 rev iew – st rateg y in ac tion Infection Se ason al inﬂu enza i s a seri ous pu blic he alth pro blem t hat cau ses s ev er e illnes s and d eath in high-risk populations. Fluenz Te t r a / Flu Mist Qu adriva lent c ontinu es to be li cens ed in mul tiple ma rkets , inclu ding the U S, Cana da, EU, Isra el and H ong Kong, a nd it re main s a ce ntral p ar t of the UK a nd Finni sh pae diatr ic national inﬂuenza vaccination p rogrammes. For th e 2020 to 2021 ﬂu sea son, ni ne millio n chi ldren i n the UK wer e offe red Flu enz Te t r a as par t of the UK’ s national immunisation programme. In addit ion, w e par ticipat ed in bot h the US Ce nters f or Dis ease C ontro l and Prevention V accine for Children progr amme and Vac cine fo r Adult pr ogra mme. T hese a re federally funded programmes tha t ensure under or uninsure d c hildren and adults ha ve acc ess to va ccine s at lit tle or n o cost . W e a lso have an o ngoin g agre emen t with th e WHO to don ate and s upply s tock at re duce d pri ces in the eve nt of an inﬂ uenz a pand emic. Respiratory syncytial virus (RS V ) is a common se ason al viru s and th e most p revale nt caus e of lowe r resp irator y tr act infe ctio n amon g infants and young children. Since its initial app roval in 1998, Synag is has b eco me the glo bal st anda rd of car e for RSV pr eventio n and h elps p rotec t at-ris k babie s agai nst RSV . Th e lif ting of pu blic he alth me asur es to combat COVID- 1 9, i ncluding national and local lockdowns, has led to ou t -of-season surges of RSV , creating increased demand for p reventi v e opti ons like Synag is . These COVID- 1 9 impacts v a ried across mark ets. Source: IQVI A. A str aZ ene ca foc use s o n s pec i c s eg ment s w it hi n th is ove ral l di sea se a rea ma rke t. Gastroint estinal $15.4bn Infection $8.3bn V accines $7.4bn $31.1bn Annual worl dwide market v alue Disease area w orld market (MA T Q3-21) 28 A st raZ ene ca A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 Strateg ic Repor t Dise ase A rea Rev iew Ot h er Medi ci n es a n d CO V I D - 19 con t inu ed Th e comme rcia l righ ts to the sa le and distributi on of Synagis in mo re than 8 0 countries outside the US reverted back to As tra Zene ca on 1 Jul y 2021 , follow ing the e nd of ou r agree men t with Ab b V ie. Our a gree ment wit h Sobi fo r the rig hts to Synagis in th e US was un af fecte d by this reve rsio n. Neuroscience We are progressing MEDI 735 2, a bispeciﬁc molecule that targets nerve growth factor and tum our ne crosi s facto r alpha , in both p ainfu l dia betic n euro pathy in Pha se II an d oste oar thr itis pa in in Pha se IIb. Al so in Pha se I are M EDI0 6 18, an an ti-PAR2 ( prote ase ac tivated re cep tor 2) mAb b eing d evelope d for o steoa rt hriti s pain a nd migr aine a nd A ZD40 4 1 , a se lec tive orexi n 1 rece ptor antagonist being dev elop ed for opioid use dis orde r . Thi s has be en awar ded a gr ant fro m the US Na tiona l Insti tute on Dr ug Ab use to progress clinical development. We cont inue ou r colla bora tion wi th T akeda on MED I 134 1 for Pa rkin son’ s dis ease a nd mul tiple sys tem atr ophy , wh ich is in P hase I. We have a coll abor ation w ith Eli Li lly on MEDI1 81 4, an a ntibo dy sel ecti ve for amyl oid bet a 1 - 42 that ha s comp leted P hase I a s a potential disease -modif ying treatment for Alzheim er’ s disease . C O V I D -1 9 Va x z ev ri a Va x ze vr ia ( ChAdOx1 - S [Recomb inant ], for mer ly AZ D 1222) was co -inven ted by the Uni v er sit y of Ox ford. Th roug h a landm ark agr eeme nt in 2020 Va x z evr i a was de v elo ped and d istr ibuted by A stra Zen eca . Unde r a sub-li cense agreemen t with AstraZeneca, the vac cine i s manu factu red an d suppl ied by the S erum I nstitu te of Indi a under t he nam e Covish ield . Va x ze vr ia rece ived it s ﬁrs t approva l for em erge ncy use i n Dec embe r 2020 and i t has now be en gr anted a c ondit iona l market ing or emergency use authorisation in 93 countries worldwide, including an Emergency Use Lis ting fr om the WH O in Febr uar y 2021 , wh ich acc ele rated a cces s in mo re than 1 4 0 countries through the CO VAX Facility . In ju st over a yea r , Ast raZe nec a built m ore than 1 2 regional supply chains around the w o rld , relying on our own manufacturing ca pacit y , an d shar ing ou r know-h ow with mor e than 20 pa r tner s. In 2021 , As tra Zene ca and o ur glo bal par tn ers r elea sed fo r suppl y 2.5 bill ion vacc ine dos es to over 180 cou ntrie s. Ap proxim ately t wo third s of thes e went to L MICs, an d more th an 24 7 mill ion dos es have be en de livere d to 1 30 c ountr ies thr ough th e COV A X Facil ity i n 202 1 . The European Commission initia ted legal pro cee ding s again st Ast raZ enec a in Ap ril 2021 in relation t o the Advance Purchase Agreement for the COVID- 1 9 vaccine. The par ties reached a set tle ment in S eptem ber 2021 wh ich bro ught the se pro cee dings to a n end. Va x ze vr ia is ef fect ive agai nst all s everit ies of COVI D- 1 9 fro m symptom atic to seve re disease and hospitalisation , and is generally well to lera ted, acc ordin g to clini cal stu dies and r eal-wo rld evi denc e from te ns of mill ions of pe ople g lobal ly . Ove r the co urse o f 202 1 , the vac cine i s estim ated to have he lpe d prevent 50 million COVID- 1 9 ca ses, ﬁve million hos pita lisat ions, a nd hel ped s av e mor e than one million lives. Th e SARS -CoV-2 viru s which c ause s COVID - 1 9 has c hang ed over ti me with th e emer genc e of new va riant s inclu ding A lpha , Beta , Gamm a, De lta an d Omic ron. Dat a from c linic al stud ies and r eal-wo rld evi denc e demo nstr ate the ef fec tivene ss of t wo dose s of Va x zev ri a against Alp ha, B eta, G amma a nd Del ta. Va x ze vr ia has al so show n an incr ease d imm une res pons e to the Al pha, B eta, G amma , De lta an d Omic ron var iants w hen us ed as a thir d dose b ooste r , af ter ei ther t wo dose s of Va x ze vr ia , of an mRN A vacci ne or of CoronaV ac (Sino vac Bio tech Lt d. ). Va x ze vr ia i s alr eady a pprove d as a hom ologo us thir d dose booster in se veral countries. Regulators around the w orld hav e conﬁrmed that Va x zev ri a has a fav ourable beneﬁt-risk proﬁle. Incidents of thrombosis with thr omboc ytop enia ( T TS) a re ver y rar e and lower t han in th ose dia gnos ed with C OVID- 19, and f ollowin g a sec ond dos e of Va x ze vr ia a re comparable to the back ground rate in an unvaccinat e d population. Early diagnosis all ows appr opri ate trea tment o f these ve ry rare events. In 2021 , th e majo rit y of vacci ne prod uct s ales and d ose s delive red re lated to pa nde mic contracts. AstraZeneca will con tinue t o supply the vac cine a roun d the worl d in 2022. We have moved to a n af forda ble pr icing a ppro ach that enables us to maintain broad global access. This includes a tiered pr icing approach ali gned to G ross N ation al Inc ome pe r capi ta, a wid ely re cogn ised m odel u sed by developers of medicines and vaccines. W e remain committed t o supplying the v accine at no pr oﬁt in low- inco me coun trie s, in line w ith our agreement with Oxford U niversity . In the ﬁ rst h alf of 2021 , A stra Zene ca ini tiate d devel opme nt of the A ZD281 6 COV ID- 19 vaccin e to add ress t he Beta va ria nt. In Feb ruar y 2022, we rep or ted the p ositi ve interi m resu lts of the Phase II/I II tr ial (D7220C 000 01 ) an d addit ional ana lysi s, whic h demo nstr ated tha t AZD 2 81 6 ge nera ted a simi lar imm une re spon se to Va x ze vr ia against variants, including Omicron. Given these data, the low circulation of t he Bet a varia nt and t he subs tanti al bod y of evidence supporting Va x zev ri a aga inst current variant s, we discontinued the A ZD281 6 devel opme nt pro gram me and wi ll con tinue to fo cus on t he supp ly of Va x ze vr ia aro und the wo rld. Evusheld As tra Zene ca’ s re spon se to the pa ndem ic also included the dev elopment of Evus held (tixagevimab co-packaged with cilga vimab, for mer ly AZ D 7 442), a lon g-ac ting an tibod y (L AA B ) combination against the virus. Evu she ld is the ﬁ rst L A AB c ombi natio n to de monst rate be neﬁt in b oth preve ntion a nd tre atmen t of COVID - 1 9, as we ll as the ﬁ rst ant ibody t hera py to have shown a h igh level of pr otecti on aga inst sy mptomat ic COVID - 1 9 in a pre-exposu re prevention setting, as demonstr at ed in the P ROVENT prev e ntion Pha se III tri al in Aug ust 2021 . Evu she ld retains in vitro neutralising activit y aga inst th e Omic ron var iant at a l evel that m ay con tinue to p rovide p rotec tion to pat ients , acc ordi ng to cons isten t data ac ros s multip le indepen dent preclinical studies, makin g i t one of onl y two an tibod y ther apie s autho rise d for use that sho wed neutralising activity against Omi cron a nd aga inst a ll other te sted va rian ts to date. In v itro ac tivit y doe s not al ways correlate with clinical efﬁcacy . Astra Z eneca is co ntinu ing to coll ect f ur ther da ta to bet ter und ers tand t he impl icati ons of the se dat a in clinical prac t ice. Evu she ld received Emerge ncy Use Auth oriz ation ( EU A) f rom the FDA in De cemb er 2021 for th e pre -expo sure pro phyla xis ( preven tion) of COVI D- 19 in pe ople wi th mode rate to seve re imm une com prom ise due to a m edic al con ditio n or immunosuppressive medications and who may no t mount a n adeq uate imm une res pons e to COVID - 1 9 vac cinat ion, as we ll as th ose in dividu als for w hom COVI D- 19 vacc inati on is not re com mend ed. In 2021 , As tra Zene ca agre ed to sup ply th e US Gove rnme nt with 70 0,000 Ev ush eld doses, and i n Janua r y 2022 the US G overnm ent announced that it had agreed t o purchase 50 0,000 a dditi onal do ses . Evush eld is also aut hori sed for e mer gency u se for p reventi on of COVI D- 1 9 in seve ral oth er co untri es, including France. 29 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Govern ance Additiona l Infor mation Finan cial Statem ents Di seas e Are a Review / Othe r Medi cines a nd COVID - 1 9 Ou r b u s i ness is or gan ised t o deli ver o u r st rateg ic pr iorit ies s ust ai na bly , suppor t ing scie n ti c in n ova t i on and commer cial success. Ou r busi ness Ou r bus ine ss is or gan ise d to del iver ou r gr owt h t hrough i nnovat ion st rateg y and ou r t hre e str ateg ic prior it ies. O ur R& D a nd Com merc ial f un ct ions hav e b een org an ise d t o acc elera te deci sion ma ki ng a nd t he launc hes of new me dic ines acr oss ou r mai n dis eas e a reas . F ul l deta il s ar e p rov ide d i n th e F in anc ia l R ev iew f rom pa ge 5 2 . A ccele rate In novativ e Scienc e To dr ive ou r scien ce, we h ave di sea se a rea-f ocu sed R &D or gan is ation s tha t a re resp onsi ble for di scov er y t hroug h to late - sta ge develop ment – one each for Onc olog y , BioP har mac eut ica ls (CV R M a nd R& I ) and R are D isea se. A sep arat e V a cci nes an d Im mun e T herapie s Unit ha s bee n c reat ed for 20 22 . T hese en abl e u s to follow t he scie nce by acc elera ti ng promi sin g ea rly-s tage a sset s a nd li fe -c ycle m ana gement pro gra m mes in o ur pipe li ne and a ls o prov ide new oppor tu nities for combin ations. D elive r Grow t h and T herapy A rea Lea dersh ip Ou r gro wt h is del ivere d by our Com mer cia l tea ms , wh ich comp ris ed ar ound 4 6, 38 0 employ ees at t he end of 20 21. W e have a n ac tive pr esenc e in some 9 0 cou ntr ies a nd sold ou r produc ts i n more th an 13 0 cou ntr ies in 2 021. I n m ost ma rket s, we sel l our med ici nes t hro ugh wholly ow ned lo ca l ma rket ing c ompa nies . W e a lso sel l th rough di st ri butor s an d loc al rep rese ntat ive oce s. W e ma rket ou r pro duct s lar gely to pr ima r y ca re an d spe cia lt y car e phys icia ns. T wo com merci al u nit s, one for Onc olog y a nd one for BioP har mac eut ica ls, a lig n pro duct st rate gy a nd com merc ial de live ry acr oss ou r US and Eu rop e- Ca nad a re gion s. Ou r Inte rn ation al re gion h as com merc ial re spon sibi lit y for Eme rgi ng Ma rket s, in cludi ng Ch in a, a s well a s Aus tra li a and New Z eal and . Japan r epor ts se par ately . Ou r Op erati ons f unc tion pl ays a key role in de velopi ng, ma nuf act ur ing, te st ing a nd del iver ing ou r med icin es to our c usto mers. Ou r Ra re Di seas e group, i n addit ion to R& D, a lso ma nage s the c omme rcia l and op erat ions f unc tion s for our ra re di sea ses po rt folio i n ou r Es ta bli shed M arke ts. B e a Great Plac e to W ork For the b ene t o f ou r e mploye es and ou r bus ine ss, we w ant A st raZ ene ca to be a g reat plac e to work. We a re bui ldi ng and developi ng capabi lit ies and a st rong lead ersh ip pipel ine . W e va lue dive rsit y and ai m to att rac t, re tai n and de velop ta lente d employ ees who t hr ive i n a vi bra nt, hi gh-pe rfo rm ing cu lt ure w ith a pa ssion for pe ople deve lopment . For the b ene t o f soc iet y , we wa nt to be va lued a nd tr ust ed by our s ta keholde rs as a su sta in able s ourc e of gr eat med ici nes over t he long ter m. W e a re com mit te d to ope rati ng in a w ay th at rec ogn is es th e inter con nec tion be twe en busi nes s grow t h, t he nee ds of so ciet y and t he li mit ation s of our pla net . Ou r sus ta ina bil it y approach Ou r ambit ion is to ha rne ss the powe r of sci enc e and inn ovation in way s that have a positiv e impact on society , patients, hea lthc are sys tems an d the envi ronme nt, thr ough ac tions f or the lo ng term . Sustainabilit y strategy In 2021 , we re fres hed ou r sust aina bilit y str ategy by c ondu cting a m ateri alit y assessment. The assessment show s which topi cs are m ost im por tant to A stra Zen eca and o ur sta kehol der s, help ing us to fo cus for ma ximum positive im pact. The assess ment resulted in nine focus areas where we can make the most meaningful impact, grouped under three interconnected priorities: > Acce ss t o healthcare: we are working toward s a futur e wher e all pe ople have access to sustainable healthcare solutions for life-cha nging treatment. W e are incre asing eq uitab le acc ess to m edici nes, p romot ing disease prevention and strengthe ning healthcare system resilience worldwide . > Environmental pro tection: we aim to minimise our environmental impac t across all o ur acti vitie s and pr oduc ts. We are increasin gly circular – designing out waste and pollution , keeping products and mate rial s in use to m axi mise re sour ce efﬁcie ncy . W e are adopting nature-based solutions to prot e ct, sustainably manage and r estor e natur al and m odiﬁe d ecosyst ems that address societal cha llen ges, s uch as th e impac t of the climate crisis, and suppor t biodiversit y . 30 A st raZ ene ca A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 St rat egi c Rep or t B usiness Rev i ew 2021 2020 201 9 9 8 8 9 NM E Phase II sta rt s/pr ogr essio ns 2021 2020 201 9 27 24 35 27 NME and major LCM submissions 2021 2020 201 9 23 28 14 23 NME and major LCM Phase III i n v estment de c isi o ns 2021 2020 201 9 22 29 28 22 NM E a n d maj o r LC M app r ov al s > Ethics and transparency: we see k to create positive soc ietal im pact and e m bed ethi cal b ehavio ur in all o ur bus ines s ac tiviti es, ma rkets an d value c hain. We do this by promoting ethical, transpa rent and inc lusive p olici es, bo th withi n Astr aZen eca a s well a s acro ss all o ur par tne rs an d supp lier s. Ou r sust ainab ilit y appr oach is c entr ed aro und three principles : > Systems thinking: we re cog nise tha t our glo balis ed worl d bind s us toge ther in a dynamic, complex network o f relationships. We look fo r oppo rt unitie s that of fer syn ergie s and ad dres s syste mic iss ues. > Long- term perspect iv e: we ackno wledge the re are no q uick ﬁ x e s so we mus t be pro active a nd thin k long ter m. We antic ipate, avoid or address unintended impacts, monitoring changes ov e r time and building resilience. > Creating the conditions for last ing sustainabilit y: we apply science to go beyond p r event ing and addressing any impacts from our activities t o improve the environment. Perfor manc e ind icators By me asu ring b oth Pha se II a nd Phas e III pip elin e pr ogre ssi ons, we a re foc use d on both n ear-ter m and lon ger-ter m deli ver y . Ph ase II N ME sta r ts ens ure th e ongoing robustness and future stability of the pipeline (an d reﬂe ct the o utco me of nea rer-ter m str ategi c inv estment decisions) . Phase III investments measure as sets t hat wi ll deli ver ne arer-te rm valu e (and re ﬂec t the out come of longer -term strategic i nv estment decisions) . Submissions and app ro vals metrics demonstrate the advancement of t his inno vation thr ough ﬁ ling a nd app roval i n our fou r majo r mar kets (US , EU, China a nd Jap an). We know th at acti ng sus taina bly is a t the co re of our li cenc e to oper ate as a co mpany. Sustainabilit y is an engine for innov ation that hel ps to futu re- proof o ur bus ines s agai nst ri sk and o pen s up new opp or tuniti es in su ppor t of ou r strate gic obj ecti ves. We cont inue to embed sustainabi lity with in AstraZeneca in an integrated manner , whic h re cognises that ever y sc ienti ﬁc or bu sines s dec ision we m ake must be aligned with our sustai nability objectives and commitments. Governance Ou r Board a nd our S enio r Execu tive T ea m (SET ) review our internal sustaina bility sc orec ard qu ar terly. In 2021 , the B oard established a Sustainability Committee to mon itor the exec ution o f our su stain abili ty strategy , ov erse e c ommunication of our sustainability activities with stak eholde rs, and p rovid e input to th e Boar d and oth er Board Committees on sustainabi lity matters. Benchmarking and assurance We cont ribute to s everal key g lobal envi ronme ntal , socia l and gove rnan ce (ESG) per formance e valuations, recognising the v alue of independe nt thir d-part y assess ment and ins ights . Our pe rf orma nce is a lso as ses sed independently based on t he inf o rmat ion and dat a we make pub licly ava ilabl e. Bureau V erita s ha s p ro vided independe nt exte rna l assu ranc e to a limite d level for t he sustaina bility information containe d within this A nnu al Rep or t and For m 20-F . As sur ance is in accordance with t he Int ernational Standard on Assurance Engagements ( ISAE) 30 00 (R evise d) and I SAE 341 0 As sura nce Enga gement s on Greenhouse Gas Stat ements . Fo r mo re in for mat ion, se e S us tai na bi lit y sup pleme nta r y in for mat ion on pag e 216 a nd th e l et ter of ass ura nce av ailabl e o n www .astrazenec a.c om/s ustainability . Ac celerate I n n ovat ive Scie nce W e are using our di sti nct ive scient ic capabi lit ies to deliver a pipel ine of l ife - cha ngi ng me dici nes . Ou r p er form ance in 20 21 > Investe d $9. 7 bill ion in ou r R&D. > With the c ompletion of the A le xion acquisition, we ga ined an innov ative complement-biology platform and robust rare d isease pipeli ne. > Fir st majo r appr ovals wer e grante d for ﬁve NMEs: Va xz ev ri a , Or pathys , Saphnelo , Evu she ld and Te z s p i r e . > 1 77 pro ject s in our pi pelin e, of whic h 1 61 are i n the clin ical p hase o f develop ment . > 1 5 NM E proje cts in p ivotal t rial s or unde r re gulator y rev iew (2020: 10) . > R&D p roduc tivit y inc reas ed to 23% in 2021 ver sus an i ndus try ave rage o f 1 4 %. > We publi shed 169 ma nusc ripts in ‘high-impact’ journals. > At the en d of 2021 , 30% of ou r earl y pip eline c ompr ise d new dru g moda litie s. > Shared anonymised individual patient -level dat a from 165 clin ical s tudie s with 6 4 unique research t eams. > We unveile d our glo bal R& D Disc over y Centre in Cambridge, UK. 31 As tr aZ ene ca An nua l Rep ort & For m 20 - F I n form ati on 20 21 Corporate Govern ance Additiona l Inform ation Fin anci al Statem ents St rate gi c R epo rt Bu sine ss Re vie w / Ac ce lerat e In nov ativ e Sc ienc e Res ear ch & Deve lopment Ou r ambit ion is to tr ansfo rm the li ves of pati ents w ith imp roved outc ome s and a bet ter qu alit y of life, th roug h more ef fec tive treatment and prevention, ultimately working toward s a cure fo r some of t he world ’ s mo st complex diseases. Th rough out 2021 , we c ontinu ed to pro gres s our s cien ce, gui ded by ou r 5R fram ework (right target, right patient, right tissue, right saf ety , rig ht com merc ial pote ntial ) and foc using o n the thr ee key are as of sci ence , as b elow . Thi s was bol stere d by the add ition of Ale xion’ s complement expertise and innovat ive technology platforms. Ou r R&D pro duct ivit y , deﬁ ned as p rogr essi ng fro m cand idate dr ug nom inatio n to Phase I II com pleti on, inc reas ed to 23% in 2021 vers us an in dust ry ave rage of 1 4 %. Ou r scie ntist s pub lishe d 87 1 m anus cript s with 169 in ‘high-impact’ peer-re viewed journals, each wit h an impa ct fac tor excee ding 1 5 ( Tho mson Reu ters 5y r IF scor e) . The i ncre ase in hi gh imp act fr om 1 23 in 20 20 contin ues to re ﬂect the qu alit y and d rive to sha re our s cien ce. Enhancing our understa ndi ng of disea se We are advancing our unde rstanding o f dis ease b iolo gy to unc o ver nove l drive rs an d ins ights i nto the dis eas es we aim to tr eat, hop e to preven t and, in th e futur e, even cure . Se lect ing the r ight ta rget r emai ns one of th e mos t impo rt ant de cisi ons in the d rug di scover y proce ss and our continued inv e stments into multiple approache s in this area are delivering to our pipe l ine. 2 021 dev elopme nts include d : > Mak ing pro gres s towards o ur amb ition to ana lyse t wo milli on gen omes by 2026 . Ou r Centr e for Ge nomic s Rese arc h has alr eady a nalys ed mo re than 8 00,0 00 exome s/ ge nome s or ﬁve pet aby tes of genomic data , highlighting novel and impor tant contributions of rare genetic var iants to s ome of th e most c ommon dis ease s. Thi s was reﬂ ecte d in a Nature publication repor t ing the large st exome- wide genotype-phenotype data set from nearly 300,000 UK Biobank participants. > Addin g the ﬁr st AI -de rived t arge ts to our po rt folio, a s par t of our c ollab orat ion with Benevolent AI. Combining ar tiﬁcial and hum an intel ligen ce is he lping u s ﬁnd previously unexplored patterns and draw better , faster conclusions. > Driving deeper disease understanding and pro gres sing t wo new ta rget s in Onc ology, the o utcom e of more th an 290 C RISPR sc reen s cond ucted by t he Astr aZe nec a- Can cer Re sea rch UK Func tion al Genomic s Centre. > Becoming the co-lead of an in ternational con sor tium ( PERSIST -SEQ) t hat will employ si ngle-ce l l sequencing t o explore mechanisms of resistance to cancer treatment. Ex perts from 1 5 universities and biotechnology and pharmaceutical companies aim to characterise ﬁv e million ind ividu al can cer ce lls over ﬁ ve y ea rs. Th erea fter, data wi ll be pub licly ava ilabl e to aid c ance r res earc h. > Coll abor ating wi th T emp us on the u se of ar tiﬁ cial in tellig ence to a nalys e real wo rld dat a. Th e aim is to de epe n our understanding of comple x tumour biology to mor e accu rately p redi ct how new tre atmen ts may he lp spe ciﬁc pa tient populations, and to ac celerate cl inical trials. > Fur ther ing our i nv es tment i n cell th erapy res ear ch by prog res sing ou r ﬁrs t armo ured CAR- T programme into development, initially in hepatocellular carcin oma and pro gres sing o ur stem c ell the rapy fo r hear t failure into pre-clinic al development. > Coll abor ating wi th Gen omen on to use i ts AI -dri ven gen omic te chnol ogy to pr oduc e a complet e ‘ G enom ic Landscape ’ for cer tain ra re dise ase s and en hanc e its Mastermi nd Ge nomic S ear ch Engin e use d by genet ic tes ting lab orato rie s and me dica l centr es worldwide. Designing the next generation of therapeutics We are co ntinu ing to des ign new ways to ta rget th e driver s of dis ease to h elp us c reate the n e x t gene ratio n of ther apeu tics . At the en d of 2021 , 30% of our e arl y pipel ine con siste d of new dr ug mod aliti es, inc ludin g oligonucleotide, antibody drug conjugat e (ADC) , bispeciﬁc min i-bodies, and cell therapy approaches. 70 % of our small molecule che mist ry p rojec ts now us e AI to hel p dete rmin e the be st way to make a mo lecul e in the s hor test t ime. Deve lopme nts du ring the ye ar incl uded: > Addin g a new mod alit y – sel f -am plif yin g RN A (saRN A) – thro ugh a co llabo ratio n wit h V a xEqui ty . The s trate gic, lon g-ter m research coll aboration aims to op timise and va lidate Va xEquit y’s saRN A plat form , developed at I mperial College London, and a pply i t to advanc e novel the rap euti c programme s. > Adv ancing digital therapeutics. For exam ple, we are c urre ntly te sting a p ulse oxime ter in fou r studi es to dete ct ea rly sig ns and sy mptoms o f inter stiti al lung dis ease ( ILD) in pa tient s bein g treate d for met ast atic bre ast c ance r . Th e aim is to enable ear ly int e rvention where required and r educ e the ri sk of sever e- grade I LD. > Building on our comple ment t e chnology pla tfor m. We are expl orin g targ ets in th e com plem ent sys tem beyon d C5 and n ew mod aliti es to be st tar get co mplem ent dysregulation and offer the optimal t herapy for p atien ts. We are al so adva ncing a n innovat ive pipeline of complement inhibit ors, including oral small mole cules (Fact or D inhibit ors) and bispeciﬁc mini-bodie s (C5 and properdin inhibitors) designe d for self-administered subcuta neous injection. We a re collaborati ng across therapeutic areas to ident ify oppor tunities to e xpand complement innovation to i ndications bey ond r are d iseases. > Diversifying and expand ing our leadership in rare disease s beyond complement. This includes progressing our next-generation alkaline phosphatase enzyme replace ment therapy into clinical trials, with the int e ntion of he lping m ore pe ople li ving wi th hypophosphatasia. Pioneering new approaches to driv e su cces s in the c lini c We are ad opting a r ange o f cut ting- edg e tec hnolo gies to im prove our a bilit y to pre dict suc ces s of our c andid ate dru gs in the c linic. 202 1 developments included : > Developing ‘miniature organs’ in collaboration with Nov oHe art to recreate the m echanical and electrical proper ti es in a beating mini-hear t. W e are cur rently reﬁning and validating this advanced model wit h the aim of u sing it to eva luate pi pelin e compounds next year . > Changing how clinical trials are designed, ru n and ma nage d. One of ou r cardiovascular trials, for example, quick ly identiﬁes hear t attack patients via patie nt re gistr ies an d offe rs th em the op por tuni ty to join t he tria l via the ir hea lthc are professional. Participation is made more acc ess ible by al ignin g study v isits a nd clin ical r outin e care wi th dat a colle cted thr ough bo th routi ne car e and re mote data collection. > Usin g bloo d-ba sed ge neti c proﬁli ng as a mini mall y invasive way of i denti fyi ng the rig ht dru g for the r ight pa tient a t the rig ht time . One of ou r onco logy tr ials , SERENA -6, is exploring our next-generation oral se lect ive estr ogen r ecep tor deg rade r (SERD ) t o address endocrine resistance. In thi s tria l, we are me asur ing gen etic alterations in circulating tumour DNA (ctDN A) is olated f rom bl ood sa mple s to info rm whi ch pati ents may b eneﬁ t from switc hing fr om sta ndar d of care t hera py to ne x t - generation SERD therapy . Other stu dies in n on-s mall c ell lun g canc er (MER MAID - 1 and M ERMAI D-2) are a lso usi ng ctD NA to ide ntif y patie nts mo st at ris k of rela pse, a nd inter ven e with the most approp riate tre atment regimen. 32 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 S tr ateg ic Rep or t Busine ss Rev i ew c ont inue d for ced br eath) re motely, with sup er visi on via v ideo to e nsure h igh- qual ity d ata. We are u sing th is meth od to gen erate regulator y quality spirometr y in clinical tri als, re duci ng the pa tient b urde n and all owing us to te st mor e frequ entl y to increas e di sease and treatment understanding. > Worki ng with Ja naCa re to develo p an at-home creatinine monitoring test. Home monitoring of serum creatinine will allow for r outine a nd fre quen t esti mation s of glo meru lar ﬁl tratio n rate, a me asur e of kid ney fun ction . With a ho me devic e, we ca n make futu re tri als mor e patie nt-ce ntric. > Launching the Patient Engagement Ce nt e r of Ex cellence, a cross-fu nctional process and s et of st anda rds for Pa tient A dvocac y and o ther te ams to foll ow when i nterac ting wit h rare di seas e patie nts, c areg ivers o r patient advocacy groups in the US. The resulting inputs will help ensure we are en gagin g in a patie nt-ce ntric way. This w ill enable us to continue dev e loping innovative medicines that address unmet me dical ne eds, e nsur e we are de signin g proto cols that include patient-relevant clinical endpoints, and deliver patient-centr ic clinical trials. > Coll abor ating wi th the UK NH S and GR AI L, who t his year i nitia ted a worl d-le ading s tudy to scr een fo r canc er in a b road po pulati on. We have com mit t ed to a Ph ase III tr ial us ing cir culati ng tumo ur DNA to i denti fy th e optima l tre atmen t for ea rly lun g canc er pa tient s. > Improving p at ient health outcomes b y combining our innovative n e w treatments with e vidence-ba sed d igital health solutions, including digita l biomarker s, digital diagnost ics and digital therapeutics. For exa mple, we co llab orate d with ma nufac turer s to devel op a metho d for per forming spirometr y ( measuring how muc h air so meon e can br eathe o ut in on e Dev elopment pipel ine over vie w (as at 10 Febr ua ry 20 22) 2021 was an other exc eptio nal yea r for our sci enc e, with ou r pipel ine pro ducin g overwhelmin gly positive news for patients. This included 49 regulator y ev e nts, either sub miss ions o r appr o vals f or our me dici nes in major markets, including ﬁve NME ﬁrst app rovals . That p er forma nce is b acked by a hea lthy pip elin e of high po tentia l medi cines , wit h a t ota l of 32 pipe line p rogre ssi on events , ei ther NM E Phase II s tar ts or P hase III inv estment decisions, indicating our ability to d eliver l onger -term sustainable gro w th. Du ring 2021 , we d eliver ed clin ical t rial d ata and s ubmi ssio ns that re sulte d in 22 ap provals for n ew medi cines i n the US, EU, Chin a and Jap an. Our p ipel ine now inc lude s the Al exion Ra re Dise ase p or tfoli o and co mpri ses 1 77 pro ject s, of whi ch 1 61 are i n the clin ical p hase of dev elopment. We made signiﬁcant progress in advancing our lat e -stage pro gra mmes th rough r egul ator y app roval with 27 NME or m ajor li fe- cycle ma nage ment (LCM) r egul ator y subm issi ons in th e US, EU, Chin a and Ja pan du ring 2021 . We have 1 5 NM E proje cts in p ivotal t rial s or un der re gula tory r eview, compa red wi th 1 0 a t the en d of 2020. Als o in 2021 , 20 NME s prog ress ed to the ir next p hase o f devel opme nt and 18 proje cts we re discontinue d : nine for poorer than anticipated saf ety a nd ef ﬁcacy r esul ts and ni ne as a re sult of a str ategi c shif t in the e nviron ment or por tfolio prioritisation. Accelerating our pipeline We are pr ior itisin g our inves tmen t in spe ciﬁc programmes, focusing on scie nt iﬁc innovat ion. As a re sult, we had numerous po sitive tr ial re adout s in 2021 , inc ludin g the presentation of scientiﬁc rationale that resulted in eight Regulat o ry Designations for Breakthrough Therapy , P riorit y R evie w or Fast T rac k for new me dici nes whi ch of fer the p otentia l to addre ss un met me dica l need in ce r tain di seas es. We als o sec ured O rpha n Drug Designation for the de velopment of thre e med icine s to trea t v er y ra re dise ase s. Fo r mo re in for mat ion, se e D ise ase A rea Re vie w f rom pa ge 16. Phase I 32 Phase I I 34 Lat e -s tage development 1 32 Li fe- cycle management proje cts 2 79 Oncology 47% Cardio vascular , Renal & Metabolism 22% Respir atory & Immunology 9% Rare Disease 9% Other Medicines & CO VID-19 13% Oncology 50% Cardio vascular , Renal & Metabolism 26% Respir atory & Immunology 15% Rare Disease 6% Other Medicines & CO VID-19 3% Oncology 53% Cardio vascular , Renal & Metabolism 9% Respir atory & Immunology 16% Rare Disease 13% Other Medicines & CO VID-19 9% Oncology 59% Cardio vascular , Renal & Metabolism 13% Respir atory & Immunology 18% Rare Disease 10% Other Medicines & CO VID-19 0% 1 N M Es or no vel com bi nat ions a nd sig ni ca nt add itio na l i nd icat ions . 2 O nly i nclu des m ater ia l proje cts whe re r st ind icat ion is a lre ady lau nched. 33 A st raZ ene ca A nnu al Rep or t & For m 20 -F I nfo rma tio n 2 021 Corporate Govern ance Additiona l Inform ation Fin anci al Statem ents St rate gi c R epo rt Bu sine ss Re vie w / Ac ce lerat e In nov ativ e Sc ienc e Bioet hi cs BV ‘Bio ethic s’ refer s to the ra nge of et hica l issu es tha t aris e from th e study a nd pra ctic e of biological and medical science. It falls under our ethical busines s culture sustaina bility focus. Our Global Standard on Bioethics sets out o ur pri ncipl es, wh ich app ly to all ou r scientiﬁc activities, whether conducted by us o r b y thir d par tie s actin g on our b ehal f . Clinical trial transparency We b elie ve that transparency enhances the und ers tand ing of how ou r medi cine s work and beneﬁt patients. W e publish information ab out our c linic al res earc h, as well a s the re gistr ation a nd res ults of ou r clini cal tr ials – re gardl ess of w hethe r or not th ey are favou rable – f or all pr oduc ts and a ll pha ses. This includes market e d me dicines, drugs in development and drugs where dev elopme nt has b een d isco ntinue d. As at 31 De cemb er 2021 , A stra Zene ca ha s : > Shared anonymised individual patient -level dat a from 165 stu dies wi th 64 uni que res ear ch team s and re spon ded to 263 re ques ts from ex tern al res ear cher s usin g our p or tal, w ww. viv li.org to re ques t our clin ical d ata an d repo rt s to suppo rt additional research. > Publi shed 13 comp lete An onymize d Clini cal Document Packages between Health Can ada’ s PRC I proc ess a nd EMA ’s Policy 0070 p rocess. Sin ce 201 5, As tra Zene ca has: > Publi shed 245 T r ial Re sult S umma ries i n easy-t o -understand language on the industry-wid e portal ww w . trialsummaries.com. Th ese have be en tr ansl ated into r elevant loc al lan guag es for a ll sites w here a s tudy is conducted, spanni ng 59 language s overall. Research use of human bio logic al sam ples Th e use of hu man bio logi cal sa mple s, suc h as s olid tis sue, b ioﬂuid s and the ir de rivative s, play s a vita l role in de v elo ping a d eepe r und ers tand ing of hum an dis ease s. We are com mit ted to mini misin g the use o f human fet al tiss ue (hF T ) by explo ring te chno logic al alte rnat ives. Fet al tis sue is u sed to pr ovide inv aluable data to advance novel treatments for s erio us dise ase s of unme t medi cal ne ed bu t only when no ot her scientiﬁcally reasonable alternative is available. There were no new app rovals in 20 2 1 . A s at 3 1 D ece mbe r 202 1 , fou r proje cts us ing hF T had p rogre sse d and two projects are ongoing. Animal research T echnology has not y et advanced t o the st age whe re all a nimal u se can b e elim inated fro m rese arch a nd devel opme nt. In ad dition , some animal studies are require d b y international regulators before medicines pro gres s to huma n tria ls. An imal st udies the refor e rema in a smal l, but ne ces sar y , pa r t of deve lopin g new med icine s. Ani mal us e in research and d ev elopment v aries depen ding on many interrelated factors, including our amount of pre- clinical research, the nature and c ompl exit y of the dis ease s unde r investigation and regulator y re quirements. We beli eve that wi thout o ur acti ve and ong oing com mitme nt to the 3R s (Rep lace ment, Re ducti on and R eﬁnem ent of a nimal s in res ear ch) , o ur ani mal us e would be m uch gre ater . I n 2021 , anim als wer e used f or in- hous e studi es 93,51 1 ti mes (2020: 7 4,68 4) . An imals we re als o use d on our be half f or contract research organis at ion studies 58,8 26 time s (2020: 5 1 ,625). In tot al, over 95% were rodents or ﬁsh. Ou r R & D r esou rces Our R&D organisation comprises mo re t han 1 4,000 employees w orking across our global site s. We curr ently h ave three g lobal R &D centres: C ambridge, UK; G ait hersburg, MD , US; and G othe nburg, S wede n, as well a s several additional R &D sites. The acquisition of Al exion ad ded a Ra re Dis eas e R&D Ce ntre of E x ce llenc e in New Have n, CT , US. Cambridge R&D centre In 2021 , we of ﬁci ally u n veil ed our n ew R&D ce ntre, the D isc o ver y Ce ntre (D ISC), at the hear t o f the C ambridge Biomedical Campus, one o f Europe’s leadi ng life s cien ces cl uster s, promoting innov ation and collaboration. Our new building is designed t o encourage inte ract ion bet wee n our sci entis ts and t he surrounding scientiﬁc and medical community . Mor e than 4,0 00 As tra Zene ca emp loyees a re now lo cated i n the Cam brid ge are a, whe re our scientists contin ue to work side-by-side with colleagues from univ ersities, resea rch institutions and biot e ch companies. The ne w ce ntre exemp liﬁes h ow we are ma king ou r science and our business sustainable in ever y thing we d o – from how we d iscove r and develop new medicines to ho w we identify and addres s the ir en vironmenta l im pact. Proj ect c osts in curr ed to the e nd of 2021 am ounted to c. $1 . 3 billio n (£1 billio n ) and a pro jecte d spe nd of c. $0. 1 bill ion (£0. 1 bill ion) will b e incu rred d uring 20 22 to comp lete the installation of primar y laborator y e qu ipment, furniture and ﬁxtures, and ﬁnal c ommissioni ng of the building. Res ear ch & Deve lopment 20 21 2020 2 019 Discovery and early-stage development 3 8% 3 6% 36% Late-stage development 62% 6 4% 6 4% Inves tin g in R&D In 2021 , R& D expe nditur e was $9,736 millio n (2020: $ 5,991 millio n; 20 19: $6,059 m illion), inc ludin g Core R& D cost s of $7 ,987 mil lion (2020: $ 5,87 2 milli on; 201 9: $5,320 m illion). In ad dition , we spent $ 2 7 ,0 42 millio n on acquiring produ ct rights ( s uch as in-licensing and , in 2021 , $26,45 5 millio n of prod uct rig hts as p ar t of the Al exion ac quis ition) (2020: $1 ,4 54 milli on; 20 1 9: $1 , 835 mill ion). We also i nvested $ 223 millio n on the implement ation o f our R&D restructurin g str ategy (20 20: $35 mi llion; 201 9: $1 0 mill ion). Th e alloc ation s of spe nd by ear ly- and late-sta ge development are presented in the R& D spe nd ana lysis t able b elow. 34 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 S tr ateg ic Rep or t Busine ss Rev i ew c ont inue d Perfor manc e ind icators Gl obal P rodu ct Sa les by g eogr ap hy 20 21 2020 20 19 Produc t Sal es $m Actual grow th % CER grow th % Product Sales $m Actual grow th % CER grow th % Product Sales $m Actual grow th % CER grow th % Emerging Ma rket s 1 2 ,1 6 1 40 36 8,679 6 10 8 ,1 6 5 18 24 US 1 2,000 39 39 8,63 8 12 12 7, 7 4 7 13 13 Europe 7, 6 0 4 50 44 5,05 9 16 15 4,350 (2) 2 Established Re st of Wo rl d 4,7 76 36 36 3 , 514 6 6 3,303 17 18 To t a l 3 6 , 5 41 41 38 25,8 90 10 11 23,565 12 15 Pr icing a nd val ue of ou r medi cine s With increasing demand for healthcare, the re is inc reas ed pr essu re on he alth sys tem budgets. This includes do wnward pressure on pricing and reimbu rsement in many markets, including the US and China. This pressure is hei ghten ed by a shif t fr om pri mar y to spe cial ty care medicines, which comprise a g ro wing sha re of As tra Zene ca’ s po rt foli o . Pri cing fo r the se pro duct s reﬂe cts the h ighe r value the y br ing to pati ents a nd payer s, as we ll as the sma ller p atien t numbe rs a s a resul t of targeted treatment options. Th e COVID - 19 pand emic h as als o had an impact. Healthc are resources have been rea lloc ated to me et the gr eates t nee d with, for exa mple, p ayers p rior itisi ng trea tment s that help k e ep patients out of ho spital. The pandemic also demonstrated that he althcare syste ms ca n move quick ly to gra nt rap id access to innov ative new medicines, such as vac cine s, whic h may ena ble fa ster access to promising medicines. For m ore i nfor ma tion o n our b road a nd eq ui ta ble sup ply of ou r V axzev ria vac cin e, se e Ot her Me dic ine s an d COV I D-19 f rom p age 27. Aga inst th is backgr ound, a nd in our discussions with national, regional and local st akehol der s, we cont inue to ba se our p ricin g pol icy bas ed on fo ur pri ncipl es: > Dete rmini ng the pr ice of o ur med icine s whil e cons ider ing the ir full va lue for pati ents , payer s and so ciet y , an d reﬂ ecti ng facto rs su ch as cli nica l bene ﬁt, cost-effectivenes s, imp ro vement to life expe cta ncy an d quali ty of lif e. > Aim ing to ens ure the s usta inab ilit y of both hea lthc are sys tems an d our re sear ch-l ed business model. > Worki ng clos ely wi th payer s and p rovide rs to und ers tand t heir pr ior ities a nd ens ure appropriate patient access to our m edicines. > Pursuing a ﬂexible pricing approach that reﬂects the wide v a riation in global health syste ms. For exa mple, we a pply T iere d Pricing Principles, deﬁning price le vels bas ed on a c ountr y’s abili ty to pay. For m ore i nfor ma tion , se e our A o rda bil it y St ateme nt on o u r website, www.astrazeneca.com/sustainability. As p ar t of our ap proac h, we coll abor ate wit h payers to c oncl ude inn ovative outc omes - and value-ba sed reimburse ment models that improve patient outcomes. We had c oncluded mor e than 1 70 su ch agre eme nts by the e nd of 2021 . We al so of fer a num ber of pa tient assistance programmes that help increase patients’ ac cess t o medicines and/ or hea lthc are, an d redu ce thei r out-of- pocket c osts . For m ore i nfor ma tion , se e Acc ess t o hea lth car e on p age 4 4. Sa les a nd ma rketi ng As o utline d in Our S trate gy and Key Per for manc e Indic ator s from pa ge 1 2, we are se ekin g to trans form h ealth care d elive ry wi th a foc us on pat ients , as well a s innovati ve commercial approache s a nd pricing strategies. Ou r appro ach to pr icing , summa rise d bel ow , is on e that fo cuse s on unlo ckin g the valu e our me dicin es bri ng to patie nts. M oreove r , our foc us on pat ient c entri cit y has se en us m ove away fro m a tradi tiona l prod uct-c entre d app roac h to one bas ed on im provin g the whole patient e xperience, from driving earlier diagnosis t o impro vements in clinical trials. Th rough t he use of d ata an aly tics , ‘omni chan nel’ an d ‘ g o-to -mar ket’ mo dels, we are a lso wor king to i mprove the way i n which we en gage wi th HCPs an d other c ustom ers . This includes acc elerating the dev elopment of he althc are co llab orati ons to dri ve chan ges in practice that impro ve patient outcomes. Du ring 2021 , g rowt h was well ba lanc ed ac ross our d isea se are as, an d we saw dou ble- digi t growth in all major regions, including Emerging Markets de spit e some headwinds in China. F ollowing completion of the A le xio n acq uisit ion on 21 July 20 2 1 , Ra re Dis eas e me dicin es gen erate d $3,071 millio n, 8 % of T ota l Revenu e, growin g 8 % (9% at CE R) on a pro f orma , pro ra ta bas is 1 . Ou tside t he US, sa les of Soliris an d Ul tomiris were dr iven by new country launches. Del iver Grow th a nd Therapy A rea L eadersh ip W e pla n to meet ou r grow t h and prot abi lity go als t hrough suc cessf u l in novat ion, com merc ial e xcel lence a nd the c reat i on of su sta in able p r o  t a b i l i t y. Ou r per for ma nce in 2 021 > T otal Rev e n ue, co mprising P roduct Sales and Coll aboration Revenue, increased by 4 1 % (38% at CER) to $ 3 7 ,4 1 7 milli on. > Grow th was we ll bala nce d acros s our disease areas. > In the US , T o tal Reve nue inc reas ed by 38% to $1 2,228 mil lion an d in Europ e by 45% ( 4 0 % a t CER) to $8,0 50 millio n. > T ota l Revenue i n Emerg ing Mar kets inc reas ed by 4 1 % (36% at CER ) to $1 2,281 milli on, with C hina gr owth of 1 2% (4 % at CER ) to $6,01 1 mi llion. > We conti nue to col labor ate with p ayers to concl ude outcomes- and value-based reimbur sement models that improve patient outcomes and had concluded mor e than 1 70 su ch agre eme nts by the en d of 2021 . > Committed to high ethical standards: 1 0 5 emp loyees a nd thir d par ties r emoved fro m their r oles fo r brea ches o f sale s and marketing regulations or code s. > Del ivere d 1 1 0 suc ces sful m arket la unch es and achiev ed 1 0 0 % of planned new technology implementation milestones. > More than 1 ,000 collaborations around the wo rld. 35 St rat egi c Rep ort A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al State ments Bu sine ss R evi ew / D eli ver Gr ow th a nd Th erap y Ar ea Le ader sh ip Ou r com merci al re gion s US We have a 3. 1 % m arket sh are of US pha rma ceuti cals by s ale s value an d we are the fourteenth largest prescription-ba sed pha rma ceuti cal c ompany i n the US. Pro duct Sa les inc reas ed by 39% in 2021 to $1 2,00 0 mill ion, driven primari ly b y the performance of ou r new med icine s acro ss Onc olog y and BioPharmaceuticals, including T agrisso , Calquence , Far x iga a nd Fas en ra . Product launches and ne w indications also cont ributed to this g rowt h. Breztr i was intro duce d for patients with COPD; Far xi ga in a ne w ind icati on for ch ronic k idney di sea se, and Saphnelo for s ystemic lupus ery thematosus. Th e US heal thca re syste m is comp lex. Mul tiple paye rs an d inter medi arie s ex er t pre ssu re on pati ent ac ces s to bran ded medicines through regulatory rebates in government progra mmes and v oluntar y rebates paid t o managed care organisations and pharmacy beneﬁt manager s for commerc ially insured patients. Signiﬁcant pr icing p res sure is d riven by paye r consolidatio n , restrictive reimbur sement pol icie s and co st con trol too ls, suc h as ex clusionar y f ormularies and price protection clauses. Many formularies employ ‘ gene ric ﬁr st’ st rateg ies an d/or req uire phys icia ns to obt ain pr ior ap proval fo r the use of a b ran ded medicine where a generic alternative exists. For pr esc riptio ns disp ens ed in the U S in 2021 , ge neri cs con stitu ted 86. 3 % of th e marke t by volu me (2020: 85.3% ) and 1 7 . 2 % ( $ 101 .0 bill ion) of the m arket ($ 587 . 7 bill ion) by value (2020: 18. 7%, $1 02.2 b illion o f $546 .2 bill ion). On going s crut iny of the US p harm aceu tica l ind ustr y , fo cuse d larg ely on a ffo rdabi lity, has be en the ba sis of m ultipl e polic y propo sal s. In ad dition , lawmake rs at b oth the fe dera l and s tate leve ls have sou ght inc reas ed dr ug tra nspa renc y and have pr opos ed and implemented such policies. Despite this pr ice sc rutiny, we have a diver siﬁe d prod uct po rt folio i n the US. We prov ide a bro ad spec trum o f treatments in many different disease areas, allowing for sign iﬁcant access to pat ients in need of our innovative medicines. In R are Dis ease, Solir is T otal Revenue amounted to $ 1 ,068 million, representing a pro f orma , pro ra ta 1 inc reas e of 4 %. Sa les be neﬁt ted fro m growin g use in n euro logy ind icati ons, gM G and NMO SD, off set by the successful con version t o Ult omiris in haematological indications, PNH a nd aHUS. At $3 8 1 m illion, Ultomiris sal es grew by 20% on a pr o form a, pro r ata ba sis. Europ e Th e total Eur opea n phar mace utic al mar ket was wo rth $ 228 billio n in 2021 . We have a 2.6 % mar ket sha re of pha rmac euti cal sa les by valu e and we ar e the eleve nth lar gest prescript ion-based ph armaceutical compan y in Eur ope (se e Market d eﬁnit ions on pag e 22 4). Pro duct S ales i ncre ase d b y 50% at ac tual r ate of exchan ge (44 % at C ER) to $7 ,60 4 millio n (2020: $5,0 59 millio n ). We cont inued to l aunch n ew medi cine s and s aw sus taine d per for man ce of our existing medicines. On colog y sal es grew by 28% (22% at CER), dri ven by inc reas ed use o f T agrisso for the tre atmen t of 1 st-li ne EGFR- mutate d (EGFR m ) NSCLC patients. Imﬁnzi sa les re ﬂec t a growing number of reimburse ments in SCL C. L ynparza saw cont inued strong per f ormance in the 1st-line ova rian c ance r set ting a nd launches in breast and prostate cancer . BioPharmaceutical sale s grew b y 1 4 % (9% at CER ). For xig a sale s grow th of 60% (52% at CER) wa s drive n by typ e-2 dia betes a nd new ind icati ons in he ar t failu re and c hroni c kidn ey dis ease (C KD). Fas enr a sale s in creased 4 1 % (34% at CER) whi le Tr i x e o was l aunch ed in maj or Europ ean m arkets w ith mor e to follow in 20 22. Established Rest of W orld (R OW) Japan Th e phar mace utic al mar ket in Japa n was wo rth $ 85 bill ion in 2021 , r emain ing an at tra ctive ma rket for i nv es tment i n inn ovation. We have a 3.7 % mar ket sha re of ph arma ceut ical s ales by va lue an d we are the ﬁfth largest prescription-base d pharmaceu tical company . The gov ernment introd uced a mid- year price con trol me asure ment i n Apr il 2021 in orde r to addr ess continued pressure on hea lt hcare spend. T ota l Produ ct Sa les grew by 31 % (35% at CER) to $ 3,4 1 6 m illion, d espi te conti nued COVID- 19 challenge s, pric e cuts and ongoing ge neri c eros ion for Symbicor t . This included sa les fr om Rare D ise ase me dicin es af ter the acquisition o f Alexion. The st rong pe rfo rma nce was d riven by new m edic ines including T agriss o , Imﬁnzi , L ynparza , Fas enr a , Brez tri , Lokelma a nd For xig a . Additionally , Calquence was in trodu ced fo r patie nts wit h chronic lymphocy t ic leukaemia, For xig a for CKD a nd Saphnelo for systemic lupus er y them atosu s. We also re covere d the dis tribu tion ri ghts fo r Nexium an d Synagis . Canada Pro duct S ales i n Canad a incre ase d by 2 8% at ac tual ra te of ex cha nge (1 9% at CER ) in 2021 . Thi s was pr imar ily dri ven by stro ng, sus tain ed growth of our new medicines, par ticu larly T agrisso , L ynparza , Fo rx iga a nd Fas en ra . De cline s in Onglyza , Cr estor a nd Brilinta sa les, li nked to los s of exclusi vit y , com bine d wit h pric ing pre ssur es, pa rt ially of fs et the growth in inno vativ e medicine s. Australia and New Z ealand Ou r sale s in Aust ralia a nd New Ze alan d inc reas ed by 89% at ac tual r ate of exchan ge (73% at CER) in 20 2 1 . T his was p rima rily du e to grow th in key br ands s uch as T agrisso , L ynparza , Fas enr a , Soliris an d Forx iga / Xigduo . Calquence ach ieved a hig h level of gr owth i n its ﬁ rst f ull year o f reimb urs emen t. However , the ove rall gr owth of t he bus ines s was con stra ined by t he impac t of the Cr estor a nd Atacan d dive stme nts in 2020, a s well as t he ﬂat g rowt h of Symbi cort despi t e it mainta ining lea der ship in t he L ABA /I CS clas s. Emerging Markets Wit h revenue s of $1 2,281 millio n (2020: $8,71 1 mil lion), Astr aZe neca wa s the se cond largest multinational pharmaceutical company , as m easu red by pre scr iption s ale s, and th e third fastest-growing top 1 0 multinational pharma ceutical company in Emerging Mar kets in 2021 . D esp ite the co ntinue d impa ct of COVI D- 1 9 acr oss a ll geog rap hies, we s aw grow th ac ross a ll majo r area s. Thi s inclu ded La tin Am eric a at 1 5 3 % (1 56% at C ER) , Rus sia & Eura sia at 4 0 % (42% at CER), Mid dle Ea st & Afr ica at 16 % (20% at CER) a nd Asi a Paciﬁc at 9 6 % (9 3 % a t CER). China In Chi na, A stra Zene ca is th e large st pha rma ceuti cal c ompany by s ales va lue in the h ospit al se ctor . S ales i n 2021 incre ase d by 1 2% at ac tual r ate of exchan ge (4 % at CER) to $ 5,995 mil lion (2020: $ 5,345 m illion). For xig a , roxadu stat a nd L okelma were listed or re newed in t he NRDL . The implementation of V alue Based Pro curem ent ( VBP), wh ich ha s open ed up mor e of the ho spita l volume s to qual ify ing generic s, ha s impac t e d several AstraZenec a brands includin g Cre stor , Iressa , Brilinta , Nexiu m Oral , L osec Oral a nd Arimi dex . In t he most rece nt cycle of V BP implement ation, Pulmicort , Nex ium IV , Onglyza , Betaloc Oral and C asodex were i nclud ed. A num ber of As tra Zene ca bra nds ar e expec ted to be inc lude d in the nex t VBP cyc le with a n estimated implementation during the ﬁrst hal f of 2022. 1 G row th r ates on R ar e Dis eas e med icin es hav e bee n ca lcu lat ed on a pro f orm a, pr o rata b asi s by com par in g po st-ac qu isit ion r evenu es fr om 21 Jul y 2021 t o 3 1 De cem be r 2021 w it h the c orr espo ndi ng pe rio d in t he pri or yea r, pre -ac qu isit ion a s prev ious ly pu bli shed b y Ale xio n. P ro for ma, p ro rat a Tota l Reve nue gr ow th ra tes ha ve bee n pre sent ed for 2 021 R are D ise ase a rea a nd con st itu ent med ici nes , and d o not imp act G roup to ta ls. 36 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 S tr ateg ic Re por t Busine ss Rev iew c ont inue d In 2021 , we i denti ﬁed 1 3 con ﬁrme d brea ches in co mmer cial b usine ss uni ts (2020: 1 4). Within our commercia l busines s units, there were 2,4 77 instances (i nstances can in vol ve multiple people) of non-compliance with our pol icie s by employe es an d third p ar ties (2020: 2, 1 13) . We remove d a total of 105 em ployee s and thi rd par tie s from th eir ro les as a re sult of a b reac h. Warnin gs were g iven to 2,084 ot her s (2020: 861 ) a nd we provi ded fur ther gu idance or coaching to a no ther 1 ,8 95 (2020: 2,09 9) rega rding o ur poli cies . Th e incre ase in wa rnin gs in 2021 may be attributed to reclassiﬁcation of discipline in some mark ets and stronger discipl ine for e quival ent br each es. Ever y qua rte r , our A udit Co mmit tee is a dvise d of bre ach statistics, serious breaches and corresponding remediation. The increas e in incidents during the year con tinue s to be dri ven by low-im pact i ncide nts and m ay be at trib uted to str onge r ﬁrs t - line monitoring, a company environment where employees f e el comfortable raising concerns, and evol ving external regulations and enforcement prioritie s ( i .e. data privacy globally). Anti-bribery and an ti-corruptio n BV We do not tol erate b ribe ry o r any othe r form of co rrup tion. Br ibe ry a nd cor rupti on rem ain a bus ines s risk a nd are a f ocus of o ur third-par ty risk management process and our business de velopment d ue dil igence pro ced ures. T hey are a f ocus of o ur mon itorin g and au dit pro gra mmes a s well. We rein force d our co mmitm ent to eth ical be haviou r throu gh our 2021 an nual C ode of Ethi cs tra ining, w hich wa s delive red to rel evant em ployee s and thi rd par tie s. Op erat ions Our manufacturing and supply funct ion has continued t o suppor t our grow t h b y deliv e ring successful launches, and adv ancing digital and n ew tech nolog y capa biliti es to sup por t our pipeline. In 2021 , we la unch ed our O per ation s 2025 pla n, whic h focus es on: > efﬁciently scaling our ca pabi lities t o suppor t the c ontinu ed grow th of o ur por t folio > lev eraging the beneﬁts of new manufacturing technology and digital innovat ion > tak ing pro acti v e step s to ensu re zero carbon emissions from our global operations. In 2021 , we de liver ed 1 10 suc ces sful ma rket launches. We ac hie ved 1 0 0 % of our planned new t echnology implementation milestones and i ntrod uce d the ﬁrs t two di gital s oluti ons to our e ight la rge st manu fact uring s ites. COVID - 1 9 h as co ntinue d to impac t grow th rate s in all c hanne ls acr oss Ch ina and f or Astra Z eneca’ s Respirator y & Immunolo gy the rapy ar ea. T he neb ulise d bra nds suc h as Pulmicort , Fluimucil and Bricanyl were most heav ily imp acted a s dema nd, whi le rec ov er ing, rem aine d well be low pre -pa ndemi c levels . A healthcare investment fund jointly set up wi th CICC ha s prog ress ed wit h near ly $20 0 millio n paid in a nd over $ 50 millio n inves ted to date. In t he las t quar ter of 20 2 1, Abbisko became the ﬁrst por tfolio compan y to com plete a n IPO on the H ong Kong S tock Exchange. An internet hospi tal v e nture with Hil lhouse Capital, which also includes in-house pharmacy distribution, commenced in ea rly 2021 an d has ma de pos itive ini tial progres s. Follow ing the a cquis ition of A lexio n in July 20 2 1, we es tabli shed a R are Di sea se unit i n China . Healthcare in l ow- and middle-income countrie s (LMICs ) BV As tra Zene ca is co mmit ted to equ itab le acc ess to h ealt hcare f or pati ents gl oball y . Ou r approach includes adapting our programmes to inte grate in to loca l system s and de liveri ng affordable medicines to pat ients. Our patient acc ess p rogr amme s in LMIC s are ta ilore d to me et the ne eds of t he heal thca re syste ms, patients and communities they se rve. We iden tif y barr ier s to care a nd con tribu te toward s heal th syste m stren gthe ning by training providers and addres sing gaps in aw arenes s, education, prevention and diagnosis. For m ore i nfor ma tion , se e Acc ess t o hea lth car e f rom pa ge 44 . Responsible sales and mark eting BV We are co mmit ted to hig h ethic al st anda rds of sa les an d mar k etin g, alig ned to our C ode of Ethi cs and complian ce frame work. W e maintain a rob ust co mplia nce pr ogra mme tha t aims to ensure compliance wi th all a ppl icable la ws, regulations and adopted industr y codes. Our compliance programme is deliv e red by dedicated compliance professionals who adv ise on a nd moni tor adhe renc e to our Code and policies. These compliance prof essionals support our loc al ma nage rs in en suri ng sta ff me et our ethi cal s tand ards. A n etwo rk of nom inated signatories review s product promotional materials and activities t o ensure compliance wit h appli cabl e regul ation s and co des of pr actic e, and to en sure i nform ation i s accur ate and b alan ced. O ur Inter nal Au dit Se rv ices conducts compliance audit s on selected market ing companies. “ Th e C O V ID- 1 9 pa ndem ic demons trate d th at healthcare systems ca n m ove qu i ck l y to grant access to i n novat ive ne w med ici nes . ” 37 St rat egi c Rep ort A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al State ments Bu sine ss R evi ew / D eli ver Gr ow th a nd Th erap y Ar ea Le ader sh ip Ensuring quality and compliance We are co mmit ted to hig h ethic al st anda rds and compliance with la ws, regulations and inte rnal p olici es. We are m embe rs of in dust ry as soci ation s inclu ding IFPM A, EFPIA a nd PhRM A and ad here to th eir co des. Managing our supply chain We nee d an unin terr upted s upply of h igh- quality materials along our end-to-end supply chains. This includes our activ e pharmaceutical ingredients (APIs) . As most of ou r API manu factu ring i s outs ource d, we place great impor tance on our global external sourc ing and procurem ent org anis ation s and po licie s, as wel l as our integrated risk manage ment processe s. Du ring 2021 , we a ctivate d our bu sine ss continuity plans t o ensure continued supply of me dicin es to pati ents a nd mitig ate aga inst any ris k of disr uptio n caus ed by COVID - 1 9 a nd the con seq uenc es of the U K leavin g the EU. W e have co ntinue d to focu s on inc reas ing the avail abilit y of dua l and mu ltipl e sourc es of raw materials, mainta ining adequate st ock levels and mitigat ing the ef fect of increasing pricing and s er vice ﬂ uctu ation s acros s raw mate ria ls, services an d util iti es. In 2021 , A lexion s uppl y chain d elive red strongly on objec t ives d espite disrupt ions to the gl obal s upply c hain re late d t o COVID - 1 9 and several signiﬁcant climate events. Work ing with r elevan t par tne rs in ou r suppl y chain, w e ensured suf ﬁcient busines s con tinui ty an d risk mi tigati on pla ns were activated. These included incre asing safety stoc k levels fo r prod ucts a nd cri tica l components across our business and dis tribu tion ce ntre s. We also d eploye d dual stoc king a nd for ward s tocki ng loc ation s to en sure pr oduc t was loc ated cl oser to o ur cus tomer s and ex tend ed the nu mber o f validated shi pping routes globally . In sp ite of the ch alle nges f aced i n 202 1 , ou r tea ms were a ble to mai ntain s uppl y to patie nts. Supply chain ﬁnance As tra Zene ca has a s upply c hain ﬁn ance pro gra mme to sup por t the ca sh ﬂow of it s external supply base. The programme is ma nage d by T a ulia Inc. (w ith fun ding pr ovide d by som e of the Gr oup’ s re latio nship b anks) and provi des suppliers with visibility of invoic es an d payme nt dates v ia a ded icate d platform. Suppliers can acce ss t his platform fre e of cha rge an d have ﬂexibi lity to s elec t ind ividu al invoic es for e arly p aymen t. On ele ctio n of an ea rly pay ment , a charg e is inc urre d by the sup plie r base d on the pe rio d of ac cele ratio n, cen tral ba nk inte rest r ate and the r ate agre ed be twee n T aulia I nc. and e ach sup plie r . All e arly p aymen ts are p roce sse d by the f under s and A stra Zen eca s ettl es the or igina l invoice a mount w ith the fu nder s at mat urit y of the or igina l invoic e due date. Th e progr amme o per ates in th e US, UK, Swe den an d Ger many . A s at 31 Dece mbe r 2021 , th e progr amme h ad 389 s uppli ers en rolle d and a po tentia l earl y payme nt bal ance o f $44 mi llion. In ad dition , a sepa rate pro gra mme was es tabli shed i n China i n the sec ond ha lf of 2021 , de livere d thro ugh a rel ation ship ban k - led pl atfo rm. As at D ece mbe r 202 1 , the re were a s mall nu mber of s uppli ers leveraging t hat capability . Responsible supply chain BV Ev er y emplo yee and contractor who sources goo ds an d ser vic es on be half of A stra Zen eca is exp ecte d to follow ou r Glob al Sta ndar d for the Pr ocure ment o f Good s and Se r vice s. We monitor compliance through as sessments and imp roveme nt prog ramm es an d do not wor k wit h anyone wh o is unab le to mee t our standards. Our Global Standard on Ex pec tatio ns of Th ird Par tie s is publ ishe d on our we bsite. I n 202 1 , we c onduc ted a tota l of 37 audits (2020 : 48) on high-risk commercial suppliers (e x t e rnal manufacturing partners) to ensure appropriat e practices and controls. 24 % full y met ou r e xpe cta tions w hile 54% had i mprovem ent pl ans for m inor in stan ces of non-compliance. We had no examples of high-risk engagements. Through our P ositive Sourcing Programme, we pro mote ethi cal b ehavio ur amo ng our sup plie rs. Ou r ambi tion is to ac hieve 1 00% ethical spend, e nsuring that sustainability is e mbed ded into e nd-to -en d proc urem ent processes. We use our responsible sourcing pro ces ses w hen wor king wi th supp lier s to suppor t their sustainability journeys, innovat e together on challenges and promote supplier div er sity . Our Supplier Div er sity Programme aims t o en sure tha t smal l and dive rse b usine sse s are par t of o ur supp ly bas e and have a pprop riate sup por t to be mo re sus taina ble. T his is in li ne wit h our obje ctive s for grow th a nd innovat ion. Ou r ambit ion is to exp and the p rogr amme to 1 0 c ountr ies o utsid e the US by 2025. In 2021 , our p rogr amme wa s laun ched in A ustr alia, New Ze alan d and Pola nd an d is now act ive in six c ountr ies ou tsid e the US, in cludi ng Bra zil, Sou th Afr ica an d the UK. Global manufacturing capability Our principal tablet and capsule formulation site s are in th e UK, Swe den, C hina, P uer to Ric o and th e US, with l ocal /regi onal s upply site s in Rus sia, J apan, I ndone sia , Egypt, Ind ia, Mexi co and B raz il. We also have m ajor formulation sites f or the global s upply of parenteral and/or inhalation p roducts in the US, Swe den, Fra nce, Au stra lia and t he UK. Mos t of the ma nufac ture of A PIs is del ivere d through the efﬁcient use of e x ternal sourcing, com plem ented by i ntern al cap abili ty in Swe den. In Se ptemb er 2021 , an d in line wi th our Op erati ons 2025 pl an to invest i n new manufacturing technology , we announced a $3 60 milli on inves tment to e stab lish a next-generation API manufacturing facility for sma ll mol ecule s at our A lexio n site in Du blin. Al so in 2021 , we co mple ted the exi t from ou r ma nufac turin g facili ty at We del, Ge rma ny . For biologics, our principal commercial ma nufac turin g facili ties a re in the US (Frederick, MD; Greater Philadelphia, P A ) , the UK (Spek e) and the Netherlands (Nijmegen) , with capabilities in process dev elopment, manufacturing and distribution of biologi cs, including g lobal supply of mAbs and i nﬂuenza vacc ines . Our new b iolog ics dr ug pro duct ma nufac turin g facili ty in S weden h as be en app roved fo r Good M anufa ctur ing Pra ctice s (GMP ) manufacturing , allo wing commercial manufacturing t o commence. Al exion us es bot h intern al man ufac turin g facilities and third-part y contract manufacturers to supply cli nical and com merc ial qu antiti es of ou r produ cts and prod uct candi dates . Our int e rnal manufacturing capa bility is multi product and i nclu des a ﬁll /ﬁni sh faci lity a t our Athl one, Ire land s ite, bulk dr ug sub sta nce, QC a nd packaging/lab elling facilit y at our College P ark, Dub lin, Ire land s ite. In 2021 , we re ceive d regulatory approval for our new large-scale dr ug subs tanc e facil ity l ocate d in Dubl in and ma nufac ture an d rele ase of c omme rcial d rug substance has commenced. F ollowing a suc ces sful i nspe ction , we expec t to rece ive regulatory approval for our new small-scale dr ug subs tanc e facil ity a t our Athlo ne site in 2022. We als o have a prod uctio n facil ity located in Georgia , US. 38 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 St rat egi c Rep ort Busine ss Rev iew c ont inue d In 2021 , n ew deal s inclu ded: > Ionis Pharmaceuticals, Inc. (I onis) collaboration to de velop and commercialise ep lonter sen, a l iver-targe ted ant isen se the rapy in Ph ase III d ev elo pmen t for the treatment of tra nsth yretin amyloidosis, a systemic , progressive and fatal condition. Th e upfro nt payme nt fro m Astr aZe neca to Ion is was $20 0 millio n. Astr aZe nec a will make a dditio nal co nditi onal pay ment s of up to $485 mil lion follo wing regulator y app rovals . It will al so pay up to $2.9 bil lion of sales-related milestones based on sales thresh olds between $ 500 million and $6 b illion, p lus low do uble -di git to mid-twenties percentage royalties. > Pro teros B iostructures GmbH (Proteros ) col labo ratio n to jointl y disc o ver nove l sma ll mol ecule s for the t reatm ent of haematological cancer s. AstraZene ca wi ll prov ide re sear ch fund ing an d Protero s will be eligi ble for succe ss-based r esearch, development and commercial milestone paym ents u p to $ 75 millio n plus ti ered royal ties on a nnua l net sa les. > Regeneron Pharmac euticals, Inc. collaboration to research, dev elop and commercialise small molecule compounds dire cted a gain st the G Pro tein- Coup led Re ceptor 75 (GPR75) ta rget wi th the pote ntial to tr eat ob esit y and r elate d co -mor bidi ties. T he co mpani es will eve nly spl it res earc h and deve lopme nt cos ts and sha re equ ally in a ny futu re poten tial pr oﬁts. > Sie rra O ncolo gy , In c. was gra nted exclu sive glo bal ri ghts to fu rth er devel op and commercialise AZD5 1 53, a cli nical BRD4 inhibitor . Astra Zeneca received an upfront paym ent of $ 8 millio n and may a lso be eli gible fo r futu re mile stone pay ment s of up to $208 m illion p lus sin gle -to-low d ouble - digi t royalti es on a ny future A ZD51 53 product sale s. Divestments We t ypically div es t me dicines that sit outside our d isea se are as and c an be d eploye d bet ter by othe r comp anie s. Thi s enab les us to re direc t reso urce s to our ma in are as of foc us while ensuring continue d or expanded patient acc ess . 2021 trans acti ons inc lude d: > Cre stor (rosuvastatin) a nd a ssociated me dicin es in over 30 c ount ries i n Europe dive sted to Gr ünen thal G mbH. Ri ghts in the UK a nd Spa in were n ot inclu ded in the agreement. > Glob al rig hts to Eklira (acl idinium bromide ), kn own as Tu d o r z a in the U S, and Dua klir (aclidi nium bromide/formot erol) transferred to Covi s Pharm a B. V . (com plete d in Jan uar y 2022). Th e resul ting reve nue fro m thes e activ ities sup por ts ou r R&D inves tment s in our disease areas. Third-pa rt y c ontract manufacturer s, including Lon za Gro up AG and it s afﬁ liates ( Lonz a) , prov ide bul k drug s ubst ance ﬁl l/ﬁn ish, QC testing, packaging and labelling ser vices. Th ese pa rt ner ships h av e all owed us to successfully manufacture, test and pack our products for w orldwide distribution in multi ple locations globally . As our int ernal capability grow s via inves tment a nd acc ess to th e As tra Zene ca net work, we w ill optim ise ou r exte rna l netwo rk to ma ximi se ben eﬁt to our customers and patients. This optimisation pro gra mme be gan in 2021 . Th e Group h as 1 5,8 00 pe ople i n Ope ratio ns, including 28 manufacturing sites in 1 6 countries. Busi ness dev elopment Our business dev elopment and par t nering activities suppl ement and strengthen our pipeline and our effor ts to achieve scientiﬁc leader ship. We work wi th acad emia , govern ment s, industr y , scie nt iﬁc organisations and patient gro ups, a s well as oth er pha rma ceut ical com pani es, to ac cess t he bes t scie nce, stimulate innov ation and accelerate the del iver y of new me dici nes. We cur rent ly have more than 1 ,00 0 c ol laborations worldwid e. Alliances, collaborations and acqu isitions We cont inue to as ses s oppo rtu nitie s to make strategic, v alue- enhancing additions to our po rt folio a nd pip eline in o ur dis ease a reas through in-l icensing, collaborations and acquisitions. Ove r the pas t thre e year s, we have comp leted more than 75 major or strategically impor tant busines s development transac tions, including 1 9 i n 2021 . Thr ee of the se were c ompl eted on be half of O ncol ogy R& D and fou r on beh alf of BioPharmaceuticals R&D. Sev e n re lat e d to pre -c linic al ass ets or p rogr amme s and 10 to precision medicine, genomics or access to genetic data. “ D espite t he co n tin ued imp act of the CO V I D- 1 9 pa ndem ic, we saw g ro w t h across a l l major Emer gi ng Ma r kets i n 2021 . ” 39 St rat egi c Rep ort A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al State ments Bu sine ss R evi ew / D eli ver Gr ow th a nd Th erap y Ar ea Le ader sh ip Perfor manc e ind icators BV 88 % Improved my existing/learned new skills, or had a development opportunity 2 88% 90% 87% 2021 2020 201 9 48.1 % In c lusion a n d d i ver sit y 3 48.1% 46.9% 45.4% 2021 2020 201 9 2021 2020 2019 89% 91% 89% 89% Ac cess to healthcare – Astr aZeneca is truly patient -oriented ¹ 2021 2020 2019 78% 81% 77% 78% Perf orming as an enterprise team 1 Ou r succe ss depend s on recr uit ing, ret ai ni ng and d eveloping t ale nted pe ople whi le operat ing i n a res ponsi ble a nd sust ai na ble way . Ou r per for ma nce in 2 021 > 1 7 ,0 00 ex terna l hires . 33 % of em ployee s now have le ss tha n two yea rs’ se rv ice. > 6, 700 successful hires t hrough emplo yee referral sch eme. > Gai ned 4,0 00 p erm ane nt emp loyee s through the Ale xion acquisition. > Rem oval of per fo rman ce rati ngs ha s given ma nager s opp or tunit y to focu s on coa ching and d evelop ing the ir team s. > Ex pande d our Pa rtn ers hip for H ealth System Sustainabil ity and Resilience wit h the Lon don Sch ool of Ec onomi cs and Wo rld Eco nomic Fo rum. > The Science Based T argets initiativ e veriﬁed our net -zero targets. > HRH T he Prin ce of Wales awa rde d As tra Zene ca his T e rra Ca rt a Seal i n re cogni tion of o ur ef for ts to cre ate a more sustai nable fut ure. > Reached 3 1 million people through our ﬂag ship Ac ces s to Heal thca re prog ramm es. 1 S our ce: Nov emb er P ul se fu ll c ens us su r vey for e ach ye ar, ba sed on t he pe rce ntage o f fav our able r esp onse s to th e que sti on ab out ‘e ect ive co lla bor atio n b et wee n t eam s’ . 2 S our ce: Nov emb er P ul se fu ll c ens us su r vey for e ach ye ar, ba sed on t he pe rce ntage o f fav our able r esp onse s to th e sta teme nt ‘I n th e las t 12 mont hs , I have i mpro ved my ex is tin g sk il ls , o r l ear ned ne w s ki ll s, or had a dev elopm ent oppo rt un it y’ . 3 Fem al e repre sent ati on at ca ree r leve l F+ (t he mos t sen ior 13% o f the e mploye e popu lation). Contribution to the enterprise Th is pri ori ty is b uilt on t hree p illa rs: pe rf ormi ng as a n ente rpr ise tea m, com mitm ent to li felo ng learning and dev elopment, and championing of inclusion and diversity. For m ore i nfor ma tion , se e Peopl e fro m page 4 1. Contribution to society Our sustainability performance indicators measure the progress o f our environmental, social and go vernance pr acti ces. T hey a re rep rese ntat ive ind icato rs of e ach of our three sustainability priorities: broaden access to he alth care , prote ct the e nviro nme nt, an d ensu re ethical, transparent behaviours. For m ore i nfor ma tion , se e Sus ta ina bi lit y fr om pag e 44 . Be a Great Place to Work 1 S our ce: Nov em ber P ul se f ul l cen sus su r vey for e ach ye ar, ba sed on t he pe rce ntage o f fav our able r esp onse s to th e sta teme nt ‘ A st ra Ze neca is t ru ly pat ient- or iente d’ . 40 As tr aZ enec a A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Strateg ic Repor t Busine ss Rev i ew c ont inue d Th e volunta r y empl o yee tu rnover fo r As tra Zene ca incr ease d in 2021 to 1 4 % (2020: 10 % ), while th e volunt ar y turn ov er r ate for A lexio n also in crea sed to 1 1 %, from 7% in Feb rua ry 20 2 1. The lau nch of th e new exit sur vey in May 20 2 1 will h elp us ga in a bet ter und ers tand ing of the r easo ns for le aving a nd en able us to a ct acc ordin gly to tr y and r educ e tur nover . We wil l contin ue to moni tor the Astra Z eneca and Alexion combined resignation rates as mergers and acquisitions ca n resul t in incr eas ed tur nover level s. Cr eati ng a cul ture o f high p er for manc e We no lon ger gi v e pe rfo rma nce rat ings to em ployee s and have sh ifte d our fo cus to coaching, development and contribu t ion to the organisation. Managers are accountable for h elpin g to develop i ndivi dual an d team pe rfo rma nce ta rgets . In 2021 , we tra ined 1 5,0 00 li ne mana ger s in our n ew per for manc e dev elopment approach, focusing on building coa ching c apab ilitie s. In ou r 2021 pe rfo rma nce devel opme nt sur vey , 77% of managers who responded felt conﬁdent tak ing a co achin g appr oach wi th thei r team me mber s and 70% sta ted they we re regu larl y pr actis ing coa ching w ith the ir team. O ur recogni t ion platfor m continues to rew ard behaviours that reﬂect company V alues, drives engagement a cross teams and e nsures we celebrate our achievements. F ollowing the lau nch in 2020, t he rec ognit ion pla tfor m has con tinue d to be suc ces sful wi th 7 1 % of em ployee s bein g rewarde d thro ugh the pla tfor m in 2021 . Our salary and bonus budgets are distributed in lin e with ou r prin ciple s, allow ing us to cle arl y diff eren tiate rewa rd acc ordin g to pe rfo rma nce. Foll owing the r emoval of pe rfo rma nce rat ings, we n ow iden tify employees who ha ve made ex ce pt ional contributions throughout the y e ar . W e encourage par ticipation i n various employ e e sha re pla ns, so me of whic h are de scr ibed in the Directors’ Remuneration Report from pag e 98, and i n Note 29 to the Fi nanc ial St ateme nts fro m page 186. Listening t o our workforce Employ e e opinion surveys help us measure employee sentiment and progre ss in our aim of be ing a gre at pla ce to work . In our mo st re cent s urvey ( Novemb er 2021 ), we con tinue d to score highly , achieving an av e rage result of 84% acros s all qu estio ns. Ou r resp onse r ate als o reﬂe cts th e high leve ls of eng agem ent wit h 9 1 % of a ll empl oyees ch oosi ng to par ti cipate in t he sur vey . We have me t or excee ded th ree of o ur sco reca rd goa ls relating to P atient Centrici ty , Speaking My Mind and Development. In 2021 , we a lso co ntinue d to trac k a set of que stio ns rela ting to the C OVID- 19 pan demic to und ers tand h ow well we were s uppo rti ng our employees through a challenging time. We rec eived a favo urab le sco re of 87 % f or ‘I am ﬁ nding ways to b alan ce man aging my fam ily ne eds wh ile keep ing up wi th my most important work responsibilit ie s ’ and 91 % fo r ‘I am get ting t he supp or t I nee d (fr om my man ager , team , etc. ) dur ing thi s time’ . T hese h igh sc ores d emon strate o ur ongoing commitment to the w e l lbeing of our employees. Bui ldi ng a cu ltu re of li felong lea r ni ng and de velopment Emp loyees a re enc oura ged to ta ke o wne rsh ip of the ir own deve lopme nt and l eade rs ar e expected t o spend time supporting and enabling their employ ees’ dev e lopment ne eds. In 20 2 1 , we inve sted $3 5 millio n in devel oping a c ultur e of lifel ong le arnin g to sup por t the up -sk illing o f our pe ople. Le arn ing for L ife is pa rt of o ur amb ition to m ov e fro m per f ormance management t o per formance development, which focuses on encouraging pe ople to gr ow their s kills a nd expe rien ce so they c an ma ximi se thei r poten tial. Our global online learning plat form provides em ployee s with ac ces s to an exte nsive amount of educational resources. Over 7 8% of employ ees have ac cessed resources since lau nchin g the pla tfor m in 2020, wit h 84 % of the se emp loyees r etur ning mo re than o nce. In ad dition to p rovidi ng impr oved onli ne res ourc es, we of fer a r ange of d iffe rent lea rnin g prog ramm es that h ave bee n devel oped to p rovide m ore ta rgete d lear ning opp or tuniti es, a s shown in th e tabl e below. Name of programme Numbe r of attendees T arget group Women as Leaders 225 Women, Mid-Se nior Level roles Leading Ente rpri se 11 3 T op 1 50 Senior Leaders Leading Business 818 Senior Managers Rising Leaders 11 8 High Potential Mid- Senior Level Accelerate 52 Mid-Senior Lev el in Emerging Mark ets Emp owerme nt 350 Women, Mid-Junior Lev e l Leadership Labs 499 Second-Line Leader s in markets Leading People 9 47 New First -Line Leaders Brand Leadership 40 US Women o f Colo r Leaders At t en dees o f our devel opme nt pro gram mes are l ess li k el y t o res ign an d have high er rate s of promot ion. I n addit ion, t he programmes have al so e nabled more accurate su ccession pla nning . Of the 201 9 Women a s Lead ers at tende es, 32% have si nce be en pro moted into more senior positions . F ur thermore, the resignation rate o f these attendees is low e r tha n the overa ll tar get pop ulati on (5. 7% for Women as Leaders attendees compared with 7 .6% for wom en in mi d- to sen ior -leve l role s ). Ou r pe ople We grow and prosper by recruiting, retaining and d evelop ing ta lente d peop le. We do that by be ing a gre at plac e to work, e ncou ragi ng and rewarding innov ation, entrepreneu rship and hi gh performance. Per form ing a s an e n ter pri se tea m Attracting diverse talent and critical capabilities Our graduat e and apprenti ce programmes are cr itica l to attr acti ng ear ly-c aree r tal ent an d en surin g we build t he capa bilit ies we ne ed to del iver ou r future s trate gic obj ecti ves. We als o of fer an M BA develo pmen t progr amme i n our US Commercial Business, which provides our future leaders with broad e xperienc e through business rotations. Ou r tale nt scou t mode l cont inues to successfully support recruitment activity acr oss th e busin ess . This is s uppo rte d by our em ployee re ferr al sch eme, wh ich ha s beco me an increasin gly impor tant source of hiring. In 2021 , we hi red 6,700 pe ople a s a resu lt of employ ee referrals. In 2021 , we re cei ved over 50 0,00 0 job applications and hired 24 ,00 0 e mplo yees (1 7 ,00 0 exte rnal a nd 7 ,0 00 in terna l), de monst ratin g our ab ilit y to attr act key capabilities and talent throughout the COVID - 1 9 p ande mic. Hir ing in crea ses over re cent ye ars have r esul t ed i n 33 % o f our wor kfor ce havin g les s than t wo year s’ ser vice . A dive rse wo rkf orce of b oth new an d longer -se rving emplo yees can help foster a cul ture of in novation w here f resh i deas a re combined with existing busines s k no wledge. Du e to our cha nging f ootpr int and s trate gic obj ective s, mos t of the hir ing ac tivit y has be en in ou r Emerg ing Mar kets, wh ere we have bui lt new sa les tea ms in re cent ye ars . Thi s grow th has b een p ar ticula rly s trong i n Chin a, whi ch acc ounte d for over 7 ,0 00 exte rna l hires i n 202 1 . Pe rfo rman ce dat a indicates these new recruits are suc cessful in the ir pos ition s. However, an incr ease d footprint in Emerging Markets also brings challenges such as i ncreased turnov e r . In 2021 , we a lso ga ined a n additi onal 4,0 00 employees through the ac quisit ion of Ale xion. Th ese new e mploye es have be come p ar t of our new Ra re Dis eas e group o r embe dde d acros s othe r func tion s, such a s HR and F inanc e. 41 Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Bu sine ss R evi ew / B e a Gre at Pla ce to Work Ch ampions of i nclus ion and d iversit y We beli eve that bu ilding a n inclu sive cul ture an d mak ing the m ost of th e stre ngth an d diver sit y of our people allows us to unlock the i nnovat ion required to deliver life-cha nging medicines to the patients who need them most. In 2021 , we exp ande d our in clusi on and diversity (I&D) learning programmes to fur ther em bed I& D in our day-to -day wo rkin g practices. This included mandatory digital ‘conscious inclusion’ traini ng in 1 0 languages and a s et of tec hniqu es that f oster a psychologically safe environment. For more infor mation, see our website, ww w .astrazeneca.com/s ustainability . Our commitments We incl ude ta rgets o n our glo bal sc orec ard to increase represe ntation of women in lea der ship p ositi ons, as we ll as to in crea se the percentage of leaders from Emerging Mar kets an d Japan t hat rep or t into our Se nior E xecuti ve T e am (SE T ) . We also t rack employee sentiment on measure s o f inclusion tw ice a yea r . In the N ovembe r 2021 sur vey , 90% of e mployee s answe red favou rabl y to the statement ‘Managers in my function/ compa n y suppor t diversit y a nd inclusion in the wor kplac e’ . T his yea r we launc hed a vol untar y disclosure campaign t o better understand our global work f orce demogr aphics, including countr y of origin, disabilit y status (including visible and in visible disabilities) , ethnicity , rac e, sex, ge nder i denti ty a nd sexua l orientation where globally permissible. Women c omprise 5 1 .8 % ( approximat ely 43,0 00) of o ur glob al work for ce. Wit h the app ointm ent of A radh ana Sa rin as CFO, the re are ﬁ ve women o n our Boa rd (38% of the tota l). Followi ng the ap point ment of S usan Ga lbra ith as E VP of On colo gy R&D, ﬁve of 1 2 S ET me mber s are n ow women (42% of the tot al). Acr oss th e enter pris e, the represe ntation of women in senior roles inc reas ed to 48. 1 % in 2021 (2020: 46 .9 %), ab o ve our t arge t of 4 7 . 5 %. In the 20 20 Hampto n-Al exande r review, pub lishe d in 2021 , we wer e name d as the highest-ranking pha rmaceutical compa n y in the F TSE 100 fo r repre sen tatio n of women o n the c ombin ed execu tive com mitte e and th eir dire ct re por ts, a nd we moved up f rom si xth pla ce to thir d place i n the lis t of the T op 10 Be st Per form ers . W e als o reta ined o ur po sition a s one of 3 80 com panie s on the Blo ombe rg LP Ge nde r -Eq ualit y Index 20 2 1, which distinguishes companies committed to t ransparency in gender repor t ing and advancing women ’s equality . Ou r employe es co me from 169 dif fe rent cou ntrie s. In 2021 , 18.4 % of em ployee s who are e ithe r memb ers o f the SE T , o r their d irec t rep or ts, ar e from Em ergin g Marke ts and Jap an (1 8.4 % a t year e nd 2020) sli ghtly be low our ta rget of 20%. T o sup por t our c ommi tment to r acial e quit y , we work a t ever y stag e of our ta lent p ipel ine to increase and maintain repre sentation. W e are a f oundi ng par tne r of the Worl d Econo mic For um’ s Par tne rin g for Rac ial Jus tice in Bus ines s initi ative, whi ch is foc use d on eradicating racism in the workplace and set ting n ew glob al sta ndar ds for ra cial e quit y in bu sine ss. Wi thin the U K, As traZ enec a is a signatory of the Race at Work Char t e r . We are co mmit ted to hir ing an d prom oting ta lent et hical ly and i n compl ianc e with app lica ble laws . Our Co de of Ethic s and it s sup por ting S tand ards a re des igne d to help protect against unlaw ful discrimination on any grounds (includi ng disability) . The Code cov e rs recruitm ent and selection, per formance managem ent, career development and promotion, transfer , training, retraining (including retraining, if nee ded, f or people who h ave beco me dis able d), and rewa rd. We e mbrace t he unique skills, insights, and ex per ienc es hel d by indiv idual s with bot h seen a nd uns een di sab ilitie s and ar e com mit ted to cre ating a s uppo rti ve cultur e by providing reasonable accommodations during the interview/hiring proc ess that continue as needed throughout employees’ careers and development within AstraZeneca. Our Global St anda rd for Inc lusi on and D ivers ity s ets ou t how we fos ter an in clus ive and di v er se wor kfor ce whe re ever yone fe els va lued a nd res pec ted be caus e of thei r indivi dual a biliti es and pers pectives. For m ore i nfor ma tion o n our S ta nda rd s and Gl oba l Pol icy f ra mewo rk, s ee ou r web site , ww w .astrazeneca.com/s ustainability . In 2021 , o ur I&D ef for ts e arne d rec ogni tion exte rna lly . We fea tured i n : > The T imes T o p 50 Empl oy er s for Wome n > Dive rsit y Inc. T o p 50 Comp anie s for Di ver sit y > Forb es Be st Empl o yer fo r Diver sit y > Financial Times Div e rsity Leaders > 2021 Bes t Place s to W o rk for LGBTQ E q u a l it y. H uman rig hts BV Ou r Code of Et hics an d Huma n Right s St ateme nt comm it us to re spec ting a nd promoting int ernational human rights – not onl y in our own o pera tions , but al so in our wid er sph eres o f inﬂue nce, su ch as ou r thir d-pa rt y prov ider s. We are co mmit ted to en surin g that we id entif y an d elimi nate, to the ful lest ex tent pr acti cabl e, mode rn slave ry o r hum an traf ﬁc king in o ur supp ly cha ins or a ny par t of o ur bus ines s. We provid e assu ranc e ann ually to t he Audi t Commi ttee a nd our f ull st ateme nt requ ired un der s ecti on 54 of the U K Mod ern S laver y Act 201 5 a nd Se ction II (1 4) of the A ustra lian M oder n Slaver y Ac t 20 18 is avai lable o n our web site, ww w .astrazeneca. com. “ In 2021, we i n ves ted $35 mill i on in deve loping a cu lt ur e of lifel ong l ea rn ing to suppor t t he u p -s k illin g o f ou r pe ople. ” 42 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 St rategic Report Busine ss Rev i ew c ont inue d Co-locat ed around three global R&D centr es 1. Gaithersbur g, MD , US 3,700 2. Cambridge, UK 3,800 3. Gothenburg, Sw eden 2,600 1. US 15,900 19% 2. UK 8,800 11% 3. Sweden 6,900 8% 4. Canada 1,100 1% 5. Centr al and South America 3,500 4% 6. Middle East and Africa 1,800 2% 7. Other Europe 11,400 14% 8. Russia 1,600 2% 9. Other Asia P acic 7,100 9% 10. China 20,600 25% 11. Japan 3,400 4% 12. A ustralia and New Zealand 1,000 1% 4 5 6 7 8 10 1 1 9 12 2 3 1 By g eographical ar ea Emerging Mark ets 39 % Europe 35% US 19% Established Rest of W orld 7 % All number s as at 31 December 2021. 83,100 emplo y ees Emplo y ees by r eporting region Our global business We supp or t the pr incip les se t out in th e United Nations U niversal Declaration of Human Rights and the International Labour Or ganiz ation’s (ILO) sta ndard s on chil d labo ur and m inimu m wages . W e h ave been m embe rs of the United Nations Global Compact on Hum an Rig hts sin ce 201 0. We cont inue to en gage wi th Slave Free Alliance (Hope for Justice) and participate in working groups with peer multinationals to benchmark our approach to risk identiﬁcation and s hare b est p racti ces. We a re memb er s of the Pharmaceutical Supply Chain Initiativ e Hum an Rig hts and L abo ur Gro up, an indu str y collaboration supporting responsible supply chain manage ment principles for ethics, lab our , h ealt h, safet y , env ironm ent an d related management systems. Emplo yee re latio ns BV We see k to follow a gl obal ap proa ch to employee relations, gu ided by global employment principles a nd sta ndards, loc al laws a nd goo d prac tice. In J uly 201 9, we es tabli shed a G loba l F unc tion fo r Employ ee Relations. Th e purp ose of thi s func tion is to b uild an d maintain a positive work environment where ever y em ployee c an fee l safe, pr oduc tive, moti vated an d able to sp eak up. T he Boa rd of Di recto rs, in c ollab orat ion wit h our Glo bal Compliance and E mploy e e Re la tions functions, sup por ts ou r effo rt s to crea te a ‘Spea k Up’ cul ture. Ou r aim is to e ncou rage e mployee s to expr ess th eir op inion s and to preve nt and dete ct any b ehavio ur not in l ine with o ur V alues, Code of Ethics and Global Stan dards. Th e Audit C ommit tee al so che cks the s exual harassment, and harassment and bullying process acti vities and cases periodicall y . T o ach ieve this o bjec tive, we also wo rk to devel op and m ainta in goo d rela tions wi th loc al wor kfor ces a nd work c lose ly with ou r recognised national trade unions. W e also regular ly consult with employee represe ntativ es or , whe re app licab le, tra de unio ns, who s hare our a im of ret ainin g k ey sk ills and m itiga ting job l osse s. Acc ordin g to our inte rnal H uman Rig hts sur vey ca rri ed out i n 2020, 7 5 % o f our employees recognise and hav e a relationship wit h trade u nions . Wher e trade u nions d o not exis t in an ar ea of ope rati on, all th ose ar eas hav e established arrangements to e ngage sim ilarl y with th eir wor kfo rce. W o rkplac e saf ety a nd hea lth BV We work to pr omote a s afe, hea lthy , an d en ergis ing wor k enviro nmen t for our employees and par tners. Our standards apply glo bally a nd are s tated i n our Co de of Ethic s as de scr ibed o n page 47 and avai lable o n ww w .astrazeneca.com/ sustainability . W e ha ve es tabli shed a nd mon itor a se t of safet y and hea lth ta rget s aime d at supp or ting ou r workforce and k e eping A straZeneca among the s ector l eade rs in p er form ance. I n 2021 , we imp leme nted a new G loba l Safet y , He alth an d Environment (SHE ) S tandard t hat describes our c ommi tment to, ma nage ment o f and acc ount abili ty for S HE. In 2021 , we a chieve d a 40% red ucti on in the veh icle c ollisi on rate a nd a 68% red uctio n in the wor k - rela t ed i njur y rate fro m the 201 5 ba seli ne. Sadl y , the re was one em ployee fa talit y due to a ve hicle a ccid ent, and o ne fat al illne ss fr om a poten tiall y wor k -r elate d COVID - 19 expo sure du ring 2021 . 43 Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Bu sine ss R evi ew / B e a Gre at Pla ce to Work Sus tainab ility BV Contributing t o society is a fundamental par t of ou r commi tment to m ake a dif fere nce to pe ople a nd our st rateg ic ambi tion to le ad in sus tain abili ty , a s par t of be ing a gre at pla ce to work . Dur ing 2021 , we wer e reco gnis ed for o ur ef for ts in su stai nabili ty ac ross o ur strategic priorities. This included: > inau gura l 2021 T e rra Ca rt a Sea l award > Dow Jones Sustainability Inde x constituent > FTSE4Good Inde x Series constituent > Fina ncial T ime s 202 1 Euro pean C limate Lea der fo r redu ction o f gree nhous e gas emissions > CDP D ouble A L ist for C limate Ch ange a nd Water S ecur ity fo r the six th co nsec utive yea r > Corporate Knights Global 1 00 Most Sustainable Corporations in the W orld > Acc ess to Me dicin e Index 2021 – seve nth out o f 20. Driving the sustainability agenda During 202 1 , we i ncreased our engagement on glo bal sustain ability issues with external stakeholders and on the global policy agenda. We actively promoted public-private par tnerships to s tr engthen global health se curi ty an d heal th system r esili ence i n light of le sson s lea rned f rom the C OVID- 19 pandemic. W e did this t hrough our Partnership for Health System Sustainabil ity and Resilience (P HSSR) with the London Sch ool of Ec onomi cs and Wo rld Eco nomic For um (W EF), as we ll as our l ong- stan ding access t o healt hcare pr ogrammes and ini tiative s to stren gthe n heal th system s. We als o focuse d on opportunities to identi fy inn ovative sol ution s to the clim ate cri sis and address its impact on global health. As a fo undin g memb er of the Pr ince o f W a les’ Sustainable Markets Initiativ e (SMI) and a supporter of the T erra Carta Sustainabi lity Cha rte r , our C EO atte nded m eetin gs suc h as th e G 7 L eade rs’ Sum mit in Co rnwall, U K. He al so hos ted an SM I Round tabl e focus ed on deliv e ring su stainable healthcare. During the C OP26 sum mit in Gl asgow, UK, we we re one o f the ﬁrs t comp anie s to be award ed the in augu ral 2021 T er ra Car ta S eal by HRH T he Prin ce of Wale s. The S eal re cogn ises com pani es fro m aroun d the wor ld who ar e driving innov ation and leader ship in their ind ustr y in ta cklin g clima te chang e. The Pri nce of Wale s and ou r CEO, along w ith global health leaders, also launched the SMI H ealth S ystem s T ask forc e, whic h our CEO wil l champion. Ou r climate c hang e targ ets wer e v er iﬁed by the Science Based T argets initiativ e (SBTi) as in l ine with t heir ne w Net- Ze ro Co rpor ate St anda rd, Ast raZe nec a bein g one of on ly seve n compa nies wo rldw ide at la unch an d the only p harmaceutical company . Ac cess t o healt hca re BV We are wor king towa rds a fu ture whe re ever yone c an have ac ces s to sust ainab le health solutions for life- changing treatment and c are. T his inc lude s colla bora ting wi th our par tn ers i n suppo rt o f comm on goal s to str ength en he alth sys tem res ilien ce, imp rove eq uitab le acc ess to m edici nes an d prom ote dis ease p reventi on. We innovate a nd par tne r to tra nsfor m solu tions a cros s the pat ient c are pat h way – fro m preven tion, ra isin g awarene ss, dia gnosi s and tre atme nt, to pos t -t reatm ent and wellness. Ach ievem ents i n 2021 > Over 199,00 0 hea lthca re worke rs an d othe rs tr aine d sinc e 20 10 and ove r 31 millio n peop le reac hed th roug h Acce ss to Healthcare programmes. Healthy Heart Afr ica co nduc ted over 23 mi llion sc ree nings for e levated b lood p ress ure an d Y o ung Hea lth Pro gram me ( YHP) re ache d more tha n six mill ion youn g peop le thro ugh prev ention and education programmes in over 30 c ountr ies. > Over 1 1 mil lion pe ople r eache d thro ugh our patient a ssistance programmes (cumulativ ely), which help patients in ﬁnancial difﬁcult y gain access to AstraZene ca medicines. Equitable access We emb ed pra ctic es into th e produ ct po rt folio to dri ve equit able a cce ss to hea lthca re – including digital heal t h, clinical trial diversit y , patient centric ity , inv esting in rare disease s, open innov ation and int e llectual propert y- sharing arrangements. Du ring 2021 , we p ut bro ad and e quita ble acc ess a t the hea r t of our pa ndem ic res pons e. Ast raZe nec a and ou r globa l par tn ers r elea sed fo r suppl y 2 .5 bil lion vac cine dos es to over 180 coun trie s. App roxima tely two t hirds of t hese we nt to low- an d lower - middle-income countries, and more than 24 7 mill ion dos es have be en de livere d to 1 3 0 coun trie s throu gh the COVAX Fa cilit y in 2021 . In 20 2 1, the majo rit y of vacc ine pro duct sa les an d dose s delive red re lated to p ande mic contracts. AstraZeneca will con tinue t o supply the vac cine a roun d the worl d in 2022. We have moved to a n af forda ble pr icing a ppro ach that enables us to maintain broad global access. This includes a tiered pr icing approach ali gned to G ross N ation al Inc ome pe r capi ta, a wid ely re cogn ised m odel u sed by developers of medicines and vaccines. W e remain committed t o supplying the v accine at no pr oﬁt in low- inco me coun trie s, in line w ith our agreement with Oxford U niversity . For m ore i nfor ma tion , se e Ot her Me dic ine s an d COV I D-19 f rom p age 27. “ Th ro ughouragship $1 bi l lio n A m bit ion Z ero C arb on program me, w e a re on track to red uce greenho use gas em issions from o u r globa l o per ation s b y 98% by 2 026 and ha l ve our entire va l ue cha in foo t print by 203 0, o n the way t o a 9 0 % r educ t ion b y 2 0 4 5 .” 44 As tra Ze nec a An nua l Rep or t & Form 2 0 -F I nfor ma tion 2 021 Strate gic Report Busine ss Rev i ew c ont inue d inte rim re por t. Pha se II of the PHS SR als o lau nche d in 2021 , wit h an expan sion i nto 1 3 n ew coun trie s and a re giona l hub in the Ce ntral, E aste rn Europ e and Ba ltic s area , whi ch brou ght the to tal num ber of m embe r cou ntrie s to more t han 30. T he PHSS R has ac t ed a s the bas is for p olicy im proveme nts in ma ny of the cou ntrie s whe re it has b een a ctive. Healthy Heart Africa programme Our Healthy Hear t A frica programme is committed to reducing h y pertension and t he bur den of c ardiova scul ar dise ase, a iming to rea ch 1 0 m illion p eopl e with el evated bl ood pre ssu re acro ss Afr ica by 2025. We work w ith loc al an d globa l par tner s to rai se aware nes s and offer tra ining, s creening and reduce d- co st trea tment , as app licab le. By the e nd of 2021 , th e progr amme h ad con ducte d over 23 million blood pressure scree nings and tra ined ove r 9, 00 0 hea lthc are wor k er s sinc e lau nch in 201 4. In 2021 , t he pro gram me expa nded i nto Côte d’Ivoi re, Sen egal a nd Rwa nda. Y oung Health Programme Sin ce 201 0, the A stra Zen eca Y o ung He alth Pro gram me has wor ked to hel p young pe ople age d 1 0 to 24 take co ntrol of t heir he alth, especially to combat long- term conditions suc h as ca ncer, diabe tes, re spir ator y and hea r t disea se, an d ment al hea lth con ditio ns – refe rre d to as non -co mmuni cabl e disea ses . In co llabo ratio n with UN ICEF and Pl an International, w e suppor t research, advocacy and e duc ation to he lp youn g peop le make bet ter c hoice s for he althi er live s. In 2021 , the programme had reached 1 . 1 8 million yout hs with h ealth i nform ation a nd tra ined 73,00 0 pee r edu cator s in 30 co untri es. Communit y in vestme nt BV We aim to ma ke a posit ive impac t on pe ople in al l the com muniti es whe re we are p rese nt, suppor t ing programmes t o advance patient hea lth, in crea se acc ess to c are, dr ive scientiﬁc innov ation and build re siliency . Our Glo bal St anda rd on E xter nal Fund ing cover s community investment and provides guidance to en sure a co nsis tent, tr ansp aren t and eth ical app roac h aroun d the wor ld, bas ed on lo cal ne ed. Our a ctivi ties a re focu sed o n healt hcar e in the c ommu nity and supporting science education. They include ﬁnancial and non -ﬁnan cial c ontri butio ns. In 2021 , we prov ided $1 1 2.9 mil lion to mo re than 1,220 non-proﬁt organisations across 7 4 countries. This includes cont ributions made by Alexion. We also d onate d more th an $2.3 bill ion (2020: $1 .6 bill ion) of me dicin es in co nnec tion wi th patient assistance programmes around the wor ld, the la rges t of whic h is our A Z& Me pro gra mme in the U S. This c hang e reﬂe cts an in crea se in re ques ts for as sis tanc e and growth acr oss our therapeutic areas, including new indications. Diversit y in clinical trials It is im por ta nt that vol untee rs tes ting a potential ne w medicine appropriately reﬂect our potential target patient populations. We nee d to demo nstr ate a medi cine’ s saf ety and e fﬁ cacy fo r all thos e who ne ed it, wha tever thei r age, sex, e thnic ity, ov er all hea lth, wh ere they l ive and th eir pla ce of origin. Local clinical tria ls also increas e understanding and conﬁdence in medicines. Buil ding on o ur expe rie nce wit h the COVID - 1 9 vacc ine we will wo rk to inc lude mo re coun trie s to ensure diverse, global represe ntation. For m ore i nfor ma tion , se e Cli nic al t ri al s tra ns par enc y on p age 3 4. Rare diseases Th erap ies ar e only avai lable f or 5 % of m ore tha n 7 ,00 0 rar e disea ses . W e b elieve p eopl e wit h rare di seas es de ser ve the sa me at tentio n and investment into ﬁnding therapie s as anyon e. We w or k to help pe ople g et me dicin es thro ugh ou r patie nt supp or t and expa nded a cce ss pro gram mes, a nd we are expanding the geographies where our medicine s are available. For m ore i nfor ma tion , se e Ra re Di sea se fr om pag e 24 . Affordabilit y and p ricing We want al l patie nts who n eed m edic ines to ha ve access to them without ﬁnancial har dshi p . We work to exp and avail abili ty an d accessibilit y of our l ife-cha nging m edicines to pe ople a round th e world. We drive a cces sibi lity o f medic ines fo r dive rse, e quit able an d inclu sive pat ient g roups through compan y polic y and programming , including core pricin g p rinciples and acces s programme s. For m ore i nfor ma tion , se e Pr ici ng an d valu e of our me dic ine s fro m page 3 5. Health system resilie nce We stre ngthe n hea lth syste ms by advoc ating for h ealth sy stem an d poli cy refor m. We build capabilities to addres s unmet medical need, imp rove acce ss to qu alit y heal thca re and prov ide sol ution s alon g a conti nuum of c are – fro m preven tion, awar enes s, dia gnosi s and treatment to post- treatment and wellness; and comm it t o humanitarian relief , grants and donations. We also wo rk to advo cate for g lobal healthcare policies that suppor t the unique ne eds of th e rare di sea se com munit y . Th e Par tner ship fo r Heal th Syste ms Sustainability and Resilience (PHSSR) Thi s par tne rshi p is moti vated by a sha red commitment to improving population health, through and beyond the COVID- 1 9 pandemic. In 2021 , we c o-le d the ﬁr st PHS SR Summ it wit h o ver 50 l eadin g exper ts f rom ei ght pilo t cou ntrie s. We disc usse d the fu ture of he alth in a po st-COVI D- 19 world a nd laun ched t he Product donat ion programmes BV In 2021 , we g av e $23 mil lion (2020: $ 2 7 m illion) in pr oduc t donat ions fo r disa ster , hum anit aria n relie f and pu blic he alth ne ed. We rema in com mit ted to work ing wit h heal th syste m sta k eho lder s and p ayers towa rds achieving more systemic solutions. Env ironment al protec tion BV We aim to de mons trate gl obal le ader ship by minimising our environmental impac t across all our activities and products. Becoming increasin gly circular , we are designing out was te and pol lutio n, keepi ng pro ducts a nd mate rial s in use, a nd ma ximi sing re sour ce efﬁcie ncy . W e are also adopting nat ure-base d solutions t o protect, sustainably manage a nd res tore na tural a nd mod iﬁed e cosys tems th at add ress s ocie tal ch alle nges , such a s the imp act of th e climate c risi s and su ppor tin g biodiversity . Ach ievem ents i n 2021 > 59% redu ction i n Scop e 1 and 2 greenhouse gas emissions since 20 1 5 > Over th ree mil lion tre es pl anted by A Z Fore st by end o f 2021 > 1 7 % red ucti on in water u sage s ince 201 5 > 8 % r educ tion in o ur waste s ince 201 5 > 7 5 % of development projects met resource ef ﬁcie ncy ta rget s at laun ch in 2021 > 1 0 0 % saf e API disc harg es for AstraZeneca sites > 91 % for g lobal ly man aged ﬁ rst-tie r supplier sit es. As p ar t of our WEF p ar tner ship, in 2021 we con tribu ted to the A llian ce of CEO Cl imate Lea der s and as a C orp orate A llian ce sup por ter of th e T rilli on T re es refo rest ation movement. Ambition Zero Carbon We are co mmit ted to: > Achieving net - zero greenhous e ga s (GHG) emissions by maximising our energy efﬁcie ncy , shif ting to renew able ene rgy source s, a nd in vesting in nature -based rem ovals to co mpen sate for a ny resi dual GHG footprint. > Building resilience by managing the physical ( sites, supply chain ) and transitional (regulatory , market and product) risks and opportunities from climat e change in the va lue ch ain thr ough ad aptat ion an d busines s continuit y p lanning. 45 Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Bu sine ss R evi ew / B e a Gre at Pla ce to Work Th e climate e mer gency i s a publi c heal th emergency . It is changing our planet irreversibly , with w arming reachin g c ritical tolerance thresholds for he alth . Human health and t he hea lth of the p lanet a re de eply inte rcon necte d. We have an opp or tunit y now to res et how we live a nd cre ate a more sus tain able wo rld – tog ether a nd with out de lay . Th rough o ur ﬂag ship $1 billi on Amb ition Z ero Car bon pr ogra mme, we ar e on trac k to redu ce GHG e miss ions f rom our g loba l oper ation s by 98% by 2026 an d halve ou r entire va lue ch ain foot print by 20 30 on th e wa y to a 90% re ducti on by 2045. O ur emi ssio n redu cti on ta rgets h ave been ve riﬁe d by the Sc ienc e Bas ed T ar gets in itiati ve and we wer e one of the ﬁ rst seve n comp anie s world wide to have our S cope 1 to 3 a nd lon g-term n et- ze ro targets veriﬁed under their new Net -Z ero Corporate Standard. W e w e r e also an early sup por ter of th e UN-b acked Ra ce to Zer o . Near -term targets: > 98% redu ctio n in Scop e 1 and 2 GH G emi ssio ns by 2026 fr om 201 5 bas elin e > switch ing to 1 0 0% fully e lec tric ve hicle ﬂe et (E V 1 0 0) by en d of 2025 > usin g 1 0 0 % ren ewable e nerg y (RE1 0 0) for p ower and h eat by en d of 2025 > doubling energy productivit y (E P1 00) fro m 20 1 5 to 20 2 5 > launching ﬁrst next - generation respiratory inhalers with near -zero cli mate impact by 2025 > aligning supplier spend with companies wit h approve d scie nce -bas ed ta rget s by en d of 2025 > pla nting an d steward ing over 50 m illion tre es by en d of 2025 as a natu re- base d solution to enhance climate, ecological and community resilience t hrough our A Z Forest global initiative. Long-term targets: > 50% redu ctio n in total S cope 3 e miss ions by 203 0 and 90% re duct ion by 2045, f rom 201 9 ba seli ne > carbon negativ e for all residual e missions fro m 2030 a nd scie nce -ba sed ne t -zero by 2045 > transitioning to next - generation r espiratory inhalers with near -zero cli mate impact. Product sustainability We m anage the environmental impact o f our pro duct s from d iscover y in t he lab th rough to the e nd of a pro duct ’ s li fe. T o avoid ad vers e imp acts o n the envir onme nt and h uman hea lth, we eval uate all m ateri als an d pro ces ses u sed to ma ke our pro duct s. We focu s on preve nting an d redu cing wa ste wherever p ossible , ma ximising the utility of the n atura l reso urce s we use. As p ar t of our co ntinue d com mitme nt to tra nspa rency i n the man agem ent of Pha rmac eutic als in t he Enviro nment ( PiE), we launched an E c oP harmacoVigilance das hboa rd that s hows the r isks of pharmaceu ticals that reach the e n vironm ent pr incip ally thr ough p atien t use. Th is help s to mon itor any a ssoc iated r isk an d ensu re the environmental safet y of our life-ch anging me dicin es. Wit h the das hboa rd, we can l ook at re al-wor ld envi ronme ntal r isk by co mpar ing measured environmental concentrations with deﬁned ‘no effect and safe ’ concentrations. Thi s is the ﬁr st tim e an indi vidua l pharmaceu tical company has shared this typ e of data . This initiative highlights our pro gres s on wate r quali ty an d build s on our establishe d le adership in responsible active pharmaceu tical ingredient discharge management from our operations. For m ore i nfor ma tion o n our P iE p osi tion p ape r , se e our w ebs ite, www.as trazen eca.com/ sustainabili ty/ enviro nmental - protect ion/pha rmaceutica ls-in-t he-e n vi ronment.htm l. In 2021 , we la unch ed our i ntern al Prod uct Sustainability Index to ensure w e understand the environmental impacts across our product value chains and prioritis e im pro vement oppor tun ities. A key pro duct-r elate d elem ent of ou r Am bitio n Zero Ca rbon s trate gy is ou r commitment to de velop the next -gener ation respirator y inhalers with near zero global warming potential (GWP ) propellants. Durin g 2021 , we pr ogre sse d a proje ct sp annin g all key fun ction s in the bu sine ss to as ses s alternative lo w- G WP prope l lant options from an environmental, technica l , regulatory, medical, non-clinical and commercial view point to e nabl e a Phase II I investm ent de cisio n for the l ead pro pell ant in th e ﬁrst hal f of 2022. Natural resources We are co mmit ted to: > Reducing our impact on the planet through the efﬁcient, circular use of natural res ourc es acr oss th e value ch ain to en sure responsible sourcing , consumption , production and d isposal. > Prote cti ng and resto rin g eco syste ms to improve he alth ou t c omes and tackle envi ronme ntal d river s of dis ease, s uch a s water a nd air q ualit y , th rough o ur focu s on wate r steward ship a nd biod iver sity. T o dr ive our cli mate ac tion ini tiative s and me et our e nvironm enta l targ ets, we h av e a dedicated Nat ural Resource E fﬁciency Fund , whi ch has inve sted a pproxim ately $1 30 mi llion in environmental efﬁciency innovat ions since 201 5. T his inc ludes 5 6 new proj ect s and nea rly $ 30 milli on spe nt in 2021 . Wa ter st ewardship Sin ce 2020, we have co llab orate d in a water stewa rdshi p par tner ship w ith the Wor ld Wid e Fund fo r Nature ( W WF ) Swede n. Thr ough th is collaboration, in 2 021 , we championed a se ctor-level wate r risk a sse ssm ent of the global pharmaceutical supply chain. For m ore i nfor ma tion o n th is as ses sme nt, s ee ww f. panda.org/wwf _news/? 4417966/ Diagnosing- curre nt -and- f u ture-wa ter -risks- fa cin g-th e - pha rmaceut ical- sector. Thi s ass ess ment ha s help ed ide ntif y se ctora l- level wa ter stewar dship o ppor tu nitie s, as well as p otentia l shar ed water c hall enge s that may be s trateg ical ly releva nt in are as of co nce ntrate d pharmaceutical manufacturi ng. We also i ntrod uced a n ew water stewa rdsh ip pil ot, focu sed o n six key site s in water-sca rce are as as th ese fa ce fut ure water ava ilabi lity and q uali ty ri sks. In 2022, we wi ll set lo cally- app ropr iate wate r targ ets for th ese si tes and aim to h ave long-te rm co ntextua l water ta rgets i n place by 20 25. Green l abs In 2021 , o ur coll abor ation w ith the no n-pr oﬁt organisa t ion, My Green Lab, continued to ins pire a re duct ion in th e enviro nment al imp acts of ou r labs. A tot al of 36 l abor ator y func tion s acr oss 31 site s are involve d in the pr ogra mme. Of t hese, 12 rece ived ce r tiﬁca tions t hroug h this ini tiative ac ros s 1 1 si tes: four s ites at tain ed the highest Green cer tiﬁcation lev el, one Platinum, six G old, an d one Si lver . We aim f or all of ou r R&D l abs to be M y Gree n Lab s cer tiﬁ ed by 2026. Fo r the sec ond co nse cutive ye ar , we won the Biot ech/ Biopharma organisation category in the I nternational F re ez er Challenge, saving app roxima tely 1 , 858 kWh /day duri ng the challenge across the participating sites. My Gr een L ab ce rt iﬁcat ion ha s been recognised by the pharmaceutical sector as pa r t of the UN Ra ce to Zero. For more infor mation, see ww w .mygreenlab.org/blog-beaker/ g r een-lab- cer ti cation -name d-key-pl ayer-in-t he- un- clim ate- cha ng es-race -to-z ero. Building a fr ame work for circularit y 1 We are leve ragi ng our exp erie nce wi th LE AN manufacturing, which includes tools to enh ance e fﬁ cienc y and el iminate wa ste, to buil d a fram ework fo r empl oyees to id entif y and impleme nt ini t iatives that contribute to our e nviron ment al tar gets. Fo r exampl e, in 2021 a K AIZEN TM pil ot event was h eld to target single -use plastics use d in packaging for o ne of our p roduc ts. Us ing LE AN too ls, a cro ss-f uncti onal te am ana lyse d inventor y dat a to ide ntif y optio ns to tac kle pl astic u se and increas e re cy cling, resulting in oppor tunities to eli minate up to 20 0 tonne s of pla stic ann ually. This f rame work will c ontin ue to be sc aled u p and sh ared a cros s our net work . 1 ‘ Cir cu lar it y’ mea ns des ign in g o ut was te and pol lut ion, ke epin g pro duct s and ma ter ial s in us e, for exa mple by de sign in g for du ra bil ity a nd rec ycl ing , a nd reg ener ati ng nat ura l sys tem s by avoi di ng non- rene wa ble reso urc es and pre ser v ing or en ha nci ng renew abl e o nes. 46 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Strate gic Report Busine ss Rev i ew c ont inue d Et h ics an d tra nspa renc y BV We see k to crea te posit ive soci etal i mpact and e mbe d ethic al be haviou r in all ou r bus ines s acti vitie s, mar kets and va lue ch ain. We do this by p romot ing ethi cal, tr ansp aren t and i nclu sive poli cies w ithin o ur comp any as well a s acro ss all o ur par tne rs an d supp lier s. It is im por ta nt that we ca n crea te value beyon d the imp act ou r medi cines h ave on patients. Building trust by demonstrating integrit y , tra nsparency and fair treatment is ce ntra l to ever yth ing we do. Ach ievem ents i n 2021 > 48. 1 % of sen ior mid dle man agem ent ro les and a bove are h eld by wome n > 72 % of all c ritic al ma nufac turin g par tne rs are r ated ‘b ronze’ or be tte r by our sus tain abili ty fr amewor k (2025 tar get of 75 %) > 83 % of employ e e sur ve y respondents f e el tha t Astr aZen eca h as a ‘Spe ak Up’ cult ure. For more infor mation, see: > Bio et hic s, se e page 3 4. > Ch amp ions o f inc lusio n and d ive rsit y, see p age 4 2. > Work plac e sa fet y and h eal th , see p age 4 3. Code of Ethics We are co mmit ted to em ployin g high et hica l st anda rds whe n car ry ing ou t all asp ect s of our b usin ess gl oball y . Ou r Code of Et hics (the C ode) is b ased o n our Value s, expe cted be haviou rs an d k ey pol icy pri ncipl es. It app lies to a ll Exec utive an d Non- Execu tive Dir ecto rs, of ﬁce rs, e mploye es and te mpor ar y st aff, in al l compa nies w ithin o ur Grou p wor ldwi de. Th e Code e mpowe rs e mploye es to make de cis ions in th e bes t intere sts of th e Gro up and t he peo ple we se rve, now a nd in the l ong ter m. It doe s this by ou tlining o ur commitments in simple terms and focusing on why t hese c ommit ment s matte r . Th e Code is at t he core o f our com plia nce pro gra mme. It ha s bee n tran slated i nto appr oximate ly 40 languages and guides employees on ho w to make th e bes t day-to- day choi ces a nd how to act i n a cons isten t, resp onsi ble way , worldwide. There are two mandator y training cou rse s dedi cated to t he Code: o ne is for new st ar ter s; the sec ond is t he annu al tra ining for a ll empl oyees, r emin ding the m of the key com mitme nts. In 20 2 1 , 100% of all a ctive employees completed the annual training on th e Code. The Code includes four high-lev el Global Policies cov e ring Science, Interactions, Workplace and Sustainability . Thes e G lobal Policies are c omplement ed by underlying Global Standards, which deﬁne the g lobal re quire ments we f ollow to del iver our b usin ess con siste nt with t he V a lues , behav iour s, commitments and principles embodied in our C ode an d Glob al Polic ies. O ur Code and Global P olicies, toget her with rele vant Global Standards and Posit ion Statements, are published on our website , ww w .astrazeneca. com. Our pol icy framew ork also includes addition al requirements at the glo bal, lo cal an d busin ess u nit level to sup por t emp loyees i n their d aily wo rk. The Code recommends that employees rep or t pos sible v iolati ons. It a lso pr ovide s info rmat ion on how to d o so, inclu ding vi a the A Z Ethi cs hel pline o r websi te, which i s ma nage d by an inde pend ent thi rd par t y . A Z Ethic s is als o availab le to third p ar ties. Rep or ts ca n be made a nonym ousl y where de sired a nd whe re pe rmit ted by lo cal law. Anyo ne who ra ise s a potenti al bre ach in g ood fai th is ful ly supp or ted by man agem ent. Th e major ity o f case s come to o ur at tentio n through management and employee se lf-rep or ting. T his can b e see n as an indication that emplo yees are comfortab le in ra ising th eir co nce rns wi th line ma nage rs or loc al Hum an Res ourc es, Le gal or C ompli ance , as re com mend ed in the C ode (an d reinfo rced in the 20 2 1 Cod e train ing). In 2021 , 4 16 repo rt s of all ege d comp lianc e brea ches o r other e thica l con cer ns were m ade thr ough A Z Ethi cs, inc ludin g repo rt s made by any a nonym ous route that c ould b e c onsidered whistleblowing (in 20 20, there we re 385 r epor ts). A Fina nce Co de com plem ents th e Code and a ppli es to the CFO, the G roup’ s p rinc ipal accounting of ﬁcers (including key Finance st aff in a ll over seas s ubsid iari es) and a ll ma nager s in the F inanc e func tion. T his reinforces the impor tance of the integrity of the Group’ s Financial Statements, the rel iabil ity of th e acco untin g reco rds on w hich they a re bas ed and t he robu stne ss of the relev ant control s and proces ses . Non-Fi nancia l I nformat i on Statement Und er se ct ions 414 CA a nd 414C B of t he Com pan ies A ct 2 00 6, a s int ro duce d by t he Com pan ies , Pa rt ner ship s an d Group s (Acc ounts and Non-F inanci al Repor ting) Re gu lat ion s 2016, A st ra Zen eca i s req ui red to i nclu de, i n its S tra teg ic Rep or t, a no n-nanc ial stat emen t con taining certain in for mat ion . As r equ ir ed by t he Re gu lat ion s, the St rategic Report contai ns informat ion on t he fol low ing m at ters , whi ch in clud e re fere nce s to our r elev ant p oli cies , due dil igence processes and in f ormat ion on how w e are p er for mi ng aga in st va riou s mea su res i n th ese a rea s: > A n ti-bribe r y and anti - c orrupti on, se e page 3 7 . > C ode of E th ic s, se e th is pa ge. > A cc ess to h ea lthc ar e, se e page s 4 4 to 45. > E nvironmenta l protection, see pages 45 t o 46 . > O ur p eopl e, se e page s 41 to 4 3. > H um an r ights , se e page s 42 to 4 3. I nfor mat ion o n the G roup’s P ri ncip al R isk s is i nclu ded i n Ri sk O ver vi ew (se e fro m pa ge 48 ) and i nfo rm atio n on th e non - na ncia lkeyp er for man cei ndic ator s re leva nt to ou r bus ine ss is i ncl uded i n Ke y Per for ma nce I nd icat ors (s ee fr om pag e 12). A de scr ipt ion of ou r bus ine ss mo del i s conta ined in Busine ss Model and Life -c ycle of a Me dic ine ( see f rom p age 10). 47 Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Bu sine ss R evi ew / B e a Gre at Pla ce to Work Mana ging risk Ou r appro ach to ri sk mana geme nt is de sign ed to encourage clear decision making on which ris ks we take an d how we man age the se ris ks. We stri ve to embe d soun d risk m anage ment in our strategy , planni ng, budgeti ng and performance management processe s . The Board deﬁnes the Group ’s r isk appetite. Thi s enab les th e Group, in b oth qua ntita tive and q uali tative ter ms, to ju dge the l evel of ris k it is p repa red to ta ke in achie ving it s ov er all obj ective s. The B oard ex pres ses th e acc epta ble leve ls of ris k for the G roup us ing thre e key dime nsio ns. The se ar e : (i ) earn ings and c ash ﬂ ow , (ii ) retur n on inves tment a nd (ii i) ethi cs and r eput ation. A nnua lly , th e Grou p devel ops a de taile d thre e-yea r bot tom-u p business plan and 1 0-year long-range pro ject ion to sup por t the de liver y of it s str ategy. The Bo ard co nsid ers t hese in the c ontext o f the Gro up’ s ri sk app etite. Adju stme nts are m ade to the p lan or r isk app etite to e nsure t hey rema in alig ned. Th e SET is r equi red by the B oard to over se e and m onito r the ef fect ivene ss of the r isk managem ent processes imple mented b y managem ent. Within each SET func tion, lea der ship tea ms dis cus s the ris ks the business faces. Quarterly , each SET function as ses ses ch ange s to thes e risks , new and emerging risks and mitigation plans. These are a ssim ilate d into a Gro up Risk R epor t for the B oard, Au dit Co mmit tee and S ET . Gl obal Compliance, F inance and I nternal A udit Se rvi ces s uppor t SE T by adv ising o n polic y and standard setting, monitoring and auditi ng, com muni catio n and tra ining , as well a s rep or ting on t he ade quacy of l ine man agem ent pro ces ses a s they app ly to ris k manag eme nt. Th e Board b elieve s that exi sting p roce sse s prov ide it wi th ade quate info rmat ion on th e ris ks and u ncer ta intie s we face. T he Boa rd has c arr ied ou t a robu st as sess ment o f the Pri ncipa l and Eme rgin g risks f acing th e Grou p. Th e table ove rlea f provid es ins ight in to our ongoing Principal Risks. It outlines why ef fec tive man ageme nt of the se ri sks is imp or tant a nd rel evant to our b usine ss, h ow we are m anag ing the m and whi ch ris ks have gon e up, down or re main ed st atic dur ing the pas t 1 2 mo nths. O ur Prin cipal R isks a re thos e ris ks that a re mos t likely to have a ma teria l imp act on o ur busi nes s and ar e a subse t of the tot al ris k land scap e facin g the Gr oup. For m ore i nfor ma tion o n the se P ri ncip al R isk s an d the ot her r isk s in o ur r isk l and sca pe, s ee t he Ri sk sup plem ent at ww w .astra zen eca.com/annualreport2 02 1. Em er gin g ri sks Eme rging r isks a re ‘new’ ri sks that m ay cha llen ge us in th e futur e. Thes e risk s have the p otentia l to cr ysta llise a t some p oint in th e fut ure but a re unli k ely to i mpac t the bus ines s dur ing the n ext yea r . The o utcom e of such ris ks is of ten mo re unce r tain. T hey may be gin to evolve ra pidl y or simp ly not ma teria lise. We moni tor our bu sine ss ac tiviti es and exte rna l and inte rnal e nviro nment s for new, em ergin g and ch angin g risks to e nsur e thes e are managed appropriately . Annually , we combine input f rom each SET function and exte rna l insig ht to sca n the hor izon for emerging risks. A summar y of emerging risks is pr ese nted for a sse ssme nt to the Au dit Committee and the Board . Emerging risks con tinue to b e monito red as p ar t of our ongoing risk management processes outlined above. Cl im ate ri sk Th e ident iﬁcat ion an d asse ssm ent of cl imate ris k form p ar t of our exi sting r isk ma nage ment processes as described below . ‘ Fai lure to meet regulatory and ethical expectations on environmental impac t, in cluding climat e cha nge’ is a co mpon ent of th e Group’s risk landscape . For m ore i nfor ma tion a bou t our G loba l Comp lia nce f unc tio n, se e pag e 79 an d for ou r Code o f Et hic s se e page 4 7 . T ask force on Climat e-related Financial Disclosures We supp or t the T as k force o n Climate -re lated Fina ncia l Disc losu res ( TCFD) fr amewor k and con tinue to d ev elo p our di sclos ures i n line with its recommendations. W e ﬁrst adopt ed the TCFD f ramewo rk in ou r 2020 Ann ual Rep or t, and c ontin ue to appl y it to des crib e ac tiviti es con ducte d in the yea r to 31 Dece mbe r 2021 . Our TCFD S tatem ent fro m page 21 7 the refor e summa ris es the wor k und er taken to d ate to unde rst and the pote ntial i mpac t of clima te chang e on our bus ines s and ou tline s futu re area s of management focus. For m ore i nfor ma tion a bou t our T CF D St atem ent, se e page 2 1 7 . W e face a d i verse rang e of risks a nd uncer tai n t i es. T h ose r isks t ha t hav e t he po ten t ial to ha ve a ma ter ial impa ct on our St ra teg i c P riorities are our P rincipal R isks. “ W e str i ve to embed so un d ris k ma nagem ent in ou r st rate g y , pla nn i ng, budget i ng a nd perfo rma n ce ma nagem ent pr ocesses. ” 48 As tr aZ enec a A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Strateg ic R eport R isk Over view Vi abi lit y stat ement In ac cord ance w ith provi sion 31 of the 201 8 UK C orpo rate Gove rnan ce Cod e, the B oard ha s deter mine d that a th ree -year pe riod to 31 De cemb er 2024 cons titute s an a pprop riate p erio d over whi ch to provi de its viability statement. Th e Board c onsi der s annu ally an d on a rol ling ba sis, a th ree -y ea r bot t om -up det aile d bus ines s plan . The Bo ard al so ass ess es the C ompany ’ s pr ospe cts u sing a 10-yea r long-range projection but, given the inh erent unc er tain ty invol ved, be lieves tha t the three - yea r statement pres ents readers of this A nnu al Rep or t with a re ason able de gre e of as sura nce wh ile stil l provid ing a longer -term perspective. Th e three -year d etai led bu sine ss pla n ca ptures r isks to th e sale s and c ost for ecas ts at a ma rket an d SET f uncti on level. T he pla n is us ed to pe rfo rm ce ntra l net deb t and headroom proﬁle analysis. The follo wing sc enar ios have be en ap plie d to this an alysi s to cre ate a sever e but pla usibl e downs ide com binin g a numb er of the Pr incip al Ris ks det aile d on page s 50 to 5 1 : > Principal Risks : Pricing, affordability , acces s and competitive pressu res. F ailure s or de lays in th e quali ty an d ex ec ution of t he Group’ s commercial strategies. – Scenario 1 – Gover nme nt acti on on pricing, higher th an anticipat ed competition and other commercial headwinds result in lower than ant icipa ted grow th rate s for ou r medicines. – Scenario 2 – A signiﬁcant incident leads to rep utati onal d amag e in a key marke t resulting in an ongoing 1 0% rev enue reduction in this market. > Principal Risk : Failu re or de lay in the del iver y of our p ipeli ne or lau nch of new medicines. – Scenario 3 – As sume s no laun ches of new products. > Principal Risk: Failure t o maint ain supply of compliant, quality medicines. – Scenario 4 – Major equipment failure or signiﬁcant regulatory obser vation at one of ou r major m anuf actur ing site s res ults in a 1 2-month supply interruption f or one of ou r k ey onc olog y prod ucts . > Principal Risks : Failure in information technology or cybersecurity . Adverse outcome of l itigation and/ o r government inv estigations. – Scenario 5 – Le gal or re gula tor y non -co mplia nce re sult s in the lev y of a $50 0 milli on ﬁne p ayable in 20 23. In ad dition , the Boa rd has c onsi dere d more stress ed scenarios including res trictions on deb t facto ring an d no acc ess to c apit al ma rkets to ra ise new d ebt. In e ach sc enar io (or combination of scenarios) , the Group is abl e to rely o n its exis ting ca sh, ca sh eq uivale nts an d shor t-term ﬁ x e d inco me inv estments and committed credit faci lities. It may l everag e its co st bas e, redu ce cap ital expe nditu re and t ake othe r cash m anag emen t me asure s to mitig ate the im pacts a nd stil l have res idua l capa cit y to absor b fur the r shoc ks. Bas ed on th e resu lts of thi s anal ysis, th e Directors have a rea sonable e xp ectation tha t the Com pany will b e able to c ontinu e in op erat ion and m eet it s liab ilitie s as they fal l due over th e three -year p eri od of the ir asse ssment. C O V I D -1 9 p a n d e m i c Th e risk ‘ failu re of cri tica l proc ess es’ (whic h ca n be foun d in the Ri sk Supp leme nt at ww w .astra zeneca.com/annualrepor t202 1 ) inc orpo rates t he ris k of disr uption a s a resu lt of a pandemic. The Board does not consider this to b e a Princ ipal R isk in it s own righ t. However, the impa ct of the C OVID- 19 pan demi c on the G roup’ s o per ations r emai ns unc er tain a nd ca nnot be p redi cted wi th con ﬁden ce. Th e extent o f any adver se im pact on G roup op erat ions wil l depe nd on the g loba l dur ation, ex tent a nd sever ity o f the pan demi c. T o the ex tent th at the pa ndem ic adver sel y impacts Group operations and/or per formance, the G roup exp ect s it to have the ef fec t of heightening cer tain risks, including Principal Risks. This incl udes those risks relating t o the d eliver y of th e pipe line or la unch of n ew me dicin es, the exec utio n of the Gro up’ s commercial strategy , the manufacturing and supply of new medicines and reliance on thir d-pa rt y goo ds and s er vice s. “ W e mon i tor ou r bus ine ss ac t ivit ies an d ext ernal and i nter n a l e nv i ron me nts for ne w , emerg i ng risk s to ensure these are managed appropri a tely . ” 49 Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts R isk O ver v iew R isk c ateg or y and P ri ncip al R is ks Contex t/potent ial impact Man agement ac tions Trend versus pr i or year Prod uct pi pelin e ri sks Failure or de lay in t he de live ry o f our pipeline or launch of new medicines The dev elopment of an y pharmaceutical product ca ndid ate is a co mplex , risk y an d leng thy pr oces s invol ving s igni ﬁcan t res ourc es. A pr oje ct may fa il at any s tage o f the pr oces s due to a n umbe r of fac tors , which could adversely affect our future busines s and results o f operations. > Prioritise and accelerate our pi peline. Strengthen pipeline through ac quisit ions, licensing and coll aborations. > Fo cus on i nnovat ive sci ence i n our ma in disease areas. > Improve R&D productivity. Fai lur e to meet regulatory or ethical requirements for medicine development or approv al We are s ubje ct to law s and re gula tion s that c ontro l our a bili ty to ma rket o ur pha rma ceut ica l prod ucts . De lays in r egul ator y revi ews an d appr ovals c ould de lay our a bili ty to ma rket ou r pro duct s and ma y adve rs ely af fec t our r evenue . > Quality management systems incorporating monitoring , training and assurance activities. > Collaborating with regulatory bodies and advocacy groups t o monit or and r espond to ch ange s in the r egul ator y envi ronm ent, including revised processe s, timelines and guidance. Com merc ial isat ion r isk s Pricing, affordabilit y , access and competitive pressures Op erat ing in m ore th an 1 0 0 co untri es, we a re subject to political, socio-ec onomic and ﬁnancial fac tor s arou nd the wo rld. T he me dicin es in o ur Rar e Di sea se unit a re si gniﬁ cant ly mor e expen sive th an traditional medicines. Global pressures to reduce healthcare spending ma y lead to t he implementation of v arious controls, reimbursement mechanisms or cost containment measures, wh ich could adversely affect our business or ﬁn ancial results. > Focus on key pr oducts. > Demonstrate v alue of medicines/health economics. > Global footprint. > Diversiﬁed por tfolio. Global economic and political conditions placing down ward pressure on healthcare pricing and spending , an d ther efore o n reve nue. Failure or de lays in t he quality or execution of the Group’ s commercial strategies A fai lure to exe cute ou r com merc ial s trate gies o r ach ieve the l evel of s ale s antic ipate d for a me dic ine could materially impact our busines s or the result of operati ons. > Focus on key pr oducts. > Substantial in vestment in s al es and marketing ac tivities. > Ac cel erate e x ec utio n of plan s and r isk share through business de velopment and strategi c coll aborations and alliances. Maximis ing the commercial potential of ou r new pr oduc ts underpins the success of ou r stra tegy a nd the de liver y of ou r sho rt- an d medium-term targets. Supply c hai n and b usin ess exe cut ion ri sks Fai lur e to maintain supply of compliant, quality medicines De lays or i nter rupt ions i n supp ly can l ead to p rodu ct sh or tage s, whi ch may re sul t in los t prod uct s ales an d adver sel y af fect o ur rep uta tion a nd reven ues in a ma teri al way. > Estab lishment of new manufactur ing facilities, creating capacity and technical ca pabi lit y to supp or t new pro duc t laun ches . > Contingency plans incl uding dual s ourci ng, multiple suppliers and close monitoring an d main tenan ce of st ock leve ls. > Business continuity and resilience ini tiati ves, di sas ter an d data r ecove ry, and emergency response plans. > Quality management systems. Ex ter nal fa ctor s suc h as the CO VID- 1 9 pandemic, geopolitical tensions a nd high lev e ls of demand for certain raw m aterials and components place increase d pressu re o n supply chains and distribution networks. Princ i pal R i sks St rat eg y key Acc elerate I nnovat ive Scie nce Del iver Gr ow th a nd T herap y Ar ea Le ader shi p Be a Gr eat Pla ce to Work Ach ieve Group Finan cial T arge ts Trend key I ncreasi ng risk Decreasing risk Uncha nged 50 A st ra Zen eca A nn ual R epo rt & For m 20 - F In for mat ion 2 021 St rategic Report R isk Over view c ont inue d R isk c ateg or y and P ri ncip al R is ks Contex t/potent ial impact Man agement ac tions Trend versus pr i or year Supply c hai n and b usin ess exe cut ion ri sks c ontin u ed Fai lur e in information technology or cybersecurit y Sig niﬁc ant di sru ption t o our IT sy stem s, incl udin g bre ach es of da ta se curi ty or c ybe rse curi ty, or fai lure to comply with applicable law s or r egulations ma y re sult in l oss es or r egul ator y pen alti es, w hich c ould ha rm our r eput atio n and m ateri ally a ffe ct ou r ﬁnancial condition or results of operations. > Cyberse curi ty framew ork and dashboard . > D isas ter an d data r ecove ry p lan s. > Strategies t o secure critical systems and processes. > Re gula r cyb ers ecu rit y and p rivac y trai ning for e mploye es. Growing multi-faceted cyber thre at. Fai lur e to attrac t, develop, engage and re tai n a dive rse , talented and capable workforce The inability to at tract and retain highly -skilled pe rso nnel m ay weake n our s ucce ssi on pla ns for c riti cal p osit ions , may adve rs ely af fec t the imp lem enta tion of o ur str ateg ic obj ecti ves an d could ultimat ely impact our business or re sult s of operati ons. > T argeted recruitment and r etention str ateg ies de ploye d incl udin g in the Rare Disease unit. > Development of our emp lo yees. > Evol ve our cu ltur e. Strong competition for talent. Comple x workforce dynamics as a r esul t of COVID - 19 pandemic-related disruption. Le gal , reg ul atory a nd compl ia nce ri sks Safety and ef ﬁcacy of market ed medicines is questioned Se riou s safe ty co nce rns o r adver se eve nts re latin g to ou r prod ucts m ay lea d to prod uct r eca lls, se izure s, inte rru ptio n of supp ly an d loss o f prod uct approvals, which could adv e rsely affect patient ac ces s, our r eput atio n and ou r reven ues. Signiﬁcant product liability claims could als o a rise, whi ch may b e cos tly , d iver t man age ment a tten tion , re duce d ema nd for ou r pro duct s and d amag e our reputation. > Robust processes an d s ystems in place to ma nage p atie nt safe ty a nd ef ﬁcac y tre nds a s well as ex ter nall y rep or ted ri sks through regulatory agencies and other par t ies. This includes a comp rehensive pharmacovi gilance programme supplemented b y close mon itoring an d review o f adver se eve nts. Adverse outcome of litigation and/or governmental investigations Ou r busi nes s oper atio ns are s ubje ct to a wi de range of la ws, rules and regulations around the wor ld. Any f ailu re to com ply wi th the se may re sul t in A stra Zen eca b eing i nvesti gate d by relev ant government agencies and authorities a nd/ or in legal proceedings being ﬁled a gainst us. Government i nvestigat ions, lit igations, and other legal pr oce edin gs, re gard les s of the ir outc ome, c ould b e co stly, diver t ma nage men t atte ntio n, or da mage o ur re puta tion a nd dem and fo r our p rodu cts. Unf avoura ble re sol utio n of cur rent a nd sim ilar fu ture pr oce edin gs ag ains t us cou ld sub jec t us to criminal liability , ﬁnes, penalties or o ther monetary or non-monetary remedies and could adv er sely af fec t our bu sine ss or r esu lts of op era tion s in a mat eria l way . > Established compliance framework with strong ethical a nd compliance culture. > Combined internal and external counsel manageme nt. IP r isks r ela ted to ou r products The pharmaceutical industr y is experiencing pressure from go vernments and other healthcare payo rs to im pose l imit s on IP pro tect ions i n an ef for t to ma nage h ealt hca re cos ts. If we a re una ble to obt ain, d efen d and e nforc e IP that p rote cts ou r products, we may experience accelerated and intensiﬁed competition from third-par ties. > Ac tive ma nage men t of IP rig hts a nd IP litigation. Ec onomic and  nanc ia l r isk s Fai lur e to achieve strategic plans or meet targets or expecta tions Failure to successfully implement our busine ss str ateg y , in clud ing the e ffe cti ve integ rati on of Al exion i nto our G roup, m ay fru stra te the achievement of our targets and materially damage our brand , business, ﬁnancial position or results o f operations. > Fo cus on key p rodu cts a nd inn ovative sc ienc e in our c ore di sea se are as. > Direct senior e xecutive-led sponsorship of th e integ rati on of the R are D isea se uni t. > Strengthen pipeline through acquisitions, licensing and coll aborations. > Appropriate capital structure and balance sheet. > Port folio-driven decision-making process gov erned by senior ex ecutive-led committees. Global economic and political conditions placing down ward pressure on healthcare pricing and spending , an d ther efore o n revenue . Securing th e effec tiv e integration of th e Rare D ise ase un it. 51 Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts R isk O ver v iew I am de lighte d to pre sent th e 2021 Financ ial Revi ew . My ﬁ rst ﬁve m onths a s CFO of As tra Zene ca have bro ught ma ny exciting highlights, including the transform ativ e impac t of Va x ze vr ia on combatting the pandemic, the inte grati on of Al exion, 1 4 p ositi ve Phase I II readouts in nine medicines an d c ontinued grow th of ou r prod ucts i n spite of mu ltipl e challenges. This w a s only possible through the h ard wor k and de dicat ion of al l our col leag ues ac ross th e glob e. In all, 2021 ha s be en a mom entou s year for t his Com pany an d I loo k for ward to en ablin g our or ganis ation to con tinue to s er ve patie nts, ad vance s cien ce and b e a grea t plac e to work in 202 2 . St rong Tota l Revenue g row th As tra Zene ca achi eved T ota l Revenue o f $37 .4 b illion i n 202 1 , wi th grow th of 4 1 % (CER: 38% ), inclu ding $ 0.9 billio n of Col labo ratio n Revenue, $ 3.9 bill ion of Va x ze vr ia P roduct Sales an d $3. 1 billion of post - acquisition A le xion sales. Pro duct S ales g rew by 4 1 % (CER: 38% ) to $36.5 billion, with 1 3 1 blockbuster medicines, including Va x ze vr ia and the n ewly ac quire d Soliris . Our continued investment in Oncology and CVRM medicine launches suppo rted str ong Pro duct S ales g rowt h of 20 % (CER: 1 8% ) and 13 % (C ER: 1 0% ), re spe ctivel y , wit h stan dout pe r forma nce s from T agrisso ($5.0 b illion), Far x iga ( $3.0 bill ion) and L ynparza ($2.3 bi llion). In the U S, we saw grow th of 39%, wit h Produ ct Sal es of $1 2.0 billi on, 45% of whic h came f rom Oncology , including $1 . 1 bil lion from Calquence . In Eu rope, Pr oduc t Sale s inc reas ed by 50% (CER: 44% ) to $7 .6 bi llion and i n Emer ging Ma rkets, Pr oduc t Sale s of $1 2.2 b illion c ontin ued to ac cele rate, wit h grow th of 40% (CER: 36% ), inc ludin g Va x ze vr ia sale s of $2.2 bi llion. W ithin ou r 1 U ltomiri s’ desig nat ion a s a bloc kbu ste r med ici ne in clude s fu ll -yea r 2021 P ro duct S ale s, i nclu sive of t he pre -acqu isit ion perio d. new Ra re Dis eas e por tfo lio, we rec orde d po st -ac quisi tion Pro duc t Sale s of $3. 1 billi on, contributing 8 % to full-year T otal Rev enue and rep rese nted p ro rata g row th of 8 % (C ER: 9 % ). Col labo ratio n Revenue i ncre ased by 20% (CER: 20% ) to $ 0.9 billi on and i nclud ed $0.4 b illion of m iles t one i ncom e from th e ongoing MSD arrangement on L ynparza and Koselugo . I n ves ti ng in f utu re g row th We cont inue to ma k e inves tment s in the bus ines s to supp or t our str ategi c obje ctives . Reported R&D expenses increased b y 62% (CER: 59% ) to $ 9 .7 billio n, inclu ding $1 .5 bi llion of i mpair ment c harg es, of wh ich $1 .2 b illio n relate s to the dis conti nuatio n of ver inura d. Core R& D expe nses i ncre ased by 36% (CER: 33% ) to $ 8.0 billi on. Inc reas es to bot h Core an d Repo rte d R&D exp ense s reﬂe ct our continued investment in our COVID- 1 9 medicines, and in several lat e -stage Oncology trials and Phase II cli nical dev e lopment programme s in BioPharmace uticals. Repor ted Selling , general and admi nistrat ive expenses (SG& A ) incre ase d by 35 % (CER: 3 2 %) to $1 5. 2 billio n. The se incl uded t he incr ease d am or tisati on of int angib le ass ets re lated to th e Alexion acqu isition and restructuring charges rel ated to su pply ch ain an d exit co sts for dep rio ritis ed R&D p roje cts. C ore SG& A expe nse s incre ase d by 1 9% (CER: 1 5% ) to $1 1 . 1 billion, reﬂecting our further inv estment in Oncology and BioPharmaceutical launches. St rateg ic div est ments 2021 Rep or ted and C ore O ther op era ting inc ome was $1 . 5 billio n and in clude d $776 millio n from th e divest ment of Astra Z eneca’ s share of Viela Bio and $31 7 mill ion fro m the sa le of the Eur opea n rig hts (excludi ng the UK , Isr ael an d Spain) for Cr estor , t o Grün enth al. Pro tabili ty In 2021 , R epor ted O per ating p roﬁt de cline d by 80% (CER: 70% ) to $1 . 1 bil lion an d Core Op erati ng proﬁ t grew by 35% (CER: 4 1 % ) to $9.9 bi llion. T he inc reas ed dif fere nce b etwe en Rep or ted an d Core O pera ting pr oﬁt in the yea r is prim aril y due to ite ms rela ted to the acquisition of Alexion, increase d intangible asset impair ments and restructur ing charges, of whi ch $1 .0 bill ion rel ates to the Po st Alex ion Acq uisit ion Gro up Review ( P A AGR), aim ed at integrating systems, structure and ope rations to opti mise th e globa l footpr int an d prio ritis e resource allocations and inv e stments, following the acquisition of Alexion. Repor ted Bas ic ea rning s per s hare (EP S) was $0.0 8 and C ore EPS wa s $5.29. Ou r c omm itme nt to the ght a gai nst C O V I D -1 9 We are ver y p roud of ou r cont ribut ion to ﬁgh ting the C OVID- 19 pan demic a nd rem ain com mit ted to del iverin g our vac cine. A s at De cemb er 2021 , A stra Zene ca an d its sublicensing partner remain the largest con tribu tor to the COVA X prog ramm e, havi ng deli vered m ore tha n 2 47 millio n dos es to 1 3 0 coun trie s. Glob ally , A stra Zen eca and i ts par tn ers h av e rel ease d more t han 2.5 bill ion vacc ine dos es, fo r suppl y in over 1 8 0 coun trie s. App roximate ly two t hirds of t he doses hav e gone to low- and middle-income cou ntrie s. We were a lso del ighte d t o se e Evu she ld receive Emergency Use Auth oris ation i n the US an d other m arket s in 2021 , fo r the pre -ex posu re preven tion o f C O V I D -19 . Ara dhana Sarin Ch ief Fi na ncia l O cer Exceptio na l p i peli n e d el i ver y , the i n tegration of Alex i on a n d t he s uccess of V axz ev ria m ade 2021 a mom ento us year for A stra Zen eca. Fi nancial Rev i ew “ A st ra Ze nec a ac h ieved T ota l Reven ue o f $37 .4 bill i on in 202 1, with grow th of 41 % (CER: 38% ) , inclu d ing $ 0.9 bill i on o f Co l laboratio n Reven ue, $3.9 bill i on of V axze v ri a P rodu ct Sa l es and $ 3. 1 b i llion of post -acqu is ition A lex ion sa les. ” 52 A st raZ ene ca A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 Strate gic Report H ighl ights Fi na ncia l per f or manc e Sa les plat form s $ 36.5 b n Repor ted and Core (2 02 0: $2 5.9 bn) Japa n 3 1% grow th (CE R: 35 % ) Emer ging M arket s 40% grow th (CE R: 36 %) Onc olog y 20% grow th (CE R: 18%) CVR M 13% grow th (CE R: 10%) Re spir ator y & Im munolo gy 13% grow th (CE R: 9%) Ra re Disea se 8% pro r ata g row t h * (CE R: 9%) $ 0. 9bn Repor ted and Core (2 02 0: $0.7b n) $1 .1 b n 8 0% dec lin e – Rep or ted (CE R: 70 % d ecl ine) $ 9. 9 bn 35 % g row t h – Core (CE R: 41% ) $ 0 . 10 97 % de cli ne – R epor te d (CE R: 8 4%) $ 5. 2 9 32 % g row t h – Cor e (CE R: 37 %) P roduc t Sa les Col lab oration Revenu e Op erati ng prot EPS Su mm ar y per for ma nce i n 20 21 Reported CER Core 20 21 $m 2020 $m % chan ge CER grow th 1 $m Grow th due t o ex change effec ts $m % chan ge 20 21 $m 2020 $m % change Product Sal es 3 6 , 5 41 25,8 90 41 9,9 42 709 38 3 6 , 5 41 25, 89 0 41 Collaboration Rev enue 876 727 20 14 7 2 20 876 727 20 T ot al Revenu e 3 7, 4 17 2 6 , 6 17 41 10 ,0 8 9 7 11 38 3 7, 4 17 2 6 , 6 17 41 Cost of sales (12 , 4 37 ) (5,29 9) 13 5 (6, 542) (59 6) 123 (9,444 ) ( 5 ,1 7 5 ) 82 Gross proﬁt 24,980 21, 3 18 17 3 ,5 47 11 5 17 2 7, 9 7 3 2 1, 4 42 30 Operating expenses ( 2 5, 416 ) ( 1 7, 6 8 4 ) 44 ( 7,1 2 4 ) (608) 40 (19,537 ) (1 5,6 33) 25 Other operating income and e xpense 1, 49 2 1, 52 8 (2) (5 4) 18 (4) 1, 4 92 1, 5 31 (3) Operating proﬁt 1, 05 6 5 ,1 6 2 (80) (3 , 6 31) (475 ) ( 70) 9,928 7, 3 4 0 35 Net ﬁnance e xpe nse (1, 2 57 ) (1,219) 3 ( 21) ( 17 ) 2 (862) (782) 10 Sh are of af ter t ax l oss es of jo int ven tures a nd as soc iates (64) (27 ) 137 (36) (1) 13 3 (6 4) (27 ) 137 (Loss)/proﬁt before tax (26 5) 3 ,9 16 (107 ) (3,68 8) (49 3) (93) 9,0 02 6, 5 31 38 Ta x a t i o n 380 ( 772) ( 14 9) 1,0 6 6 86 (13 7 ) ( 1,4 9 4) ( 1, 312 ) 14 Pr oﬁt a ft er t ax 11 5 3 ,1 4 4 (96) ( 2,622 ) (407 ) (83) 7, 5 0 8 5 , 219 44 Basic earnings per share ($) 0.08 2.4 4 (97 ) ( 2.07) (0.29) ( 84) 5. 29 4.02 32 1  A sdeta il edonpa ge55,C ERg row thi scal cu late dusi ngpr ioryea rac tua lres ult sadju ste dforce rt ai nexc han geratee ec ts ,inc ludi nghe dgi ng. P r o d u c t S a l e s C o l l a b o r a t i o n R e v e n u e O p e r a t i n g p r o  t E P S * Pr o rata g row t h rate s of Ra re Di sea se med ici nes fo r the y ear h ave be en ca lcu lat ed by c ompa ri ng pos t-ac qu isit ion re venue s f rom Ju ly 20 21 wit h th e cor resp ond ing pr ior ye ar pr e-a cqu is itio n reve nues pu bli she d by Al ex ion. 53 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Busi nes s bac kgrou nd an d re sult s over v iew The business background is co vered in the H ealth care i n a Chang ing Worl d sect ion fro m page 7 , the Di seas e Are a Review fro m page 16, and th e Our St rateg y and Key Per for manc e Indic ator s sect ion fro m page 12 , which d escribe in detail the b usiness developments of our products. As d escr ibed e arli er in thi s Annu al Rep or t, sa les of ou r prod ucts a re dire ctly in ﬂuen ced by me dical n eed a nd are g ener ally p aid for by health insurance scheme s o r national healthcare budgets. Our ope rat ing results ca n be af fecte d by a numb er of fac tors ot her tha n the del iver y of ope ratin g plan s and normal competition. F ur t her det ai ls of t he ri sk s f ace d b y t he bus ine ss ar e gi ven in R isk Ov er vie w f rom pag e 4 8 and i n t he Ri sk sup plem ent at w w w.as tra ze nec a.c om /an nual re por t2 021 . Ove r the lon ger ter m, the su cce ss of our R &D is cr ucia l and we devo t e sub stan tial re sour ces to this a rea . The be neﬁt s of this inve stmen t are ex pec ted to eme rge over t he long -term and there is consider able inherent uncer tainty as to th e scal e and tim ing of ou tcome s and the ir tra nsiti on to sale able p rodu cts. Me asurin g pe rfo rman ce Rep or ted an d Core p er forma nce a re refe rred to in thi s Finan cial Rev iew whe n repo rti ng on our p er form ance i n abso lute ter ms, bu t more of ten in co mpar ison to e arli er year s: > Reported performance takes into account all th e facto rs (i nclud ing thos e whic h we cannot inﬂuence , such as currency ex change rates) that have affected the res ults of o ur bus ines s. The C onso lidate d Financial Stateme nts have been prep ared in accordance with U K -adopted IAS and wit h the req uirem ents of t he Comp anie s Act 200 6 as ap plic able to co mpan ies re por ting under those standards. The Consolidat e d Financial Stat e ments also comply fully with IFRS a s issu ed by the I ASB and I AS as ado pted by the EU. On 31 De cemb er 2020, EU- adopte d IFRS was b rough t into UK law an d bec ame UK-ado pted IAS , with fut ure cha nges to I FRS bei ng subj ect to endorse ment by the UK Endorsement Board. > Core per f or mance me asures are adjusted to e xclude cert ain signiﬁcant items, using a set o f esta blish ed pr incip les. Fo r a det ai led de n iti on of Core me asu res , ple ase se e pa ge 55. Use of non- GA AP performance measures Cor e per for manc e mea sures , EBITDA , Net deb t, CER, G ross p roﬁt ma rgin, O per ating proﬁt margin and Ongoing Collaboration Reven ue are n on- GA AP p er form ance me asure s bec ause t hey can not be de rived dire ctl y from th e Financ ial St ateme nts. By disclosing non- GA AP performance and grow th me asur es, in ad ditio n to our Rep or ted ﬁnancial information, w e are enhancing inves tors’ ab ilit y to evaluate a nd ana lyse th e ﬁna ncia l per for manc e and tre nds of o ur ongoing business and the relat e d key bus ines s drive rs. T he adju stme nts are m ade to our R epor ted ﬁ nanc ial info rmat ion in or der to show n on- GA AP p er form ance m easu res tha t illust rate cle arl y , on a yea r - on-yea r or period-by-period basis, the impact on our pe rfo rma nce of fa ctors s uch as c hang es in reven ues an d expen ses d riven by volu me, pr ices a nd cos t levels r elative to s uch pr ior yea rs or p erio ds. Th ese no n-G A AP pe rfo rma nce me asure s are no t a subs titute for , or su per ior to, ﬁna ncial m easu res pre pare d in acc orda nce wi th GA AP . As s hown in the 20 2 1 R eco ncilia tion of Rep or ted re sults to C ore re sults t able o n pag e 56, our re con ciliat ion of Re por ted ﬁnancial information to C ore p erformanc e me asure s incl udes a b reakdow n of the ite ms for w hich ou r Repo rte d ﬁnan cial in form ation is adj usted, a nd a fur the r bre akdown by sp eciﬁ c line i tem as su ch item s are re ﬂecte d in our Repor ted income statement. This illustrates the s igniﬁ cant i t em s that ar e ex c lude d from Cor e per for manc e mea sures a nd the ir impa ct on ou r Repo rte d ﬁnan cial in form ation, b oth as a who le and in r espe ct of s peci ﬁc line i t em s. Manageme nt presents these results externally to meet investors’ requirements for tr ans paren cy and c lari ty . Cor e ﬁnanc ial me asure s are al so use d inter nall y in the ma nagem ent of ou r busi nes s per for manc e, in our budgeting proc ess and whe n determining com pen satio n. As a res ult, C ore pe rfo rman ce measure s allow inv e st ors to differe nt iate bet wee n dif feren t kind s of cost s but the y should not be used in isolation. R eade rs shou ld al so refe r t o ou r Rep ort ed n anc ia l in for mat ion in t he Su mm ar y per for ma nce in 20 21 ta ble on pag e 5 3, our re conc il iat ion of Core pe rfor ma nce mea su res to Rep or ted n an cia l i nf orm ati on in t he 2 021 Re conc il iat ion of Repo rt ed resu lt s t o C ore res ult s t ab le an d t he Ex clude d fro m C ore res ult s t ab le on p age 56 for ou r dis cu ssio n of comp ar ativ e gro wt h mea su res t hat re ec t al l fac tors t hat a ec t ou r busi ne ss. Our determinat ion of non- GA AP measures and our presentation of them wit hin this ﬁnancial info rmat ion, may di ffe r from s imila rly titl ed non -G A AP mea sure s of othe r comp anie s. Th e SET re tain s strate gic ma nage ment of the c osts exclu ded f rom Rep or ted ﬁna ncia l information in arriving at Core ﬁnancial me asure s, tra cking t heir im pact o n Repo rte d Op erati ng proﬁ t and EPS, w ith ope rati onal ma nagem ent be ing de lega ted on a ca se -by- ca se bas is to ens ure cle ar acc ount abili ty and consist ency for each cost category . We strongly encourage readers of th is An nual Re por t not to re ly on any s ingle ﬁnancial measure but to r eview our Financial Statements, includin g the Notes thereto, and our o ther publicly ﬁled repor ts, careful ly and i n their e ntire ty . 54 A st raZ ene ca A nnu al Rep or t & For m 20 -F I nfo rma tio n 2 021 St ra tegic Repor t Fi nancial Rev i ew c ont inue d Non-G AAP measur es : deﬁnitions Revenu e Constant ex change rate (CER) growth rate s R econci liation , se e p age 56 . Deﬁnition: R etra nsl ation o f the cu rren t year ’ s p er form anc e at the p revio us yea r’ s aver age exch ang e rates , adju sted fo r othe r exchan ge ef fec ts, including hedging . Why we u se the m: CER me asur es all ow us to foc us on th e cha nges i n reve nues a nd exp ens es dri ven by vol ume, pr ice s and c ost leve ls re lative to the p rio r per iod. Re venue s and c ost gr owth ex pre sse d in CER al low ma nage ment t o unde rst and th e true l oca l movem ent in re venue s and co sts, i n orde r to com pare r ece nt tre nds an d rela tive ret urn o n inve stme nt. CER g row th rate s can b e used t o anal yse reve nue s in a num ber o f ways but , most o fte n, we con side r CER gr owth by p rodu cts an d grou ps of pro duc ts, an d by cou ntri es and r egio ns. CER re venue g row th can b e fur the r ana lyse d by reven ue volu mes an d se lling p ric e. Simi larl y , CE R cost g row th help s us to fo cus on t he rea l loca l ch ange i n cost s so tha t we can m anag e the co st bas e ef fect ively. Limitations: CER me asu res ar e not al ways be tter i ndic ator s of pe rfo rma nce. W her e coun trie s are su bjec t to hig h inﬂat ion an d cur renc ies that depreciate persistently , adjusting out the ef fect of foreign exchange ﬂuc tuat ions c ould g ive an ove rly op timis tic vi ew of grow th. Ongoing Collaboration Reve nue R econci liation , se e p age 59. Deﬁnition: Collaboration Rev enue ex cluding Initial Collaborat ion Re venue (which is deﬁne d a s Collab oration Revenue that is rec ognised at the point in time control is transferred). Ongoing Collaboration Revenue comprises, among other items, mi lestone pa y ments, proﬁt sharing and ro yalties. Fo r mo re in for mat ion, se e G roup Ac cou nti ng Poli cies f rom pag e 1 38. Why we u se it: T his me asur e provi des u s with a n unde rst and ing of th e ongoing v alue derived from our collaboration arrangements, remo ving an y dis tor tion d rive n by the upf ront i ncom e. Pro ta b ility Core per f ormance measures R econci liation , se e p age 56 . Core performance measures ar e adju sted to exc lude c er tain s igni ﬁca nt ite ms. In d eter minin g the ad just ment s to arr ive at the C ore re sul t, we use a se t of est abli she d prin cipl es rel atin g to the nat ure or m ater iali ty of individual it e ms or groups of it em s, excluding, for example, events which ar e (i) ou tsid e the no rma l cour se of b usin ess , (ii) i ncur red in a p att ern th at is un rel ated to th e tren ds in th e unde rlyi ng ﬁna nci al per fo rma nce of ou r on going b usi nes s, or (i ii) re lated to m ajor a cqui siti ons, to e nsu re that inv estors’ abi lity to evalua te and analyse the underlying ﬁnancial per f ormance of our ongoing business is enhanced. S ee th e 2 021 Re conc il iat ion of Repo rt ed resu lt s t o C ore res ult s t a ble on pag e 5 6 for a rec onci li atio n o f R epor te d to Cor e p er form an ce, as wel l as fu rt her de tai ls of th e a djus tme nts. Ou r Core a djus tmen ts are s umma ris ed as: Restructuring cost s, incl udin g char ges th at rel ate to the i mpac t of our global restructuring programmes on our capitalised manufacturing fac iliti es an d IT as sets . The se can t ake pla ce over a s igni ﬁcan t per iod of ti me, give n the lo ng life -c ycle of ou r bus ines s. Why we u se the m: We adju st for th ese c harg es an d provi sion s bec ause they primarily r eﬂect the ﬁnancial impact of change to legacy arrangements, rather than t he underlying performance of our ongoing business. Intangible amortisation and impairments, including impairment reversals but ex cluding any charges re la ting t o IT assets. Intangibles generally arise from business combinati ons and ind ividual licence acquisitions. Why we u se the m: We adju st for th ese c harg es be cau se the ir pat tern of recognition is largely uncorrelated with the underlying performa nce of th e busi nes s. Acquisition o f Alexion , principally comprising acquisition-relat e d c osts related t o the acquisition of A le xion. Why we u se the m: We adju st for th is item t o enab le a mor e mea ning ful co mpar ison o f the pe rf orma nce o f acqui red b usin ess a nd pro duc ts to tha t of in tern ally d evelop ed pr oduc ts, a s well as r emov ing ch arge s whos e pattern of recognition is large ly unc orrelated to t he underlying performance of t he business. O t h e r, principally comprising acquisition-related costs, other t han those associated with Alexion, credits arising from fair value adj ustments, ﬁnance charges and fair v alue mo vements relat ing t o contingent consideration on business combinations or as set ac qu isitions, and c osts for legal settlements . Why we u se the m: We adju st for th ese i tems to e nabl e a more m eani ngfu l co mpar ison o f the pe rf orma nce o f acqui red b usin ess a nd pro duc ts to tha t of in tern ally d evelop ed pr oduc ts, a s well as r emov ing ch arge s whos e pattern of recognition is large ly unc orrelated to t he underlying performance of t he business. It sh ould b e note d that so me co sts excl uded f rom ou r Cor e resu lts, s uch as intangibles amortisation and ﬁnanc e charge s related to cont ingent co nsid era tion, w ill rec ur in fu ture ye ars , and ot her excl ude d items s uch as impairments and le gal s ettlements costs, along with other ac quisi tion -re lated c ost s, may re cur in t he fut ure. Limitations: Cor e resu lts excl ude si gniﬁ cant c ost s (such a s res truc turi ng, intangible amortisation and impairments, and ot her acquisition-related adjustments) , but incorporate associat ed beneﬁts, includi ng Product Sales arising from business combinations, asset acquisitions and a ssets which have b een a mor tis ed, as we ll as th e ben eﬁts r esul ting f rom re stru ctur ing ac tivit ies a nd, as su ch, th ey shou ld not b e rega rde d as a co mple te pict ure of th e Grou p’ s ﬁn anci al pe rf orma nce, w hich i s pre sente d in its R epo rte d re sult s. The exc lusi on of the a djus ting i tems ma y resu lt in Co re ear nin gs be ing ma teri ally hi ghe r or lowe r than Re por te d ear nings . Gross margin percentage R econci liation , se e p age 57 . Deﬁnition: G ros s Proﬁ t marg in, as a p erce nta ge, by whi ch Pro duct S ale s exce eds th e Cos t of sal es, ca lcul ated by d ivid ing the d iff eren ce be twee n the t wo by the s ale s ﬁgur e. The c alcu lati on of Rep or ted an d Cor e Gros s Pro ﬁt mar gin exclu des t he impa ct of Co llab ora tion Re venue a nd any associated costs, thereb y reﬂecting the underlying per f ormance of Product Sal es. Why we u se it: T his me asur e sets o ut gr oss pr oﬁta bili ty of Pr oduc t Sal es whe n tak ing ac cou nt of onl y dire ct Co st of sa les. I t is a key pe rfo rma nce measure of the contribut ion to fund operating costs and ov erall quality of th e busi nes s. Limitations: Gro ss ma rgin p erc enta ge exclu des th e impa ct of Co llab orati on Reve nue an d rela ted co sts a nd the refor e shou ld not b e re gard ed as g iving a f ull pi ctur e of reven ue pe rfo rma nce. 55 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Su mm ar y st atement of con solid ated income 2021 Reconciliation of Reported results to Core results 20 21 Reported $m Restructuring costs $m Intangible amortisat ion and impairments $m Acquisition 1 of Ale xion $m Other 2 $m 20 21 Core 3 $m Core 2021 compared with Cor e 2020 3 Actual grow th % CER grow th % Gross proﬁt 24,980 722 66 2,206 (1) 2 7, 9 7 3 30 30 Pro duc t Sal es gr oss m arg in % 4 66 .0 74 . 2 Distribution expenses (4 46) – – – – (4 46 ) 12 7 Re sea rch an d develo pme nt expe nse s (9 ,73 6) 223 1, 49 6 28 2 ( 7, 9 8 7 ) 36 33 Se lling , gene ral a nd adm inis trati ve expe nse s (15 , 23 4 ) 338 3,584 2 07 1 ( 11 ,10 4 ) 19 15 Other operating income and e xpense 1, 49 2 – – – – 1,4 92 (3) (4) Operating proﬁt 1, 05 6 1,2 8 3 5 ,14 6 2 , 4 41 2 9,928 35 41 Op er ating m ar gin a s a % of T ota l Reve nue 2.8 26.5 Net ﬁnance e xpe nse (1, 2 57 ) – – – 395 ( 862) Ta x a t i o n 380 (249) (1, 02 4 ) ( 53 1) (70) (1, 49 4) Ba sic ea rnin gs pe r sha re ($) 0.08 0.7 3 2.91 1. 34 0. 23 5.29 32 37 2020 Reconciliation of Repor ted results to Cor e r esults 2020 Rep orte d $m Restructuring costs $m Intangible amor tisation and impairments $m Dia betes Alliance 5 $m Ot her 2 $m 2020 Core 3 $m Co re 2020 c ompa red w ith Co re 2019 3 Actual grow th % CER grow th % Gross proﬁt 21, 3 18 53 66 – 5 21, 4 42 9 10 Pro duc t Sal es gr oss m arg in % 4 79.5 80.0 Distribution expenses (399) – – – – (39 9) 18 19 Re sea rch an d develo pme nt expe nse s ( 5, 9 91) 35 84 – – (5, 872) 10 10 Se lling , gene ral a nd adm inis trati ve expe nse s ( 11, 2 9 4 ) 16 2 1,6 5 7 3 10 ( 197 ) (9,362 ) 3 4 Other operating income and e xpense 1, 5 28 1 2 – – 1, 5 3 1 ( 2) (2) Operating proﬁt 5 ,1 6 2 251 1,8 0 9 310 ( 192 ) 7, 3 4 0 14 17 Op er ating m ar gin a s a % of T ota l Reve nue 19 .4 2 7. 6 Net ﬁnance e xpe nse (1,219) – – 2 28 209 ( 782) Ta x a t i o n (7 72) (50) (376 ) ( 127 ) 13 ( 1, 312 ) Ba sic ea rnin gs pe r sha re ($) 2.4 4 0 .1 5 1 .10 0. 31 0.02 4.0 2 15 18 1 I n 20 21, foll owi ng th e acq uis iti on of Al ex ion, a ne w colu mn h as be en in tro duce d to pre sent ac qu isi tion -rel ated n on-c ore it ems , pri ma ri ly un wi nd of fa ir v alue up lif t on i nven tori es an d acquisition costs. 2 S ee E xclud ed fr om Core r esu lts t ab le belo w for f ur the r det ai ls of ot her a djus tme nts. 3 E ach of t he mea su res i n the C ore col um ns is a n on- GA A P meas ure . 4   G rossm ar gi nasape rcen tageofP ro ductS ale sre ect sGro sspro tder ive dfro mPro duc tSa les,d iv idedbyP ro ductS ale s. 5 I n pre viou s yea rs, a s epa rate c olum n had b een i ncl uded fo r item s per ta in in g to the D ia bete s Al li anc e bet we en As tr aZ enec a and B ri stol- Mye rs Sq ui bb Com pan y (BM S). F rom 2 021, t his c olum n ha s bee n remo ved w it h amou nts n ow pres ente d in t he In tan gi ble as set a mor ti sat ion an d impa ir men ts a nd the O th er colu mn s as ap plic able . Operating margin percentage R econci liation , se e b elow. Deﬁnition: O per atin g proﬁ t as a pe rcen tag e of T ota l Reven ue. Why we u se it: This measure sets out p ro ﬁtability derived from ope rat ing ac tivit ies be fore t he impa ct of ﬁn anc e cost s and t ax. I t is a key pe rfo rma nce me asur e of the ove rall q uali ty of th e ope ratio ns of th e busi nes s. Limitations: Ope rat ing ma rgin p erce nta ge exclu des th e impac t of ﬁna ncin g co sts an d ther efor e shou ld not b e rega rde d as a ful l pict ure of reve nue performance. EB ITDA R econci liation , se e p age 60 . Deﬁnition: R epo rte d Proﬁ t befo re ta x plus n et ﬁna nce ex pens e, sh are of af ter-ta x los ses o f join t ventu res an d ass ocia tes, a nd cha rge s for depreciation, amortisation and impairment. Why we u se it: EB ITDA all ows us to u nder sta nd ou r base line p roﬁt abili ty, re movin g any ‘non -op era tion al’ exp ense s and n on- cas h items t hat ar e not considered by management to be reﬂectiv e of the underlying performa nce of th e Grou p. Limitations: EBIT DA doe s not ta k e ac coun t of the co st of inve stme nt to ge ner ate reven ues, h enc e is not a lways th e bes t indic ator of p er for manc e. Ca sh ow and l iqu idi ty Ne t debt R econci liation , se e p age 63 . Deﬁnition: I ntere st-b eari ng loa ns an d bor rowin gs net of C ash a nd cas h equivalents, Other investments and Net derivative ﬁn ancial instruments. Why we u se it: Net debt is a measure t hat pro vides valuable additional information r egarding the Group’ s net ﬁnancial liabil ities and is a measure commonly used b y in vestors and rating agencies. It faci litates the tracking of one of our key ﬁnancial prioritie s : deleveraging. Non-G AAP measur es : deﬁnitions continued 56 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 S trategic Report Fi nancial Rev i ew c ont inue d E xclude d from C ore re sult s Restructur ing cost s > R estr uct urin g cost s tota lling $1,283 mi llio n (2020: $251 milli on) mai nly co mpr ise th ose in curr ed on th e P A AGR ( $ 1 ,0 30 mi llion) a nd the G loba l Post Pa nde mic New Way s of Worki ng Pro gram me ($108 mill ion). Intangible amor tisation and impairments > A mor ti satio n tota lling $ 3,08 0 milli on (2020: $1,5 1 1 m illio n) rela ting to in tan gible a sse ts, exce pt tho se rel ated to I T . Thi s incl udes amor t isation on intangible assets recognised at fair value on the acquisition of Alexion . Further information on our intangible assets is c onta ined i n Note 10 to the Fin anc ial St ateme nts , from p age 156. > I ntan gibl e impa irme nt cha rge s of $2,067 m illio n (2020: $240 mi llion), excl udin g thos e rela ted to IT , i nclu de the i mpac t of an impairment charge of $1 , 1 72 million recognised on an intangible asset related t o the acquisition of A rdea, f ollowing the decision to dis con tinue t he devel opm ent of ve rinu rad an d $46 9 milli on re cogn ise d on By dureon . F ur the r det ails re lati ng to int angi ble as set imp air ment s are in clud ed in No te 1 0 to t he Fina ncia l Sta teme nts, fr om pag e 1 5 6. Acquisition of Alexion > C osts a sso ciate d with o ur ac quisi tion o f Alexi on in Ju ly 2021 am ounti ng to $2,441 milli on (2020: $ nil ) , p rim aril y rela ting to th e impa ct fro m the unw ind of th e fair va lue ad jus tmen t to Alexi on inve ntori es at th e date of a cquis itio n. The f air val ue upl ift i s expe cted to unwi nd thr ough R epo rte d Cost o f sal es over th e 1 8 m onths p ost a cqui siti on in lin e with re venue s, re sulti ng in a lowe r gro ss ma rgin in th e ﬁrs t turn o f invento ry. The i mpac t of this u nwind o n Cos t of sal es in th e year wa s $2, 198 mi llio n. > T he fa ir valu e of repl ace ment e mpl oyee sha re awar ds is hi ghe r than b oth the va lue of th e Alex ion awa rds the e mpl oyees we re or igina lly gr ante d and th e expe cted va lue of f utur e award s to thos e empl oyees . As a re sult, t he Gro up wil l reco gnis e an inﬂ ated exp ense d urin g the re mai ning ve sting p eri od of th ese awa rds. T his te mpor ar y inc reas e in ope rati ng exp ense s, wh en com pare d with the ex pec ted exp ens e base d on th e gran t -d ate valu e, will b e exclud ed fr om the G roup’s Core r esul ts. > O ther acquisition-related items t o be ex cluded from the Group ’s Core results include prof e ssional fees, ret ention bonuses incl uded in th e acqu isit ion ag reem ent a nd the e ffe ct of unw indin g othe r acqu isit ion- rel ated fa ir valu e adju stme nts ove r time. Other > O the r adju stme nts am ounte d to $3 9 7 m illio n (2020: $1 7 m illio n). > O the r adju stme nts to Re por te d SG& A expe nse s were $1 mi llion , inclu ding n et le gal pr ovisi ons of $ 48 mil lion (20 20: cre dit of $ 9 milli on) an d $ 1 4 m illio n (2020: cr edit o f $272 milli on) net f air val ue adj ustm ents r elat ing to co ntin gent c onsi der atio n bala nce s, of fset by $61 mi llion ( 2020: $ni l) of fa ir valu e adju stme nts re lati ng to Oth er Paya bles . Fur ther d etai ls rel ating to c onti nge nt con side rati on ba lanc es ar e cont aine d in Note 20 , from p age 166 an d fur the r deta ils of le gal p roc eedi ngs, o ngo ing at ye ar en d, are co nta ined wit hin Not e 30 to the Fi nanc ial St atem ents f rom pa ge 190. > O the r adju stme nts to Ne t ﬁnan ce exp ens e of $39 5 milli on (2020: $ 209 mil lion) re late to di sco unt unw ind ch arge s on lia bili ties a risi ng from business combinati ons. 57 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Sales platforms 20 21 Prod uct Sales $m 2020 Product Sales $m Actual grow th % CER grow th % T otal sale s platform Product Sales 3 4, 2 15 24 , 288 39 37 Ind ivid ual sa les p lat form Pr odu ct Sal es (ce rt ain Pr oduc t Sale s are i nclu ded in m ore th an one s ale s plat for m) Emerging Mark ets 1 2 ,1 6 1 8,679 40 36 Japan 3 , 416 2, 60 0 31 35 Oncology 13 ,0 4 8 10, 8 50 20 18 CVRM 1 8,02 0 7 ,096 13 10 Respirator y & Immunology 6,03 4 5 ,357 13 9 Rare Disease 3,070 – – – Re con cili atio n to Note 1 R even ue ( pag e 1 45) as f oll ows: Sum of individual sales platforms 4 5 ,74 9 34,582 Add: P rodu ct Sa les no t inclu ded i n sale s pla tfor ms 2,326 1,1 7 0 Less: Product Sales double-counted for Emerging Markets Oncology (3,2 23) (2,90 6) Respirator y & Immunology ( 1, 74 9 ) ( 1,5 9 9 ) CVRM 1 (3 ,78 0) ( 3,203) Rare Disease (19 6) – Less: Product Sales double-counted for Japan Oncology (1, 66 5 ) ( 1, 514 ) Respirator y & Immunology (28 4) (328) CVRM 1 (363) (141 ) Rare Disease (27 4) – T otal P roduct Sales 3 6 , 5 41 25,8 90 1 C VR M ha s repl ace d New C VR M for 2 021 a nd th e 202 0 comp ara tive h as b een re st ated to i ncl ude al l CV R M pro duct s. Revenu e T ota l Revenu e for 2021 was up 4 1 % (CER: 38% ) to $37 ,4 1 7 milli on, co mpris ing Pro duct S ales of $ 36,5 4 1 milli on, up 4 1 % (CER: 38% ), and Co llabo rati on Revenu e of $876 milli on, an in crea se of 20% (CER: 20% ). T ota l Revenu e inclu des Al exion s ales f rom 21 July 2021 , w hich c ontri buted 8% of Pro duct S ales fo r the yea r . Product Sales By Geograph y Product Sale s in Emer ging Markets continued to inc reas e, with gr owth of 4 0 % (CER: 36% ) to $1 2, 161 millio n in 2021 . Chin a Produ ct Sal es inc reas ed by 1 2% (CER: 4 % ) to $5,9 95 milli on. Product Sale s in ex -China Emerging Mar k et s inc reas ed by 85% in the yea r (CER: 86% ) to $6, 166 milli on, dri ven by Onc olog y medic ines and Fa r xig a . US Produ ct Sal es were u p 39% to $1 2,00 0 milli on, reﬂe ctin g the suc ces s of our O ncol ogy me dici nes. In Eu rope, Pr oduc t Sa les grew by 5 0 % (C ER: 44 %) to $7 ,604 mill ion, reﬂ ecti ng a stro ng per fo rman ce in On colog y , whi ch inc reas ed by 28 % (C ER: 22% ) i n the year. Esta blish ed Res t of World Pro duct S ales i ncrea sed by 3 6 % (C ER: 36% ) to $4,776 millio n, with sa les in J apan u p 3 1 % (CER: 35% ) to $ 3,4 1 6 m illion. By Product 2021 suc cee ded in d eliver ing 1 3 2 blockbuster drugs, including Va x z evr i a and t he newly acquired Soliris . Ou r large st-se lling pr oduc ts in the ye ar wer e T agrisso ($5,01 5 million) , Far xi ga ($3,00 0 million ), Symbicort ($2, 728 million) , Imﬁnzi ($2,4 12 million), an d L ynparza ($2,348 million) . T agrisso sal es grew by 16 % (CER: 1 3% ) reﬂ ecti ng a stro ng pe rfo rman ce acr oss a ll marke ts. Far xi ga sa les increased by 53% (CER: 49% ), wit h grow th acro ss all ma rkets in cludin g an inc reas e of 7 4% (CER: 70% ) in Em ergi ng Mar k ets . Globa l sale s of Symbicort were ﬂ at in the ye ar (CER: de cline of 2% ) w ith con tinue d grow th in the US of 4 % of fs et by dec lines i n Europ e and Jap an. Imﬁnzi Pro duct S ales g rew by 1 8% (CER: 1 6%) , w ith re cent re gula tor y approva ls and launches in China and continued grow th in othe r mar kets. L ynparza Product Sal es del ivere d a stron g per for manc e in all ma rkets , with launches continuing globally , an d ge nera ted total g row th of 32% ( CER: 30%) in the ye ar . In a dditi on, Calquence ac hie ved blo ckbu ster s tatus fo r the ﬁr st time i n 2021 , wit h sale s of $1 ,238 m illion, p red omina ntly in the US. Follow ing the a cquis ition of A lexio n in 2021 , our n ew Rare D isea se po rt folio g ener ated 8% of Produ ct Sa les, in cludi ng $1 ,87 4 m illion fro m S oliris. Our COVID- 1 9 medic ines, including Evu she ld , delivered T otal Prod uct Sales of $4,0 02 mil lion, $2,259 m illion of w hich came from Emerging Markets. Sales platforms Ou r sale s plat form s inclu de pro duct s in our fou r main di seas e area s (inc ludin g for 2021 our n ewly acquired R are Dis ease d isease are a), and a foc us on Eme rgin g Market s and J apan. S ale s plat form s grew by 39% (CER: 37% ), rep rese nting 91 % of T ota l Reven ue af ter rem oving th e effe ct of c er tain Product Sale s w hich are included in more than one sales platform. Emerging Markets Pro duct S ales i n Emerg ing Mar kets grew by 40% (CER: 36% ) to $1 2, 16 1 mill ion, mai nly dr iven by str ong pe rfo rma nces f rom On colog y , CVR M and Va x ze vr ia . Produ ct Sa les in Ch ina inc reas ed by 1 2% in 2021 (CER: 4% ), re presenting 49% of Emergin g Mar kets Pro duct S ales i n the year. Japan Jap an Prod uct Sa les gr ew by 3 1 % (CER: 3 5 % ) to $3,4 1 6 m illion, w ith On colo gy mak ing up 49% of Jap an sal es wit h grow th of 1 0% (CER: 12 %). Oncology Pro duct S ales of O ncol ogy me dici nes gre w by 20% (CER: 1 8% ) to $13,048 mill ion in 2021 , $5,01 5 m illion o f which c ame fr om T agrisso (2020: $ 4,328 millio n) , w hich c ontinu es to be our l eadin g medi cine fo r the tre atmen t of lung cancer and had r e ceiv ed regulat or y appro val in mo re than 6 9 coun trie s by the end o f 202 1 . CVRM CVRM g rew by 1 3% (CER: 1 0% ) wi th Prod uct Sa les of $8 ,020 millio n, main ly reﬂe ctin g the str ong pe rfo rma nce of Fa rx iga with global sa les of $ 3,00 0 millio n, repre sen ting gr owth of 53% (CER: 49% ) as it c ontin ued to be o ur largest-selling CVRM medicine. Respirator y & Immunology Product Sales of Respiratory & Immun ology me dicin es grew by 13 % (CER: 9%) to $6,0 34 mill ion, wit h grow th from Fa se nr a and a s ust aine d per for manc e by S ymbicort . Rare Di sease Ou r newly ac quire d Rare D isea se me dicin es achieved post -acquisition sale s of $3,070 mill ion and g ene rated 8% of Pro duct Sa les, in cludi ng $1 ,87 4 m illion f rom Soliris. 2 U ltomiri s’ desig nat ion a s a bloc kbu ste r med ici ne in clude s fu ll -yea r 2021 P ro duct S ale s, i nclu sive of t he pre -acqu isit ion perio d. 58 A st ra Zen eca A nnu al Re por t & Fo rm 20 - F In for mat ion 2 021 St rategic Report Fi nancial Rev i ew c ont inue d Collaboration Rev enue Details of our signiﬁcant business development transactions which giv e rise to Col labo ratio n Revenue a re given b elow: Nexiu m Author ised Generics In Jun e 2021 , Ast raZ enec a ente red into a n agr eeme nt with a n auth oris ed gen eri c for the out lice nse of the r ight s to Nexium Authorised Ge neri cs in Ja pan. > AstraZene ca has received consideration of $ 1 50 million (1 6.5 billion Japan ese Y e n ) fro m an aut horis ed ge neri c, of whic h 50% ($75 millio n) has be en rec ogni sed a s Col labo ratio n Revenue f or 2021 , with t he remaining 50% being deferred to the balance sheet as a ﬁnancial liability . The re cogni tion of $75 milli on as Co llabo ratio n Revenue is contingent upon regulator y app roval (or po tentia l repay ment if t he product does not achiev e regulatory app roval), wh ich is cu rren tly expe cted in 2022. Zolade x (T erSera) In Ma rch 201 7 , A stra Zene ca en t ere d into an agr eeme nt with T er Ser a for the c omme rcial rights to Zoladex in the US an d Cana da. T er Ser a paid $250 m illion u pon co mplet ion of the tr ans actio n. The G roup wil l also re cei ve sa les- rela ted inc ome tota lling up to $70 mill ion thr ough mil eston es, a s well as re cur ring qua rte rly s ales -bas ed paym ents a t a mid-te en percentage o f Pr oduct Sales. A st raZeneca will also manufacture and supply Z oladex to T erSera, providing a further source of ongoing income from Z oladex in the US a nd Cana da. Col labo ratio n Revenue i n resp ect of th is agr eeme nt has b een r eco gnise d as foll ows: > Prio r to 2021 , Ast raZe nec a reco gnis ed Collaborati on Re venue in respect of sales-re lat e d milestones to talling $7 0 million. > No Co llabo ratio n Revenue wa s rec ognis ed in re spe ct of this a gree ment i n 2021 . Daiichi Sank yo In Ma rch 201 9, As tra Zene ca ann ounc ed it had e ntere d into an a llianc e with D aiich i Sankyo to de velop and commercialise Enhertu for m ultipl e canc er t ypes . In mar k ets whe re Dai ichi Sa nk yo is sell ing the p roduc t, As tra Zene ca is en title d t o re ceive a roya lty (in J apan) or a s hare of c osts a nd inc ome (in o ther te rrito ries). Roya lty in come a nd the As tra Zene ca sha re of gros s mar gin fro m sale s mad e by Daiic hi San kyo ar e reco gnis ed as Collaborati on Re venue. E nher t u launched in the U S on 3 1 De cemb er 201 9. Col labo ratio n Revenue i n resp ect of th is agr eeme nt has b een r eco gnise d as foll ows: > Prio r to 2021 , Ast raZe nec a reco gnis ed Col labo ratio n Revenue o f $94 mill ion in rel ation to A stra Zen eca’ s sha re of gro ss pro ﬁts ar ising f rom sa les ma de by Daiichi Sank yo . > In 2021 , As tra Zene ca re cogni sed Col labo ratio n Revenue o f $ 193 mill ion in rel ation to A stra Zen eca’ s sha re of gro ss pro ﬁts ar ising f rom sa les ma de by Daiichi Sank yo . FibroG en In Jul y 20 1 3, A stra Zen eca e ntere d into a str ategi c colla bora tion wi th Fibro Gen to develop and commercialise roxadustat, a ﬁrst-in-class oral compound in late-stage development for the treatment o f anaemia from chronic kidney d isease and end-stage ren al dis ease ( ESRD). Und er the a rran geme nt, As tra Zene ca agre ed to pay Fi broG en upfr ont and subsequent non-contingent pa yme n ts totalling $350 million, as well as potentia l development -related milestone pa y ments of up to $ 465 mill ion, an d potent ial fut ure sales-re lat e d milestone pa yments, in addition to tie red roya lty pay ment s on futu re sal es of roxad usta t in the low 20% ran ge. Add itiona l devel opme nt mile stone s will be p ayable fo r any su bse quent i ndica tions w hich th e companies choose t o pursue. Col labo ratio n Revenue i n resp ect of th is agr eeme nt has b een r eco gnise d as foll ows: > Prio r to 2021 , Coll abor ation R evenue of $3 0 millio n was rec ogni sed in re latio n to As tra Zene ca’ s sh are of gr oss pr oﬁts a risin g fro m sale s made by Fi broG en. > In 2021 , Co llabo rati on Revenu e of $6 mill ion was re cog nise d in rela tion to As tra Zene ca’ s sha re of gro ss pro ﬁts ar ising f rom sa les mad e by Fibro Gen. L ynparza /selumetinib (MSD) In Jul y 20 1 7 , th e Grou p annou nce d a globa l strategic oncology collaboration with MSD to co-develop and co-comme rcialise AstraZeneca ’ s L ynparza for multiple cancer t ypes . As par t of th e agre emen t, MSD wil l pay A stra Zene ca up to $8 .5 billi on in tota l consideration, incl uding $ 1 .6 billion upfront, $750 millio n for ce rt ain lic ence o ption s and up t o $6.2 bil lion conti ngent upon successful achievement of future regulatory and sa les mile stone s. Of t he upfro nt paym ent of $1 .6 bill ion, $1 .0 bi llion was r eco gnise d as Collaboration Revenue on deal completion in 201 7 , wit h the rem ainin g $0.6 bill ion defe rre d to the ba lanc e she et. As traZ enec a book s all Collaborati on Re venue of Ly nparza and selumetinib ; gross proﬁts due t o MSD under the c ollab orati on will b e reco rded u nder C ost of sa les. Col labo ratio n Revenue i n resp ect of th is agr eeme nt has b een r eco gnise d as foll ows: > Prio r to 2021 , Ast raZe nec a reco gnis ed Collaborati on Re venue to talling $2, 1 10 million, comprisin g $7 50 million res ultin g from th e ex e rcis e of optio ns, $1 .0 bil lion in re spe ct of sa les- rela ted mile stone s and $ 360 mi llion in r espe ct of regulatory milestones. > In 2021 , ne t sale s of L ynparza reached the $2.0 billi on ann ual sa les th resh old, triggering a sales-re lat e d mile st o ne of $40 0 mill ion due to A stra Zene ca, r eco gnise d as Col labo ratio n Revenue f or 2021 . Collaboration Rev enue 20 21 $m 2020 $m Initial Collaboration Revenue Nexium Aut horised Generic s 75 – T otal Initial Collaboration Revenue 75 – Ongoing Collaboration Revenue L ynparza /selumetinib (MSD) – milestone 400 460 Enhertu (Da iich i Sank yo) – sh are of g ross p roﬁt s 19 3 94 Roxa dust at (Fi broG en) – sha re of gr oss p roﬁts 6 30 Zoladex ( T erSera) – miles ton e – 35 Royalty income 13 8 62 Othe r 64 46 T otal Ongoing Collaboration Rev e nue 801 727 T otal Collaboration Revenue 876 727 59 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Reconciliation o f Reported Proﬁt bef ore tax to EBIT DA 20 21 $m 2020 $m Actual grow th % CER grow th % Reported (Loss )/pr oﬁt be fore tax (26 5) 3 ,9 16 n /m (93) Net ﬁnance e xpe nse 1, 2 57 1, 2 19 3 2 Sh are of af ter t ax l oss es of jo int ven tures and associates 64 27 n /m n /m Depreciation, amortisation and impairment 6,530 3 ,1 4 9 n/m 99 EB ITDA 7, 5 8 6 8 , 3 11 (9) (6) P rot before ta x Reported (Loss)/ proﬁt before tax decreased by 1 07% (CER: 93% ) i n 2021 t o a los s of $265 m illion (20 20: proﬁt o f $3,91 6 mi llion). Cor e Proﬁt b efore t ax in crea sed by 38% (CER: 43% ) to $9,00 2 millio n. Pre-t ax adj ustme nts to ar rive at C ore Proﬁ t befor e ta x amo unted to $ 9 ,267 mil lion in 20 2 1 (2020: $2,61 5 mi llion), com pris ing $8,872 mill ion adj ustme nts to Op erat ing proﬁ t (2020: $2, 1 78 milli on) and $ 395 mill ion to Net ﬁ nanc e expen se (2020: $ 437 millio n ). E BI TDA EBIT DA decre ase d by 9 % (CER: 6% ) to $7 ,58 6 milli on in the yea r (2020: $8, 3 1 1 mil lion) and wa s neg ativel y impac ted by the $2, 1 9 8 mill ion unwin d of invento ry fa ir valu e uplif t re cogni sed o n the acqu isiti on of Al exion, a s well as increased res tructuring charges ar ising fro m the P A AGR . Gro ss p rot Rep or ted Gr oss pr oﬁt inc reas ed by 1 7% (CER: 1 7% ) to $ 2 4,98 0 milli on. Core G ros s pro ﬁt incr ease d by 30% (CER: 30% ) to $27 ,973 milli on. Rep or ted Gr oss Pro ﬁt mar gin de cline d 1 4 (CER: 1 3) p erc entag e poin ts to 66.0% du e to the impa ct of re stru ctur ing cha rges a nd the u nwind of the f air val ue adjustment to the Alexion in ventor y at the date of ac quisi tion. Co re Gro ss Proﬁ t margi n de cline d six (CER: ﬁve) p erce ntag e point s, reﬂecting the e qu itable supply o f Va x z evr i a , par t ially offset by A le xion’ s contribution fr om Jul y 202 1 and g row th in Onc olog y sale s. Opera t ing ex pens es Reported T otal Ope rat ing expenses inc reas ed by 44% (CER: 40% ) in t he year to $25,4 1 6 mill ion. Co re T otal O per ating expe nse s incre ase d by 2 5 % (C ER: 22 % ) to $ 19 ,5 3 7 million. Rep or ted R& D e xp ense s incre ase d by 62% (CER: 59% ) to $9,7 36 mil lion an d Core R& D expe nse s incre ase d by 36% (CER: 33% ) to $7 ,987 mi llion. T he inc reas e in both Re por ted and C ore R& D expen ses re ﬂec ts the Gr oup’ s continued investment in Va x ze vr ia and Evu she ld , as well as i nvestme nt in seve ral late-stage Oncology trials and the adva ncem ent of a nu mber o f Phase II clinical dev elopme nt pro grammes in BioPharmaceuticals. Repor ted R&D e x penses also includes inta ngible asset impairment cha rges r eco gnise d in the ye ar of $1 ,46 4 mill ion, of wh ich $1 , 1 72 millio n rela ted to the impairme nt of v erinurad. Rep or ted SG& A ex pens es inc reas ed by 35% (CER: 32% ) to $1 5,23 4 millio n and Co re SG& A expe nse s incre ase d by 1 9% (CER: 1 5% ) to $1 1, 1 04 mi llion. T he incr ease to R epor te d SG& A e xpense s includes the increa sed am or tisati on of int angib le ass ets re lated to the A lexion a cqui sitio n. Core SG & A expen ses grow th re ﬂect s the inves tment i n Onco logy me dicin e launc hes, th e launc h of sever al new BioPharmaceutical medicine s a nd fur t her expansion into Emerging Markets. Ot her ope rati ng inc ome and ex pen se Rep or ted an d Core O ther o pera ting in come and expen se in the ye ar was d own 2 % (CER: 4 %) to $1 ,492 mil lion an d inclu des $776 milli on fro m the dive stme nt of Ast raZe nec a ’ s s hare in Vi ela Bi o and $31 7 mil lion fr om the sa le of the Eu rope an righ ts, exclud ing Isr ael, S pain and U K, for C resto r t o Grünent hal . In ac cord ance w ith our C ollab orati on Reven ue deﬁnition in t he Group Accounting Policies fro m page 138 and th e requ ireme nts of IFR S 1 5 ‘R evenue f rom Con trac ts with Cu stome rs’ , pro cee ds fro m thes e divest ments a re re corde d as O ther op era ting inc ome an d expe nse a nd comp ris e the majo rit y of Oth er ope rati ng inco me and ex pens e for the ye ar . Op erati ng prot Rep or ted Op erat ing proﬁ t dec lined by 8 0 % (CER: 70% ) to $1 ,0 56 milli on in the yea r . Th e Repor ted Operating margin dec reased by 1 7 pe rcen tage p oints (CE R: 1 5 pe rcent age poi nts) to 3 % of T ota l Revenu e. Core Op erati ng proﬁ t grew by 35% (CER: 4 1 % ) i n the ye ar to $9,928 mill ion. Th e Core O pera ting pro ﬁt mar gin dec reas ed by one p erc enta ge point (CER : increase of one percent age point) to 27 % of T ota l Revenu e. Net n ance ex pen se Rep or ted Net ﬁ nanc e expen se inc reas ed by 3% (CER: 2 %) in the ye ar to $1 ,257 mill ion. Cor e Net ﬁna nce exp ens e incre ase d by 1 0% (CER: 1 1 % ) in t he year to $ 862 mill ion. Th e inc reas e to both Re por ted an d Core N et ﬁna nce exp ense wa s drive n by lower inte res t inc ome on s hor t-t er m depo sits f rom lower interest rates and increas ed ﬁnancing co sts rel ated to the f acili ties to fu nd the Alexion acquisition. 60 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 S trategic Report Fi nancial Rev i ew c ont inue d EPS Rep or ted EPS of $ 0.08 in the ye ar was a de crea se of 97 % (C ER: 84 %). Core EPS inc reas ed by 32% (CER: 37 %) to $5. 29. Res t ru ct urin g Post Alexion Acquisition Group Review In conjunction with the acquisit ion of A le xion, the enlarged Group has initiat e d a compreh ensive P A AGR, aimed at integrating systems, structure and process es, opt imising the g lobal foot print and priorit ising resource allocations and inv e stments. These activities are ex pec ted to be su bsta ntiall y comp lete by the e nd of 2025, wit h a numbe r of pla nned ac tiviti es havin g comm ence d in late 2021 . The identiﬁe d a ctivities, including those previously announced regarding the inte grati on of Al exion, a re antic ipate d to incur one-time restructuring costs of approximat ely $2 . 1 billion, of which appro ximately $ 1 .4 bi llion are c ash c osts a nd $0.7 billio n are no n-c ash co sts, an d capi tal inve stme nts of app roxima tely $0. 2 billi on. Th e activ ities a re ant icipa ted to rea lise ru n-r ate pre -ta x bene ﬁts, before reinvestment, of approximately $1 . 2 billion, including previously-announced Al exion syn ergi es, by the e nd of 2025. In li ne with establi shed practice, restructuring costs will b e exclude d from o ur Core (n on- GA AP) ﬁnancial measures. Du ring 2021 , t he Grou p has re cord ed restructuring charges of app ro ximately $1 .0 bil lion in re latio n to the P A AGR . The se costs primarily arise from the rationalisation of ou r manuf actur ing ca paci ty an d foot print, de -priori tisati on o f v arious development projects and re-negotiation of manufacturing capacity agreements as we ll as seve ranc e cost s. Ta xat ion Th e Repo rte d T a x ra te for the yea r was 1 4 3 % and t he Core t ax r ate in the ye ar was 1 7%. Th e incom e ta x paid fo r the yea r was $1 ,7 4 3 million . This wa s $2, 1 23 m illion h ighe r tha n the Rep or ted ta x cha rge for t he year , whi ch ben eﬁted f rom a net d efer red ta x cr edit of $1 ,575 milli on (2020: $1 9 9 millio n ), relat ing to the acquisi t ion of Ale xion, intangible am or tisati on and i mpair ment s and oth er defe rre d ta x items , par tiall y off set by a ne t $51 millio n defer red t ax ch arge r eﬂec ting the cha nge in D utch an d UK inco me ta x rate s, upd ates to es timate s of pri or per iod ta x liabilities f ollowing set tlements with ta x aut hori ties an d on expi ry of s tatute of limi tatio ns and o ther c ash ta x timi ng differen ces. A dditional information on the se item s is con taine d in Note 4 to th e Fina ncia l State ment s from pa ge 1 49. We pay cor por ate inco me ta xes, cu stoms dut ies, excis e ta x es , stam p dutie s, emp loyme nt and m any othe r bus ines s taxe s in all jurisdictions where applicable. In addit ion, we col lect a nd pay em ployee t axes a nd ind irec t taxe s such a s value ad ded t ax. T ota l comprehe nsive inc ome T otal comprehe nsive lo ss/income de creased by $4,782 milli on to a los s of $30 mi llion in 2021 . O ther c ompre hen sive los s for the pe riod, n et of ta x, was $1 4 5 millio n, a de crea se of $1 ,7 5 3 millio n. The de crea se was primarily driven b y F oreign ex change arising on co nsol idatio n los ses of $ 483 mil lion (2020: gai ns of $4 43 mill ion), Foreig n ex cha nge ar ising o n desi gnate d borr owings i n net inves tment h edge s los ses of $ 32 1 mill ion (2020: ga ins of $ 5 73 milli on) , N et los ses o n equit y investments measured at fair value through Other comprehensiv e income of $1 87 mill ion (2020: ga ins of $9 38 mill ion), of fse t by Reme asure ment o f the deﬁ ned be neﬁt pe nsio n liab ilit y gains o f $626 mill ion (2020: lo sse s of $1 68 mi llion). A sig niﬁca nt pro por tion o f the pri or year N et gai ns/(lo sse s ) on e quit y investm ents m easu red at f air valu e through Other comprehensive income relates to gai ns rec ogni sed du ring 2020 f rom the s ale of As tra Zene ca’ s fu ll hold ing in Mo dern a as det aile d in Note 1 2 o f the Fina ncia l State ments fro m page 160. Other programmes Th e Group h as als o conti nued to p rogre ss th e Glo bal Pos t Pande mic New Ways of Wor king pro gra mme init iated in 20 20 in res pons e to the changing busines s en vironment, acc ele rated by th e COVID - 1 9 pa ndem ic. Thi s prog ramm e is expe cted to r un until t he en d of 2022 and i ncor por ates the in crea sing utilisation of digitisation and t e chnology , as well a s the new ways o f worki ng that re ﬂec t the s ize, natur e and foo tprin t of comm erci al teams, enabling functions, R&D and ope rati ons. $1 0 8 milli on of cos ts were inc urre d unde r this pr ogra mme in 20 2 1. Le gacy pr ogra mmes i nclud e: the 201 6 pl an to red eploy i n ves tment to key di seas e area s, par ti cular ly On colog y; the ph ase 3/4 plan regarding the centralisation of our globa l R&D footprint into three strategic centres, transformation of the IT organisation and clo sure of a n umbe r of manu factu ring fac ilitie s; and the t rans form ation of S G& A functions (principally Finance and HR) . $1 45 mi llion of c osts we re incu rred u nder le gacy pr ogra mmes i n 2021 . The aggregate re st ructuring charge incurred in 2021 acr oss al l our res truc turi ng pro gram mes was $1 , 283 milli on (2020: $251 million). Fin al estimates for programme costs, beneﬁts and hea dcou nt impa ct in all f unct ions a re subje ct to compl etion o f the requisite c onsul tation in the vario us areas . Ou r prio rit y , as we un der take th ese res truc turi ng initi atives , is to work wi th our af fec ted emp loyees o n the pro pose d cha nge s, actin g in acc orda nce wi th releva nt local consul tation requirements and employment law . Brexit Th e UK lef t the EU on 31 Janu ar y 2020 with a tra nsiti on pe riod r unnin g to 3 1 D ecem ber 20 20. In re spon se to the UK re fere ndum ou tcome, the Group implemented appropriate actions to miti gate the p otenti al risk o f disr uption to sup ply ch ains du e to new bor der pr oces ses (including the additional UK document ation requireme nts int roduce d o n 1 Januar y 2 022) and p otenti al por t co nges tion. T o d ate, we have se en no si gniﬁc ant di srupt ion to our supply chain. 61 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Su mm ar y ca sh  ows 20 21 $m 2020 $m 20 19 $m Ne t de bt br oug ht fo r war d at 1 Ja nu ar y ( 12 ,11 0 ) ( 11, 9 0 4 ) (13 , 0 03 ) (Loss)/ proﬁt bef o r e tax (26 5) 3 ,9 16 1, 5 4 8 Sum of changes in int erest, depreciation, amortisation, impairment an d shar e of af ter ta x los ses o n join t ventu res an d ass oci ates 7, 8 5 1 4 ,395 5 ,1 3 8 Decrease/(increase) i n working ca pital a nd shor t -term provisions 2 ,021 3 61 (34 6) Ta x p a i d ( 1,74 3 ) ( 1 ,562) ( 1 ,118 ) Interest paid ( 72 1) ( 733) ( 7 74 ) Gains on di sposal of in tangible assets ( 513 ) ( 1,0 3 0 ) (1, 2 4 3) Ga ins on d ispo sal of j oint ve ntur es and a sso ciat es (7 76) – – Fair value movements on contingent consideration arising from business combinations 14 (272) (6 14 ) Non-cash and other mo vements 95 (276) 378 Net cash available from operating activities 5,963 4 ,79 9 2,9 69 Di spos al of in tang ible s (net of p urch ase s) (522) ( 694) 595 Acquisition o f subsidiaries, net of c ash ac q uired (9, 263) – – Net borrowings acquired from subsidiaries (2,779) – – Share-based payments attributable to busines s c ombi nations ( 2 11 ) – – Payment of cont ingent consideration from busines s combinations (6 43) (8 22) ( 709 ) Other capital ( expenditure )/ income (net ) (569) 399 ( 1, 016 ) Inves tme nts (13 ,9 8 7) ( 1 ,117 ) ( 1,1 3 0 ) Dividends (3,856 ) (3 ,572) (3,592) Pro cee ds fro m the is sue of s har e capi tal 29 30 3, 525 Distributions (3,827 ) (3 ,542) ( 67) Lease liabilities: IFRS 1 6 (240) (207 ) ( 675) Other mov ements (12 1) ( 139 ) 2 Net debt carried forward at 31 December (24,322) ( 12 ,11 0 ) ( 11, 9 0 4 ) Bo nds is sue d in 2021 a nd 20 20 Repayment dates Fac e value of bond $m Ne t boo k va lue o f bond at 31 December 20 21 $m Bo nd s iss ue d in 2 021: 0.3% USD b ond 2023 1, 400 1,3 97 0.7% USD bon d 2 024 1, 6 0 0 1, 5 9 8 1 . 2% USD bo nd 2026 1, 2 5 0 1, 2 4 5 1 .75 % USD b ond 2028 1, 2 5 0 1, 2 4 4 0.375 % EUR b ond 2029 975 898 2.25% USD bo nd 20 31 750 74 6 3% USD bo nd 2 051 75 0 734 To t a l 2 0 2 1 7, 9 7 5 7, 8 6 2 Bo nd s iss ue d in 2 02 0: 0.7% USD bon d 2026 1, 2 0 0 1 ,19 2 1 . 37 5% USD b ond 2030 1, 3 0 0 1, 2 91 2. 1 25% USD b ond 2050 50 0 486 T o tal 2020 3, 000 2, 969 Cas h ow and liq uid it y – for t he y ear ende d 31 D ecem be r 2 021 Net c ash ge ner ated fr om ope ratin g activ ities was $ 5,963 m illion (20 20: $4,7 99 mi llion). Net i nv es tment c ash ou tﬂow s were $1 3,9 8 7 m illion ( 2020: $1 , 1 1 7 mil lion). Inves tment c ash ou tﬂow s for 2021 incl ude: > an upf ront pay ment o f $9,263 m illion a nd $2, 779 mill ion in ne t borr owings i n resp ect of the acquisition of Ale xion, > payments of cont ingent consideration from business combinations of $643 million (2020: $ 822 milli on) , and > $1 , 109 mil lion (2020: $1 ,6 45 mill ion) for th e purchase of intangible as sets, including $340 million of re gulat or y milestones and a $1 50 mi llion c onsid erat ion paym ent to Dai ichi Sa nk yo for Enhertu , the ﬁ rst st age d upf ront pay ment of $ 325 millio n to Daiic hi Sa nkyo fo r DS- 1062 a nd an upf ront paym ent of $20 0 milli on to Ioni s Pha rmac eutic als, I nc. for ep lonte rse n. Investment cash inﬂows include: > $587 mil lion fr om the sa le of int angib le as sets , mainl y drive n b y $31 7 mill ion fro m the s ale of th e Europe an rig hts, exclu ding Isr ael, Sp ain an d UK for Cr estor to Grünent hal, and > $776 million f rom the d ivestm ent of Astra Z eneca’ s share of Viela Bio . Net c ash di strib ution s to shar ehol der s were $3, 827 million ( 2020: $3,5 42 millio n ), inclu ding pro cee ds fro m the is sue of sh are ca pita l of $29 mi llion (2020: $ 30 mil lion) les s divi dend s pai d of $3,8 56 milli on (2020: $3, 5 72 milli on). Bonds In May 20 2 1, Astr aZen eca i ssue d $7 .0 billi on of bo nds in th e US dolla r debt c apit al mar kets wit h matur ities f rom 2023 to 20 5 1 . A f urt her 80 0 EUR milli on was is sue d in June 2021 und er the Eu ro Medi um T er m Note pro gra mme with a m atur ity of 20 29. In 2021 , As tra Zene ca repa id a 50 0 EUR millio n 0.250% bon d, whic h matur ed in May 2021 an d a 7 5 0 EUR mil lion 0.875 % bo nd, whi ch matu red in Novem ber 2021 . 62 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 S trategic Report Fi nancial Rev i ew c ont inue d Ne t debt At 31 Dece mbe r 2021 , out stan ding gr oss debt (interest-bearing loa ns and borrowings) was $ 30, 78 1 mill ion (2020: $20, 380 mill ion). Of t he gros s debt o utst andin g, $1 ,893 m illion is du e within o ne year (20 20: $2,386 mi llion). On 1 Ja nuar y 201 9, th e Grou p adopte d IFRS 1 6, which eliminates the classiﬁcation of lea ses a s eith er ope ratin g or ﬁna nce le ases . Th e adopti on of the ne w stan dard re sulte d in the i nitia l reco gniti on of Lea se lia biliti es of $720 milli on at the s tar t of 2020. Ne t debt at 31 Dec embe r 2021 was $24,322 mill ion, com pare d with $1 2, 1 10 milli on at the be ginnin g of the yea r , pr imar ily due to th e ﬁnancing of the A le xion acquisition. At 31 Dece mbe r 2021 , Cash a nd ca sh equivalents and liquid investments totalled $6, 398 mill ion (2020: $7 , 992 mill ion). The Gro up has c ommi tted b ank fac ilitie s of $4,875 milli on availa ble to ma nage li quidi ty . Th e commi tmen ts matur e in Apr il 2025. All facilities contain no ﬁnancial co venants and were u ndraw n at 3 1 D ece mbe r 202 1 . T he Group regular ly monit ors the credit sta nding of the b anki ng grou p and cu rren tly doe s not ant icipa te any iss ue with dr awing o n the com mit ted fac ilitie s shou ld this be n ece ssa ry. Adva nces u nder t hese f acilit ies cur rent ly bea r an in teres t rate pe r annu m base d on the LIBO R ( or oth er rel evant be nchm ark ra te) plus a margin. The facilities contain arr angements to switc h to alter native r isk fre e rate be nchma rks be fore Ju ne 2023. In respect of AstraZeneca ’ s anno uncemen t on 12 Dece mbe r 2020 to acqu ire Alex ion, the C ompany e ntere d into $1 7 .5 b illion of com mit ted ban k facili ties. $13.5 billi on of the se fac ilitie s were ca ncel led in Ju ne, July and O ctob er 2021 and $ 4.0 billio n were dr awn und er the te rm loa n facili ties du ring J uly 2021 . $1 .0 bil lion of th ese ter m loan s was subsequently repaid, using the proceeds of a new b ank ter m loan. Fi na ncia l p osit ion – 3 1 Dec emb er 20 21 All d ata in th is sec tion a re on a Rep or ted ba sis. Proper ty , plant and equipment In 2021 , Pr oper t y , pla nt and e quipm ent inc reas ed by $93 2 millio n to $9, 1 83 mi llion, wit h the incr eas e prima rily d ue to the as sets acquired on the Ale xion acquisition. Business combinations On 21 Jul y 202 1 , A stra Zene ca co mplete d the acq uisit ion of 100% of the is sue d share s of Alexion, a US-base d global biophar maceutical com pany fo cuse d on ser vin g patie nts af fec ted by ra re dise ases f or a con side ratio n of $4 1 ,058 million. Th e acqui sitio n has be en ac counte d for as a business combinati on using t he acquisit ion method of accounting in accordance with IFRS 3 ‘Busine ss Combinations ’ . Fo r f ul l deta il s of the ac qu isit ion , ple ase se e N ote 27 f rom page 178 . No bu sine ss acq uisit ions we re made i n 2020 or 2019 . Goodwi ll and i ntangible assets Go odwill i ncre ased by $ 8, 152 millio n in the yea r to $ 19,997 millio n, prin cipa lly on the acquisition o f Alexion. Intangi ble assets am ounted to $ 42,492 milli on at 31 Dece mbe r 2021 (2020: $20,9 4 7 mil lion), an inc reas e of $21 ,5 45 milli on. The i ncre ase was l arge ly due to i ntang ible as set a dditio ns with a va lue of $27 bil lion as sume d as pa rt of t he Alexi on acq uisit ion, of fse t by amor tis ation o f $3, 1 4 3 millio n (2020: $1 ,99 2 million) a nd net i mpair ment c harg es of $2,428 milli on (2020: $253 m illion) in clud ing impa irme nts on ver inur ad ($1 , 1 72 millio n) and By dureon ($469 millio n ). F ur t her det ai ls of add it ions to Int an gi ble ass ets , an d im pai rm ents re cor ded , a re in clude d in Not e 10 to th e Fi na nci al St atem ents f rom page 15 6. Summar y statement of ﬁnancia l p osition – 31 December All d ata in th is sec tion a re on a Rep or ted ba sis. 20 21 $m Movement $m 2020 $m Mov ement $m 20 19 $m Proper ty , plant and equipment 9 ,1 8 3 932 8 , 251 563 7, 6 8 8 Right-of - use assets 988 322 666 19 6 47 Goodwill and intangible assets 62 ,489 2 9,697 32,7 92 291 32, 501 As set s held fo r sal e 368 368 – ( 70) 70 Inven torie s 8,983 4,959 4,024 8 31 3 ,1 9 3 T rade and other r eceivables 10 ,5 3 9 2 ,797 7, 74 2 1, 241 6, 501 Net deferred tax (liabilit ies)/ assets (1, 87 6) (2 ,396 ) 52 0 292 228 T rade and other pa yables ( 23,871 ) (2,0 02) ( 21, 8 6 9) ( 1, 59 1) (20, 2 78) Provisions ( 1,72 4) (16 4) (1 ,560) 4 (1 ,564) Net income tax payable (253 ) 510 ( 763 ) 313 ( 1,0 76 ) Retirement beneﬁt obligations (2, 454) 74 8 ( 3,2 02) (395) ( 2,807 ) Non-current other in vestments 1 ,16 8 60 1 ,10 8 (2 31) 1, 3 3 9 Investments in associates and joint ven tures 69 30 39 ( 19) 58 Net debt (24,322) (12 , 212 ) ( 1 2 ,110 ) (20 6) ( 11 , 9 0 4 ) Net assets 39, 287 23,6 49 15, 6 3 8 1, 0 42 14 , 5 9 6 Net debt reconciliation 20 21 $m 2020 $m 20 19 $m Cash and cash equivalents 6,329 7, 8 3 2 5,36 9 Ot her inve stme nts 1 69 16 0 9 11 Cash and inv estments 6,398 7, 9 9 2 6, 280 Overdraft and shor t -term borro wings (387 ) (6 58) (2 25) Lease liab ilities 2 (987 ) (6 8 1) (675 ) Current instalme nts of loans and borrowings (1, 27 3) (1 ,536) (1, 5 9 7 ) Loa ns du e afte r one ye ar (28 , 134) (1 7 ,505) (15 ,7 3 0) Loans and borro wings ( 3 0,7 81) ( 20,380) (18 , 2 27 ) Net derivati ve ﬁnancial instruments 61 278 43 Net debt 3 (24,322) ( 12 ,11 0 ) ( 11 , 9 0 4 ) 1 O the r inv est ment s exc lude non -c ur rent i nve stm ents , whi ch a re inc lude d wit hi n th e bal anc e of $1,168 m il lion ( 202 0: $1,108 m il lio n) in t he Con sol idate d St ateme nt of Fi na nci al Po sit ion on pag e 135. 2 I nclu ded i n the Ne t debt r eco ncil iat ion fo r 2021 a re L ease l ia bil it ies of $9 87 m il lion ( 202 0: $ 681 mi ll ion), w hic h aro se on t he adopt ion of I F RS 16 on 1 Ja nua ry 2 019. Se e Group A ccou nti ng Pol icie s fro m page 1 38 an d Note 8 on p age 155 fo r more in format i on. 3   T heeq ui vale ntGA A Pmea su retoNetd ebti s‘li abi lit iesa ri si ngfr omn anc ingac ti vit ies’,wh iche xclude sthea mou ntsfo r ca sha ndover dra f ts,o the rinve st ment sandno n- na nci ngder ivat ive sshow nab ovea ndinc lude stheA cer taPh ar mapu t opt ion of $ 2, 458 m il lion ( 202 0: $ 2, 297 m il lio n) show n as $ 920 m il lio n in c ur rent O the r paya ble s and $1, 53 8 mil li on in non- cur rent Ot her paya bles. 63 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Receivables, pay able s and provisions T ota l curr ent an d non- cur rent T r ade an d other re ceivab les in crea sed by $2,79 7 milli on to $1 0,5 39 milli on in the ye ar , dr iven by ba lanc es assumed on the acquisition o f Alexion. T ota l curr ent an d non- cur rent T r ade an d othe r payabl es inc reas ed by $2,00 2 millio n in 2021 to $23,871 milli on. The i ncrea se was mai nly dr iven by the re cog nition o f the Alexion pay ables. Provi sions i ncre ase d by $ 164 mil lion to $1 ,7 24 millio n in 2021 . F ur t her de tai ls of t he c har ges m ade ag ai nst p rov isio ns ar e cont ai ned i n Not es 21 a nd 30 t o the F in anc ial St ate ment s f rom pa ges 167 and 18 9 r esp ec tive ly. Th e divest ment of th e US righ ts to Synagis , whi ch com plete d in 20 1 9, in clud es $4 3 7 milli on hel d as a ﬁna ncia l liabil ity (20 20: $1 50 million) . Astra Zeneca will also re ceive $1 7 5 mill ion foll owing the s ubmi ssio n of the Biologics Licence Application for MEDI889 7 and p otenti al net p aymen ts of $1 10 millio n for other ME DI8 89 7 proﬁt-related milestone paym ents . A non- cont ingen t payme nt of $20 mil lion for M EDI88 9 7 wa s rec eived dur ing the ye ar . Contingent consideration Some of our past business combinations have included elements of consideration t hat are contingent on fu t ure de velopment milestones, sa les mil eston es and / or roya lties . Such f uture paym ent lia bilit ies ar e held at f air val ue on the Consolidated Statement of Fi nancial Position . The Group’ s most signiﬁc ant Contingent consideration balance relates to our 20 1 4 acquisition of BMS’ s interest in our global diabetes alliance and includes sales-related royal ties up u ntil 2025. Fur ther d etail s of the cu rren t posi tion, movem ent in th e year an d the ma xim um future milestones in relation to Contingent con side rati on can b e found in N ote 20 to the Fina ncia l State ment s from pa ge 1 6 6. T ax payable and receivable Net i ncom e tax p ayable h as dec reas ed by $51 0 mill ion (2020: $ 3 13 millio n) to $253 mi llion, p rinci pally d ue to cas h ta x timing dif fer ence s and up dates to e stima tes of pr ior period ta x liabilities followi ng settlements with ta x auth orit ies an d on expir y of s tatute of limitations. The tax receivable balance of $6 63 mill ion (2020: $ 364 mil lion) pr incip ally rel ates to ca sh ta x timin g dif fere nces . Net d efer red ta x as sets d ecre ase d by $2,39 6 millio n (2020: inc reas e of $292 mil lion) in the ye ar , re sult ing in a Ne t defer red ta x liabilit y of $1 ,8 76 million, princip ally due t o the N et defe rred t ax li abili ty re cord ed on th e acq uisit ion of Al exion, p ar tiall y off set by movem ents i n defer red ta x as soc iated wi th intangible amor tisation and impairm ents, and the c hang e in Dutch a nd UK in come t ax ra tes. A ddit ion al i nfo rm atio n on th e move ment i n defe rre d ta x ba la nce s i s c ont ai ned in Not e 4 to th e F in anc ial St ate ment s f rom pa ge 149. Deﬁned beneﬁt plan obligations In terms of the Group’ s major deﬁned beneﬁt pla ns, ap proxim ately 9 0 % of tota l deﬁne d beneﬁt obligations ( or around 7 1 % of net obl igatio ns) are c once ntrate d in the UK , the US an d Swede n. The UK a nd US pl ans ar e largely legacy arrange ments, as they ha ve be en clo sed to new e ntra nts sin ce 200 0. In line with local regulations, the c ol lectively bargained Swedish pension plan remains ope n to empl oyees b orn be fore 1 979. Net deﬁned beneﬁt obligations decreased by $7 4 8 millio n in 2021 (2020: inc reas e of $3 95 milli on) to $2,454 mill ion. Th e decr ease was dr iven by ac tuar ial re meas urem ents of $626 m illion f rom hig her di scou nt rate assumptions in all major countries, par tially offs et by higher future inﬂation expectations, which decreased liability valuations, together wit h highe r than exp ecte d investm ent per formance, which increa sed asset values. A fur th er $1 10 millio n reme asure men t was due to exchan ge rate m ov em ents, c ause d by a strengthe ning USD against GBP , SEK and Euro w hich re duce d deﬁc its in US D term s. Gro up cas h cont ribut ions over t he year totalled $1 7 4 million. Ove r the pas t few year s, the G roup ha s under tak en sev eral liability management initiatives to r educe net deﬁned beneﬁt obligations and manage associated long-term ﬁnancial risks. F ur t her de tai ls of o ur ac cou nti ng for p ost- ret ir ement be ne t pl an s a re in clude d in Note 22 to th e F in anc ia l St ate ment s f rom pa ge 168 . Commitments and contingencies We have commitm ents and cont ingencies whi ch are ac coun ted for in a cco rdanc e with the a ccou nting po licie s des crib ed in the Financial Stateme nts in the Group Accounting Policies section from page 1 38. We also h ave tax ation c ontin genc ies. T hese are d esc ribe d in the T a xatio n sec tion in th e Critical accounting policies and estimates se ction f rom pa ge 66 an d in Note 30 to th e Fina ncia l State ment s from pa ge 1 8 9 . Of f -bala nce s heet tr ansactions and commitments We have no of f-bal ance s heet a rra ngem ents and our derivativ e activities are non-spe culat ive. Th e table o n this pa ge set s out our m inimu m contractual obligations at the year end. Researc h a nd development collaboration payments Details o f future po tenti al R&D c o llaboratio n paym ents a re als o inclu ded in N ote 30 to the Fi nanc ial St ateme nts on pa ge 1 89. A s det aile d in Note 30, p aymen ts to our pa rt ner s may no t beco me payab le due to th e inher ent uncer taint y in achieving the de velopment and r evenue m ilesto nes lin ked to the fu ture paym ents . W e m ay enter i nto fur the r col labo ratio n proje cts in t he futu re that m ay inc lude mi leston e payme nts an d as ce rt ain mile stone p aymen ts fail to c ry stal lise du e t o, for exa mple, d evelopm ent no t proc eedi ng, they m ay be rep lace d by potent ial paym ents under new collaborations. Paym ent s due by pe rio d Le ss t han 1 ye ar $m 1- 3 ye ar s $m 3 -5 ye ar s $m Over 5 ye ars $m To t a l 20 21 $m T otal 2020 $m Ba nk loa ns and o ther borrowings 1 2,368 10 ,8 8 9 5,5 61 19 ,72 7 38,545 2 7, 7 8 3 Lease liab ilities 2 233 339 205 210 987 738 Contracted capital expenditure – – – 388 38 8 689 To t a l 2 ,601 11 , 2 2 8 5,76 6 20, 325 39,920 2 9, 210 1 B an k loa ns a nd ot her bor row in gs in clude i nter est c ha rges p aya ble in t he pe rio d, a s deta il ed in N ote 28 t o the F in anc ial St ate ment s from p age 18 0. 2 L eas e lia bi lit ies a rose o n the ad opti on of IF R S 16 on 1 Janu ar y 2019. S ee No te 8 fro m page 15 5 for more i nf orm atio n. 64 As tra Z enec a An nua l Re por t & Fo rm 20 - F I nf orm ati on 20 21 Strateg ic R eport Fi nancial Rev i ew c ont inue d Innate P ha rma > In Ap ril 201 5, we en tered i nto two on colo gy agr eeme nts wi th Innate Ph arm a: ﬁrs t, a licence which pro vides us with exclusive global rights t o co- dev elop and commercialise IPH220 1 in combination with Imﬁnzi ; and, s eco nd, an op tion to lic ense ex clusive global rights t o co- dev elop and com merc iali se IPH2201 in mo nothe rapy and other combinations in cer tain treatment are as. We joi ntly fun d Phas e II studi es with Innate P ha rma and we lead t he ex ecution of the se stu dies. I n resp ect of t hese agr eeme nts, we m ade an in itial p aymen t to Inna te Phar ma of $250 mill ion. Th e agr eeme nt als o inclu des a Ph ase III ini tiatio n miles tone of $1 0 0 milli on, as we ll as additional regulatory and sales-related mile stone s. We rec ord all s ale s and pay Innate P ha rma double-digit roy alties on net sa les. T he arr ange men t inclu des the r ight for In nate Pha rma to co -pr omote in Eu rope for a n equa l shar e of cost s and in come in the te rr itor y . > In Oc tober 201 8, we exerc ised o ur optio n over IPH2 20 1 and s imult ane ously e ntere d into a f urt her mu lti- elem ent tra nsa ction w ith Innate P ha rma. Under the agreement, we pai d $50 mil lion to co llabo rate on, a nd acq uire an o ption to li cens e, IPH5201 , a ﬁrst-in-class anti-CD39 mAb. Additionally , we pai d $20 milli on to acqu ire opti ons over four futur e programmes currently being devel oped by I nnate Pha rma , and pa id 62.6 EUR mill ion to acq uire a 9.8% stake i n Innate P ha rma. The $ 100 mil lion option fee and $ 50 mill ion pre mium pa id over ma rket pr ice for t he investm ent in In nate Pha rma have be en ca pita lise d as inta ngibl e ass ets. Th e payme nt for fu ture pr ogra mmes w ill be expe nse d as R&D ex pend iture over f our yea rs. At the s ame ti me, we lice nse d the EU and U S righ ts to Lumox iti to Innate Pharma for $ 50 milli on upfr ont plu s futur e miles tone paym ents of u p to $25 millio n. > In De cemb er 2020, In nate Phar ma ann ounc ed its i ntentio n to tran sfer th e rig hts of Lu moxiti back to AstraZenec a. As tra Zene ca will no t be req uired to r efund the u pfront p aymen t but wil l no long er be ent itled to r ece ive miles tone pay ment s from Innate Phar ma. > In Jul y 202 1 , A stra Zene ca en tered i nto a T ermination Agreement with Innat e Pharma to ﬁna lise th e trans fer of ri ghts fo r Lumox iti back to A straZeneca, with an agreed ﬁnal set tle ment of $ 6 millio n. The m ajori ty of transition activities back t o Astr aZeneca were c ompl eted in 20 2 1. We determine these business development tra nsac tion s to be sign iﬁca nt usin g a rang e of factors. We look at the speciﬁc circumstance s of the individual arrangement and apply sev eral quant itativ e and qualita tiv e crit e ria. As we consider business development tra nsac tion s to be an ex tensio n of our R& D strategy , the e xpe ct e d total v alue o f development payments under the trans action and i ts pro por tion o f our ann ual R& D spen d, bot h of which a re proxi es for ove rall R& D ef for t and c ost, a re impo rt ant el eme nts of the determination of the signiﬁcance. Other qua ntita tive cri teria we a pply in clud e, witho ut limi tatio n, expe cted leve ls of fut ure sa les, th e po ssibl e value of m ilesto ne paym ents a nd the resources used for commercialisation ac tiviti es (for exa mple, th e numbe r of sta ff ). Qualitative f actors we consider include, without limitat ion, ne w market developments, new te rrito ries , new are as of re sear ch and strategic implications. Capit al isat ion and sh are holder ret ur n Capitalisation Th e total nu mber of s hare s in iss ue at 31 Dece mbe r 2021 was 1 ,5 49 millio n (2020: 1 ,31 3 million) . Sharehol ders’ equity increas ed b y $23,6 46 millio n to $39, 268 milli on at the ye ar end. Non-c ontrolling int e rests were $ 1 9 million (2020: $1 6 m illion). Follow ing the a pproval o f Calqu ence in the EU in Nove mber 20 20, the mino rit y sha rehol der s are n ow cons ider ed to have no fu rt her sub stan tive vari abili ty in r isk and r eward rel ated to the ir sha res as i t is con side red hig hly likel y that on e of the opti ons wil l be exerci sed, a nd the pr ice of th e optio ns is now ﬁxed. T here fore, no f ur ther a mount s of the consolidated AstraZeneca results hav e been at tribu ted to the m inori ty sh areh olde rs of Acer ta Pharma and the Non-controlli ng interests rese rve relating to the minor ity sha reho lder s of Ace rt a Phar ma, tot alling $1 ,40 1 million, were reclassiﬁe d into Retained ea rning s in 2020, as d etail ed in No te 26 t o the Fina ncia l State ment s on page 1 7 7 . No fu rth er adj ustme nts wer e made fo r 2021 . Dividend and share repurchases Th e Board h as rec omme nde d a seco nd inte rim div iden d of $ 1 .97 (1 45.3 p enc e, 1 8 .00 SEK ) to be pa id on 28 Ma rch 2022. Thi s brin gs the fu ll-yea r divide nd to $2.87 (21 0. 1 pen ce, 25. 7 7 SEK ) . Aga inst Rep or ted EPS, th e Grou p had a divi dend cover r atio of 0.0 3: 1 in 20 2 1 (20 20: 0.9: 1). Aga inst C ore Ear ning s per s hare, th e Group had a d ivide nd cover r atio of 1 .84:1 in 2021 (2020: 1 .44: 1 ). T his divi dend i s cons isten t with the p rogressive dividend policy , by which the B oard in tends to m ainta in or gr ow the divid end each year . The Board regularly reviews i ts distr i bution pol icy and i ts overa ll ﬁnan cial s trate gy to con tinue to s trike a bal ance b etwe en the interests of t he business, our ﬁnancial creditors and our shareholders. Havi ng regard for busine ss in ves tment, funding the progressive dividend polic y and meeting our debt service obligations, the Board cu rrently be lieves it i s appr opri ate to conti nue the suspension of t he share repurchase pro gra mme whi ch was an nounc ed in 201 2. Inv estments, divestments and capital expenditure We have com plete d more th an 75 major o r strategically impo rtant busine ss dev e lopment tra nsac tion s ov er th e past t hree ye ars. In ad dition to t he busi nes s develop ment transactions detailed under Col laboration Reven ue fro m page 59 of th is Fina ncia l Review , the f ollowing signiﬁcant collaborations rem ain in th e develo pment p hase: Daiichi Sank yo > In Jul y 2020, Astr aZe nec a entere d into a new gl obal de v elo pmen t and commercialisation agreement with Daiichi Sa nkyo fo r DS- 1062, the ir pro prie tar y trophoblast cell-surface antigen 2 ( TROP2)- dire cted A DC an d potent ial new me dici ne for th e treat ment of m ultipl e tumou r typ es. As tra Zene ca agre ed to pay D aiich i Sank yo an up front p aymen t of $ 1 bill ion in st age d paym ents: $ 350 mill ion was d ue upon com pleti on, with $ 325 milli on af ter 1 2 m onths and $ 325 milli on af ter 2 4 mon ths fro m the ef fec tive date of th e agre emen t. As tra Zene ca als o agre ed to pay add ition al con ditio nal am ounts o f up to $ 1 bill ion for the succes sful achiev e ment of regulator y app rovals a nd up to $4 b illion fo r sal es- related milestones. The transaction w as acc ounte d for as a n intan gible a sse t acquisition, reco gnised initially at the prese nt value of non- contingent consideration, wit h any potential future mile stone p aymen ts cap ital ised i nto the intangible as set as they are recognised. Th e compa nies w ill join tly devel op and commercialise DS- 1 062 worldwide, e xcept in Japan where Daiichi Sank yo will retain exclus ive righ ts. As tra Zene ca and D aiich i Sa nkyo wi ll sha re equa lly deve lopme nt and com merc iali satio n expen ses as we ll as pro ﬁts rel ating to D S- 1 0 62 wor ldwid e, except f or Japa n whe re Daii chi San kyo wi ll be re spon sibl e for suc h cost s and wil l pay Astra Zeneca mid-single -digit royalties. Dai ichi Sa nk yo will re cord s ales i n the US, ce rt ain co untri es in Euro pe and c er tai n othe r coun trie s wher e Daiic hi San kyo ha s af ﬁliate s. Proﬁ ts sha red wit h Astr aZe neca fro m those c ount ries w ill be re cord ed as Collaborati on Re venue by Astra Z eneca. As tra Zene ca will re cor d Produc t Sal es in other countries w orldwide, f or which proﬁts sha red wi th Daii chi Sa nkyo w ill be re cord ed wit hin Cos t of sale s. Dai ichi S ank yo will manufacture and supply DS- 1062 . 65 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Th e Board r eviews th e level of dis trib utab le res er ves of the Pa rent C ompa ny annua lly and aims to maintain distributable reserves tha t provid e adequ ate cover fo r divid end paym ents . At 3 1 D ece mber 20 2 1, the Proﬁt and l oss ac coun t rese rve o f $ 1 1 , 563 mil lion (2020: $1 0,30 4 millio n ) was avai lable f or dis tribu tion, s ubjec t to ﬁling th ese Fi nanci al Statements with Companies House. When mak ing a di strib ution to s hare holde rs, t he Dir ecto rs dete rmin e proﬁt s availab le for dis tribu tion by re feren ce to guid ance o n rea lise d and di strib utab le proﬁ ts unde r the Com pani es Act 20 06 is sue d by the Ins titute of Char tered Accountants in England and Wales and t he Inst itute of Ch ar tered A ccou ntant s of Sc otlan d in Apr il 201 7 . Th e proﬁt s of the com pany have b een re ceive d in the for m of rec eivab les du e from subsidiaries. The availability of distributable res er ves in th e Compa ny is dep ende nt on those receivables meeting the deﬁnit ion of qualifying consideration with in the guidance, and i n par ticu lar on th e abili ty of s ubsid iari es to set tle th ose re ceiva bles w ithin a re ason able pe riod of t ime. Th e Dire ctor s cons ider th at, bas ed on th e natur e of thes e rece ivabl es and the av ailable cas h re sources of the Group and o ther ac ces sibl e sourc es of fu nds, at 31 Dece mbe r 2021 are all (20 20: all) of t he Com pany’s proﬁ t and los s res er ves were available for distribution. Fo r f ur t her in for mat ion reg ard in g D ivi dend s, see Not e 2 5 on pag e 176 . Future pro spects As o utline d ear lier in t his An nual Re por t, our s trate gic pr iori ties su ppor t de liver y of growth through innov ation and our Purpose: to pus h the bou ndar ies of s cien ce to deli ver life- changing medicines. In su ppor t of thi s, we made c er tai n choic es around our three strategic priorities: > Deliv er Growth and Disease Area Lea dership > Accelerate Innov ative Science > Be a Gr eat Plac e to W or k. Fo r mo re in for mat ion, se e O ur St rat eg y a nd Key Per for ma nce I ndic ator s fr om page 12 . Ful l y ear 2022: addi tional commentar y T ota l Revenu e is expe cted to in crea se by a hig h-teen s per cent age, an d Core EPS i s expe cted to i ncre ase by a mid -to-h igh twenties pe rcentage. T ota l Revenu e from COV ID- 19 medi cines is an ticip ated to de cline by a low-to -mi d twe ntie s perc enta ge, with a n expec ted de cline in s ale s of Va x zev ri a be ing par tially of fse t by grow th in Evus hel d sales. The maj orit y of vacc ine reven ue in 2022 i s expe cted to c ome fr om initi al con trac ts. Th e Gros s Proﬁt Ma rgin f rom the COV ID- 19 me dicin es is exp ecte d to be lower th an the Company average. Core Operating Expenses are ex pec ted to inc reas e by a low-to-m id tee ns per cent age, dr iven in s ubsta ntial p ar t by the f ull year i ntegr ation of A lexio n expen ses. Emerging Markets T otal Revenue, including Chin a, is exp ecte d to grow mid -sin gle digi ts in 2022. Ch ina T ota l Revenu e is expe cted to de cline by a mi d-si ngle dig it per cent age in 2022, pr imar ily due to c ontinu ed NR DL and VBP program mes impacting various medicine s. The Company remains conﬁde nt in the longer term outlook for Emerging Mark ets, dri ven by a lar ge mar ket oppo rt unit y , bro ader pati ent ac ces s and an i ncre ased m ix of new me dicin es. A Co re T ax R ate bet ween 18 % and 2 2 % i s expec ted. Astra Zeneca continues to recognise the hei ghten ed ris ks and un cer ta intie s from th e ef fec ts of COVID - 1 9. This comment ary repre sents management ’ s cur rent e stim ates an d is subj ect to ch ange. Se e the Cau tiona ry s tatem ent re gardi ng for war d-loo king s tatem ents o n page 228. Financial risk mana gem ent Financial risk management poli cies Insurance Our risk management processes ar e de scrib ed in R isk Ove rvi ew from p age 48. Th ese pr oces ses e nabl e us to ide ntif y risk s tha t can be p ar tly or e ntirel y mitig ated thr ough the u se of ins uran ce. We focu s our ins uran ce res ourc es on th e most c ritic al are as, or w here the re is a le gal re quire ment , and whe re we ca n get the b est val ue for mo ney thro ugh structured and tradit ional insurance. W e purchase an e x t ernal multi-line insuranc e programme to mitigate against signiﬁcant ﬁna ncia l loss a risi ng from c ore bu sine ss ris ks. T axation Ou r appro ach to ma nagin g tax r isk is inte grate d with ou r broad er bu sines s ris k management and com pliance framework. Ou r appro ach is to m anage t ax r isks an d ta x co sts in a ma nner c onsi stent w ith app licab le regulator y requirements and with sharehold ers’ best long-term interest s, taking into account operational, economic and reputational fac tors . W e m anag e tax r isks in t he contex t of substantiv e business transactions. T reasur y Th e princ ipal ﬁ nanci al ris ks to whic h we are exposed are those arising from liquidity , interest rates, foreign curre ncy and credit. We have a cen trali sed tr easu ry f uncti on to ma nage the se ri sks in ac cord ance wi th Board-approved policies. Note 28 to the Fina ncia l State ment s from pa ge 1 8 0 sets ou t the re levant p olici es an d the way we man age the se ris ks and ou r capi tal ma nage ment obj ective s, as we ll as a se nsitiv ity a naly sis of the G roup’s e xpo sure to exch ange r ate and interest rate mov ements. Fo r f ur t her in for mat ion on our sup ply cha in n an cin g ar ra nge ment s, plea se see th e B usi nes s R ev iew on pa ge 30 . Cr itic al acc ount ing pol icies a nd es ti mates The Consolidated F inancial Statements have be en pre pare d in acc orda nce wi th UK -ad opt e d IAS and with the requirements of the C ompa nies Ac t 200 6 as app lica ble to companies repor ting unde r those standards. The Consolidated F inancial Statements also com ply fu lly with I FRS as is sued by t he IASB and international accounting standards as ado pted by the Eu rope an Unio n. On 31 Dece mbe r 2020, EU-a dopted I FRS was bro ught in to UK law and b eca me UK -ad opted international accounting standards, with fut ure cha nges to I FRS bei ng subj ect to endorse ment by the UK Endorsement Board. The accounting policies employed are set out in the G roup A ccou nting Poli cies s ecti on in the Fi nanc ial St ateme nts fro m page 138. In app lyin g these p olic ies, we ma ke estim ates and a ssu mption s that af fec t the Re por ted am ounts of a sse ts and li abili ties an d disclosure o f contingent a ssets and liabili ties. Th e actua l outco me coul d dif fer fr om thos e es timate s. Some o f thes e polic ies re quire a hig h level of ju dgem ent be caus e the are as are especially subjectiv e or complex. We beli eve that the m ost cr itic al acc ountin g pol icie s and si gniﬁc ant ar eas of ju dgem ent and e stim ation a re in the fo llowing a rea s and align with the accounting policies conta ining our k ey accounting judgements and signiﬁcant acc ounting estimates as disclosed in the F inanc ial St ateme nts fro m page 138: > revenu e reco gniti on – see R evenue Acc ounti ng Policy f rom pag e 1 39 a nd Note 1 o n page 1 4 6 > expensing of internal development expenses – se e Re search and Development Polic y from pa ge 1 40 > impairment review of Intangible assets – se e Note 1 0 f rom pag e 1 56 > use ful ec onomi c life of Int angi ble as sets – se e Rese arch a nd Devel opme nt Policy f rom pag e 1 40 an d Note 1 0 f rom pag e 1 56 > business combinations and Goodwill (and Contingent consideration a rising from business combinations) – see Business Combinations and G oodwi ll P olicy on pag e 1 42, Note 1 0 f rom pag e 1 56, N ote 20 fro m page 6 6 and Note 27 fr om pag e 1 78 > litigation liabilities – see Litigation a nd Environment al liabilities within Note 30 fro m page 189 > ope ratin g segm ents – s ee Note 6 f rom p a g e 152 > emp loyee be neﬁt s – see Note 2 2 from p a g e 16 8 > taxation – see T axation Accounting P olicies on pa ge 1 4 1 a nd Note 30 o n page 189. 66 A st raZ ene ca A nnu al Rep or t & For m 20 -F I nfo rm atio n 2 021 St ra tegic Repor t Fi nancial Rev i ew c ont inue d Revenue r ecognition Pro duct S ales a re rec orde d at the invoi ced amount (ex cludin g inter - company sales and valu e adde d ta x e s) , les s moveme nts in es timate d accr uals fo r reba tes and chargebacks given t o manage d care and other customers, which are a particular fea ture in th e US and ar e cons ider ed to be key es timate s. It is the G roup’s policy to o ffe r a cre dit note f or all re turns a nd to des troy all retu rne d stock in a ll mar kets. Ca sh disc ount s for p rompt p aymen ts are a lso dis counte d fro m sale s. Sal es are r eco gnise d whe n the con trol of th e good s has be en tr ansfe rre d to a third part y , which is usually when title passes to the cu stome r , ei ther on s hipme nt or on t he re ceipt of g oods by t he cus tomer , dep endi ng on local trading terms. Rebates, chargebacks and returns in the US Whe n invoici ng Prod uct Sa les in t he US, we estimate the rebates and chargebacks that we expe ct to pay , whi ch are c onsid ere d to be e stima tes. Th ese re bates t ypi cally a rise fro m sale s cont ract s with thi rd-p ar ty ma nage d care organisations, hospitals, long- term care facilities, group purchasing organisations and v arious f ederal or sta te programmes (Medicaid contracts, suppleme ntal rebates, etc.). They c an be cl assi ﬁed a s follows: > Chargebacks, where w e enter int o arrangeme nts unde r which cer tain parties, typically hospitals, long-t e rm care facil ities, group purchasing organisations, the De par tmen t of V e teran s Af fair s, Publi c Hea lth Se rv ice Cove red Enti ties a nd the De par tmen t of Defe nse, ar e able to bu y products from wholesaler s at the lower pr ices we h av e co ntrac ted with t hem. T he chargeback is the difference between the pr ice we invoic e to the who les aler a nd the contracted price charged by the wholesaler to the other par ty . Chargebacks are cre dited d irec tly to the wh oles ale rs. > Regulator y , including Medicaid and other fed era l and st ate prog ramm es, wh ere we pay re bates b ased o n the sp eciﬁ c terms of ag reem ents wi th the US D epar tme nt of He alth an d Huma n Ser vic es and w ith individual states, which include product us age an d inform ation o n bes t pric es and av e ra ge mark et prices benchmark s. > Cont ract ual, und er whi ch enti ties s uch as third-par ty manage d care organisations are ent itled to r ebate s depe nding o n spe ciﬁe d per f ormance prov isions, wh ich v ary from contract to contract. Th e effe cts of t hese d educ tions o n our US pha rma ceuti cals r evenue a nd the move ment s on US p harm aceu tica ls revenu e provis ions are s et out o n this pa ge. Gr oss to N et Pro duct S ale s US pharmaceuticals 20 21 $m 2020 $m 20 19 $m Gross Product Sales 23,970 19 , 25 5 18 , 3 5 4 Chargebacks (2,0 95) (2, 46 4) (2,42 9) Regulat ory – Medicaid and state programmes (1, 48 8 ) (1, 0 8 8) ( 1, 3 8 0) Co ntrac tua l – Mana ged c are an d Medi car e ( 7,1 2 1 ) (5,6 90) ( 5,467) Cash and other disc ounts (3 12) ( 28 1) (303) Customer ret urns (14 ) (19 8) (4 4) US Br and ed Pha rmac eut ical Fe e (57) ( 47) (10 5 ) Othe r (883) (8 49) (879) Net P roduct Sales 1 2,000 8 ,638 7, 74 7 Mov e ments in accruals US pharmaceuticals Bro ught forward at 1 J anuary 20 21 $m Additions th rough business combinations $m Provision for current year $m Adjustment in respect of pr io r yea rs $m Returns and payments $m Carried for w ard at 31 D ec emb er 20 21 $m Chargebacks 17 8 2 2 ,11 7 ( 21) (2,09 5) 18 1 Regulatory – Medicaid and stat e programmes 495 46 1,5 4 8 (50) (1 ,52 9) 510 Contractual – Managed care and Medicare 1, 9 37 29 7, 2 0 4 (83) ( 7, 0 5 6 ) 2 ,031 Cash and other discounts 20 – 313 – (3 12) 21 Customer ret urns 253 18 13 – (88) 19 6 US Brand ed Pharmaceutical Fee 11 5 – 77 (28 ) (85) 79 Othe r 12 8 4 882 – (860) 15 4 To t a l 3 ,1 2 6 99 1 2 ,1 5 4 (18 2) (12 , 02 5 ) 3 ,17 2 Brought for wa rd at 1 Ja nuar y 2020 $m Provision for current year $m Adjustment in re spe ct of prior y ear s $m Returns and payments $m Carri ed forward at 31 De cem ber 2020 $m Chargebacks 24 5 2, 572 (28) ( 2 , 6 11 ) 17 8 Regulatory – Medicaid and stat e programmes 7 31 1, 2 6 9 (9 3) (1 ,412 ) 495 Contractual – Managed care and Medicare 1,9 3 9 5,7 96 (12 7 ) ( 5, 67 1) 1, 9 37 Cash and other disc ounts 19 289 – (28 8) 20 Customer ret urns 18 0 225 – ( 152 ) 253 US Brand ed Pharmaceutical Fee 12 6 92 (51) (52) 11 5 Othe r 14 5 8 51 (2) (866) 12 8 To t a l 3,38 5 11 , 0 9 4 ( 3 01) (1 1 ,0 52 ) 3 ,1 2 6 Brought for wa rd at 1 Ja nuar y 20 19 $m Provision for current year $m Adjustment in re spe ct of prior y ear s $m Returns and payments $m Carri ed forward at 31 De cem ber 20 19 $m Chargebacks 271 2,4 58 (29) (2, 455 ) 24 5 Regulatory – Medicaid and stat e programmes 892 1,47 7 (97 ) ( 1, 5 41) 7 31 Contractual – Managed care and Medicare 1, 5 4 2 5 ,6 13 ( 14 6 ) (5,07 0) 1, 9 3 9 Cash and other disc ounts 4 303 – (28 8) 19 Customer ret urns 361 44 – (225 ) 18 0 US Brand ed Pharmaceutical Fee 52 111 (6) (31) 126 Othe r 14 4 879 – (878) 14 5 To t a l 3,266 1 0,885 (278 ) (10 , 48 8 ) 3,38 5 67 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review Acc rual a ssu mption s are bu ilt up on a product -by -product and customer -by- cus tomer b asis , taki ng into ac count s pec iﬁc con trac t provis ions c ouple d with exp ecte d pe rfo rma nce, an d are the n aggr egate d into a weighted a verage rebate accrual rate for each of ou r produ cts. A ccru al rate s are rev iewed and a djus ted on an a s nee ded ba sis. T here may be f ur ther a djust ment s when ac tual reb ates ar e invoice d base d on uti lisat ion info rmat ion sub mit ted to us (i n the cas e of contractua l rebates) and claims/invoices are re ceive d (in the c ase of re gula tor y rebate s and chargebacks). We believe that we hav e made reasona ble estimates for future rebates using a similar methodology t o that of previous yea rs. In evitab ly , howeve r , the se est imates involve a ssum ption s in resp ect o f aggre gate fut ure sa les leve ls, se gment m ix and customers’ contractual performance. Ove rall ad justm ents b etwe en gro ss and n et US Pro duct S ales a moun ted to $1 1 , 9 70 mi llion in 2021 (2020: $1 0,61 7 millio n) with the inc reas e drive n by an overa ll incr ease i n our US Pro duct S ales i nclu ding the a dditio n of the A lexion R are Di sea se por t folio in 20 2 1. Cas h disc ounts a re of fere d t o cus tomer s to en cour age pro mpt paym ent. Ac cru als ar e calculat ed based on h istori cal e xperience and are a djus ted to reﬂe ct ac tual exp erie nce. O ur rev enue recognition policy is descr ibed w ithin Group Accounting P olicies from page 1 38. Ind ustr y pr actic e in the US a llows who lesa ler s and p har macie s to retur n unus ed sto cks wit hin six m onths of, an d up to 1 2 mo nths af ter , s helf-l ife expir y . Th e custom er is cre dited f or the re turne d prod uct by th e is suan ce of a cre dit note. R eturn ed pro duc ts are n ot exchan ged for p rodu cts fr om invento ry and o nce a re turn cl aim ha s bee n deter mine d to be val id and a c redit n ote has b een is sue d to the cu stome r , the r eturn ed pro duct s are de stroyed. At t he poin t of sale i n the US, we es timate th e quant ity a nd value o f produ cts whi ch may ult imatel y be retu rne d. Our ret urns acc rua ls in the US a re bas ed on ac tual expe rie nce. Ou r esti mate is ba sed o n the historical sales and re turns in formation for established products together with market - related information, such as estimated shelf life, p rodu ct rec all, an d estim ated s t ock l evels at wh oles aler s, whi ch we rec eive vi a third- par t y infor mati on ser vic es. For n ewly lau nche d prod ucts , we use rate s bas ed on our ex per ienc e with sim ilar p roduc ts or a pre- determined perce ntage. Business combinations and goodwill (and contingent consideration arising from business combinations ) Our busines s model includes inv estment in targeted business de velopments t o str ength en our p or tfo lio, pipe line an d capabilities. These business dev elopment transactions inc lude coll aborations, asset in-licences and business acquisit ions. Eac h tran sact ion is c onsid ere d t o es tabli sh whether it qualiﬁes as a b usiness combination by app lyin g the cri teria a sse ssme nt det aile d in IFRS 3 ‘Business Combinations’ , after applying the optional concentration t est on an e lect ive basi s. The d eterm inatio n of a transaction being a business combination or as set ac quisi tion is c onsi dere d to be a key jud geme nt as de taile d in the a ccou nting pol icy on pa ge 1 42. On th e acqui sitio n of a busi nes s, fair va lues are a ttr ibute d to the ide ntiﬁa ble as sets a nd liabilitie s and conting ent liabilities unle ss the fa ir valu e cann ot be mea sure d reli ably , in wh ich ca se the val ue is sub sume d into goodwill. At tribu ting fa ir value s is a key judg eme nt. Go odwill i s the dif fer ence b etwe en the fa ir valu e of the co nside rati on and th e fair va lue of ne t asse ts acq uired. Fa ir value i s the pri ce tha t would be r ecei ved to sel l an ass et or pay for a li abili ty in a n orde rly tr ansa ction a t the date of a cquis ition . The pr ice may b e dire ctly obser v able but, in most cases, is estimated using v aluation t e chn iques which normally involve p redi cting f uture c ash ﬂows a nd applying a mark et participant discount rate . Fut ure conti ngent elements of c onsiderati on, which may include development and launch milestones, rev e nue threshold milestones and r evenue -ba sed roya lties , are fa ir value d at th e date of acq uisit ion usi ng dec isio n-tre e analysis with k ey inputs including probabilit y of su cces s, co nside rati on of pote ntial de lays and r evenue p rojec tion s base d on the G roup’ s internal foreca sts. Unsettled amounts of con side rati on are he ld at fa ir value w ithin payab les wi th chan ges in f air valu e recognised immediately in t he Consolidat ed Statement of Comprehe nsi ve Income. Several of our business combinations hav e included signiﬁ cant amounts of contingent con side rati on. Det ails of th e moveme nts in the fair v alue of the contingent consideration in the y e ar and the range of possible contingent con side rati on amou nts tha t may eventu ally be come p ayable a re cont aine d in Note 10 to the Fi nanci al Sta temen ts fro m page 1 56. Whe re not a ll the eq uity o f a subsi diar y is acquired, the non-c ontrolling int e rest is re cogni sed e ither a t fair va lue or at th e non-c ontrolling int e rest’ s prop ortionate sha re of the n et ass ets of th e subsi diar y , on a ca se -by-c ase ba sis. Pu t option s over non-c ontrolling int e rests are recognise d as a ﬁna ncia l liabi lity m easu red at a mor tise d cos t, with a correspon ding entr y in e ither retained earning s or against non- controlling int erest res er ves on a c ase -by-c ase ba sis. As d etail ed on thi s page, we h av e sig niﬁc ant investments in goodwill and intangible assets as a re sult of a cqui sitio ns of bus ines ses a nd purchases of a ssets, such as product development and marketing r ights . Details of the e stim ates an d assu mption s we make in ou r annua l impa irme nt testi ng of goo dwill are i nclud ed in No te 9 to the Fina ncial St ateme nts on pa ge 1 56. T he Gr oup, including acquisition s, is considere d a single operating se gment for impairment purpose s. No im pair ment of g oodw ill was ide ntiﬁe d. A sig niﬁc ant por ti on of our inve stme nts in int angib le ass ets an d good will ar ose fro m the 2021 acq uisiti on of Al exion, re stru ctur ing of the jo int vent ure with M SD whic h comm enc ed in 1998, the a cqui sitio n of MedIm mune in 2007 a nd our 201 4 ac quisi tion of BM S’ s inte rest i n the Gro up’ s Di abete s Allia nce. We are s atisﬁe d that th e car ry ing valu es of ou r int angib le ass ets as a t 3 1 D ece mber 20 2 1 a re ful ly just iﬁed by e stima ted futu re cas h ﬂows. Th e acco unting fo r our Int angi ble as sets i s ful ly expla ined i n Note 1 0 to th e Finan cial Statements from page 156 , including details of the e stim ates an d assu mption s we make in impairment testing of intangible ass ets. Litigation and environmental liabilities In the n orma l cour se of bu sine ss, c onting ent lia biliti es may ar ise fr om pro duct-s peci ﬁc and general legal pr oceedings, fro m guarant ee s or from environmental liabilities connected with our c urre nt or for mer s ites. W here we be lieve that pot ential liabilities ha ve a less than 50 % pro babil ity of c ry stal lisin g, or whe re we are una ble to ma k e a rea sona ble es timate of t he liabilit y , we treat them as co ntingent liabilities . Th ese ar e not prov ided fo r , but a re dis close d in Note 3 0 to the Fina ncia l State ment s from p a g e 18 9 . 68 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 S trategic Report Fi nancial Rev i ew c ont inue d In ca ses th at have be en set tle d or adjudicated, or where quantiﬁable ﬁnes and pe nalti es have be en as ses sed an d whic h are not s ubjec t to appe al (or oth er simi lar for ms of re lief ), or whe re a los s is pro bable a nd we are a ble to ma k e a rea sona ble es timate of t he los s, we gen era lly indi cate the l oss a bsor bed or ma ke a provis ion for o ur bes t esti mate of the expect ed loss. Whe re it is c onsi dere d that th e Group i s mor e likely th an not to pr evail, or in t he rar e cir cums tanc es whe re the am ount of t he leg al liability cannot be estimated reliably , legal co sts involve d in defe nding t he clai m are cha rge d to proﬁt a s they are i ncur red. Wh ere it is c onsi dere d that we have a va lid con trac t which provides the right to reimburseme nt (fr om insu ranc e or othe rw ise) of le gal co sts and / or a ll or par t of a ny loss in curr ed or fo r whi ch a provi sion ha s bee n est ablis hed a nd we con side r rec ov er y to be vi rtu ally c er tain, the n the be st est imate of th e amoun t expe cted to b e rece ived is r eco gnise d as an asset. As ses smen ts as to whe ther o r not to re cogni se prov ision s or as sets an d of the am ounts c once rne d usua lly involve a s erie s of comple x judgements about future events and c an re ly heavi ly on es timate s and assumptions. We b elie ve t hat the provisions re corde d are ad equa te base d on cur rent ly available information and that a n y insura nce reco veries recorded wil l be r eceiv ed. Howev e r , given the inherent unce rtaintie s involve d in as sess ing the o utcom es of the se ca ses an d in est imatin g the am ount of th e pote ntial l osse s and th e ass ociate d insu ranc e re coveri es, we cou ld in fu ture pe riod s incur judgments or insurance settlements that could hav e a mat e rial adv e rse effect on our results in any par t icular per iod. Th e posit ion co uld cha nge over ti me and the re can, t heref ore, be n o assu ranc e that any lo sse s that re sult f rom the ou tcome o f any le gal pr ocee ding s will not exce ed the a moun t of the p rovisi ons tha t have bee n booke d in the accounts. Al thoug h there c an be no a ssu ranc e rega rding the o utcom e of lega l proc eed ings, we d o not cur rent ly expe ct the m to have a mater ial adverse effec t o n our ﬁnancial position, but they could signiﬁcantly affect our ﬁnancial results in an y par ticular period. Sa rba nes- O xley Ac t se ct ion 4 0 4 As a c onse quen ce of our N asda q listi ng, we are r equi red to co mply wi th thos e provis ions of the S arba nes -Ox ley Act a pplic able to fore ign is sue rs. Se ctio n 404 of th e Sarb anes - Oxl ey Act re quire s comp anie s annua lly to as ses s and ma k e pub lic sta teme nts abo ut the qu alit y and e ffe ctiven ess of t heir in terna l con trol over ﬁ nanc ial rep or ting. A s rega rds Sarbanes -Oxley Act section 404, our app roac h is bas ed on the C ommi ttee o f Spo nsor ing Or ganiz atio ns (COSO) 201 3 framew ork. Ou r appro ach to the a sse ssme nt has b een to select key transaction and ﬁnancial reporting pro ces ses in o ur lar gest o per ating un its an d a num ber of s peci alist a reas (e.g. ﬁ nanci al consolidation and repo rting, treasury ope rati ons an d tax ation e tc. ), so th at, in agg rega te, we have covere d a sign iﬁca nt pro por tion o f the key line s in our Fin anci al St ateme nts. Ea ch of the se ope ratin g units a nd spe cia list ar eas ha s ensu red th at its re levant processe s a nd c ont rols are document ed to appropr iat e standards, tak ing int o acc ount, in particular , the guidance pro vided by the SEC. We have als o reviewe d the str uctu re and o per ation of o ur ‘entit y level’ c ontro l environment. This refer s to the overarching control environment, including stru cture of reviews, c hecks and balances that are es sent ial to the m anage ment o f a well- controlled business. Following the acquisition of Al exion, we h av e dete rmin ed to exclude Al exion fr om the re por t on Inte rna l Contr ols Ove r Finan cial Re por ting ( ICOFR) fo r the ﬁr st yea r afte r acqu isitio n as we und ers tand a nd integrate Alexion’ s controls within the AstraZeneca frame work. 69 Strate gic Report A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Fina ncial Review We are co mm itt ed to bei ng a gre at plac e to wor k f or the glo bal wo rkf orce , enc ou ragi ng an d re war di ng in novat ion , e ntr epre neu rsh ip an d hi gh per for ma nce . D eta il s on eng agem ent wi th empl oyee s can b e f oun d on pag es 41 to 43 of th e Bu sine ss Re vie w , pa ge 92 of t he Aud it Co mm itt ee Re por t an d page 11 9 to 12 0 of th e Remu ner atio n Commit tee Report. We are co mm itt ed to empl oyi ng hig h e th ica l st an dar ds whe n c ar r yi ng out al l as pec ts of ou r bu sine ss glob al ly. O ur Co de of Et hic s (t he Code) i s b ase d on our Value s, ex pe cte d be hav iou rs and ke y pol ic y p ri ncipl es. Mo re in for mat ion on t he Code c an be fou nd in th e Bu sine ss Re vie w o n pa ge 47 . A str aZ ene ca rec og nis es pat ient s as peo ple  rst a nd puts t hem at th e h ear t of wha t w e do. I nfor ma tion on t he imp or ta nce of pat ien ts to the bu si ness c an be fou nd on pa ges 14 and 8 0, wit h fu rt her i nfo rm atio n t hrou ghout t he Bus ine ss Rev iew. In f ormat ion on interac tions with suppliers is on pa ges 38 , 39, an d 8 0. The co nsid erat ion a nd im pac t of the G roup’s op erat ion s o n th e env ir onm ent ca n be fou nd on pag es 4 4 t o 4 6 a nd A mbit ion Z ero Ca rbon on pag e 45. In for mat ion on how t he Grou p ha s cons ider ed ot her fac tor s, suc h as co mmu nit ies , is als o set out in Co ntr ib uti ng to so ciet y fr om page 45 a nd Con nec ti ng w ith ou r st ak ehold ers on pa ge 80. De ta ils o f how t he Boa rd op erat es a nd ma tte rs con side red by t he Boa rd ar e set out i n th e Cor pora te Go ver na nce Re por t f rom pag e 8 3. Ex am ples of how D ire cto rs di sc har ged t hei r s ec tio n 17 2(1) dut ies an d conside red stake holders when ma king P ri ncipa l De cis ions d ur ing 2 021 a re se t out on pa ges 8 0 a nd 81. Pr inc ipa l Dec isio ns ar e dec isio ns a nd di scu ssi ons wh ich a re ma ter ial or st rat eg ic to t he Group , b ut al so t hose t hat a re sig ni ca nt to any of ou r st ak ehold er gro ups. Se ct ion 172 (1) s tat ement W hen ma ki ng dec isi ons , t he Di rec tor s of A str aZ ene ca PL C mus t ac t in t he way th ey co nsid er, in goo d f ait h, i s m ost l ike ly to pro mote t he succ es s o f th e Com pany fo r th e be ne t o f i ts mem be rs as a whole , w hi le als o co nsid eri ng th e bro ad ran ge of sta keh olde rs who i ntera ct wi th an d ar e impa cte d by ou r bu sine ss . T h rough out the ye ar, wh ile di sc har gi ng the ir dut ies , se ct ion 172(1) re qu ire s a d ir ec tor to have re ga rd, a mong st ot her ma tte rs, to t he: > l ik ely con seq ue nces of a ny deci sion s in t he lo ng ter m > i nte res ts of the co mpa ny’s emplo yee s > n eed to fo ster t he comp any ’s b usi nes s re lat ions hip s w it h suppl ier s, cu stom ers and othe rs > i mpa ct of the c ompa ny’s ope rati ons on t he com mun ity a nd env iro nme nt > desirab ility of the com pany main taining a re puta tion f or hig h sta nd ard s of bu sine ss co nduc t an d > n eed to ac t fai rly as be tw een me mbe rs of th e co mpan y . I n d is cha rg ing t hei r s ec tion 172 (1) duti es, t he Di rec tor s have h ad re gar d to th e fac tors se t o ut abo ve, as we ll as ot her fa cto rs re leva nt to the de cis ion bei ng ma de. Th e Bo ard ac kn owled ges t hat eve ry de cis ion ma de wi ll not ne ces sar il y re sul t i n a po sit ive out come fo r a ll st a kehol ders . By con sider in g ou r P ur pos e a nd Value s, tog et her wi th ou r st rat egi c p rio rit ies , t he Boa rd ai ms to ens ure t hat t he dec isi ons m ade a re con sis tent a nd in tend ed to prom ote th e C ompa ny’s long-t er m success. T he Group en gage d w ith ke y s ta keh older s t hro ugho ut the ye ar to u nder st an d t he is sue s an d fa ctor s th at ar e sign i ca nt for the se st ak ehold ers , an d a num ber of ac tio ns wer e ta ke n a s a r esu lt of th is eng agem ent. T he in tera ct ion wit h st ake holde rs, a nd the im pac t o f th ese i ntera ct ions , is set out i n t he Con ne ct ing w ith o ur st a kehol ders s ec tio n on p ages 8 0 to 8 2 and t hr ougho ut th e Strateg ic Report. Strate gic Report T he fol lowi ng se ct ion s mak e up th e St rate gic Re por t, wh ich ha s bee n p rep are d in ac cor da nce w ith th e r eq ui reme nts of the Comp an ies Ac t 2 0 06: > A st ra Zen eca at a Gla nc e > Chair’ s Stat eme nt > C hie f Exe cut ive O cer ’ s R evi ew > H ea lthc ar e in a Ch an gi ng World > B usi nes s Mo del an d L if e- cyc le of a Me dic ine > O ur S tr ateg y an d K ey Pe rfo rm anc e Ind ica tor s > Dise ase A rea Review > Bu siness Rev iew > R is k Ove rv iew > F inancial Review an d ha s bee n a ppro ved an d s ign ed on beh al f of th e Bo ard . A C N Kemp Comp any Se cret ar y 10 F e br uar y 2 022 70 A st ra Zen eca A nnu al Re por t & Fo rm 20 - F I nf orm ati on 202 1 Strateg ic R eport Fi nancial Rev i ew c ont inue d 71 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Ch ai r’ s I ntro duct ion 72 Cor porate Govern ance O verv iew 73 Boa rd of Di rec tors 74 Se nior E xecut ive Team (S ET ) 76 Cor porate Govern ance Repor t 77 Nomi nat ion and Gove rn ance Com mit tee Re por t 86 Sc ience Com mit tee R epor t 88 Su sta in abi lit y Comm it tee Rep ort 89 Aud it Comm itt ee Repo rt 90 Direc tors’ Remu n erat i on Repor t 98 Cor p or ate G o ve r n a nc e Bui lt on s t rong fo u ndation s of good cor porate gover na nce , t h e B oard con t in ued to exercise eect i ve oversi gh t of Astr aZe n eca a cti vi ti es . As in 20 20, the pan demi c once a gain te sted our s olid gove rnan ce fou ndatio ns in 2021 . Al thoug h some D irec tors we re able to m eet in pe rso n at our of ﬁce s in Lon don in th e seco nd par t of th e year , all B oard me etin gs duri ng the yea r were he ld vir tual ly . Howeve r , with g ood IT su ppor t, we co ntinu ed to col labor ate and discharge our responsibilities e ffectively in wha t was ano ther bu sy and su cce ssfu l year for Astr aZene ca. St rate gic over sight Ove rsig ht of our s trate gy and i ts imp leme ntati on is, of c ours e, a key res pons ibili ty of the B oard. I n 2021 , this inc lude d ov er sigh t of the co mpleti on of the Alexion acqu isition and its int e grat ion int o the re st of th e Group. In p ar ticul ar , th e Audit Com mit tee hel d a numb er of me eting s with the A lexion te am to bet ter un der sta nd the bus ines s and i ts risk e nviron ment . The Science Committee under t ook an in-depth revi ew of the Al exion po rt foli o of medi cine s and development pipeline, scientiﬁc capabilities, talent and organisation, while the Remuneration Committee looked at reward-related elements of t he organisation. E ec tive Comm itte es Give n this ad ditio nal ac tivit y , I am g ratefu l to the Ch air s of the Boa rd Com mit tees fo r the wo rk they have l ed and r espo nsibi litie s dis char ged so a bly: Mi chel D ema ré for the Remuneration Committee and Na zneen Rah man fo r the Sci ence C ommi ttee. I a m par ti cular ly gra teful to Phi lip Broa dley for h is wor k with the Au dit Co mmit tee an d as sen ior indepen dent Non-Executive Director . I woul d also li k e to ack nowle dge an d thank Mic hel De maré fo r his wor k chai ring th e Ad Hoc B oard C ommi ttee o n Va x zev ri a , which ope rate d from Ma rch to Oc tobe r of 2021 . Michel, ably suppor ted b y the Committee’ s me mber s – Deb orah D iSan zo, Dian a Lay ﬁeld and N azn een R ahma n – ensu red the r est of the B oard a nd mana geme nt were f ully fo cuse d and s uppo rte d on all m atte rs rel ating to o ur COVID - 1 9 va ccin e durin g the yea r , ran ging fr om safety and efﬁcacy , through manufacturing and supply t o reputational matters. Su sta in abi lit y Comm it tee My tha nks al so go to Na znee n for ag reei ng to chair o ur ne wly establ ished Sustainab ility Committee, ha ving pre viously overseen sus tain abili ty ma tter s on be half of t he Boar d sin ce Janu ar y 2021 . Th e Sust ainab ilit y Com mit tee was e stab lishe d in Oc t obe r and met f or the ﬁr st time i n Dec embe r , reﬂ ecti ng the increasing signiﬁcance of sustainability to our business, not least our ambitious Ambition Zero Carbon programme. I am gr atefu l t o all t he memb er s of the Boa rd for th eir co ntinu ed com mitme nt to Ast raZe nec a and p romo ting our s ucc ess fo r the be neﬁt of shareholders and stakeholders more generally . Leif Johans son Chair “ O ve rsight of ou r st r ateg y and its i m plement ation is a key resp onsibi lity of the Boa rd. ” 72 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance C h a i r ’s I nt r odu ct ion Gove rna nce st r uct ure At tenda nce i n 20 21 T he Dir ec tors a re col lec tive ly res pons ible for t he suc ces s of the G roup. T he Boa rd ma int ai ns a nd per iod ica lly re vie ws a li st of mat ter s th at ca n only b e approv ed by t he Bo ard . Mat ter s th at have not b een e xpr essl y re ser ved to t he Bo ard i n t his w ay are dele gate d to the C EO or on e of the B oar d’ s ve Com mi tte es. T he di agra m belo w il lus trat es t his go ver nan ce st ru ct ure . T he Boa rd’s resp onsi bil it ies in clude se tt ing ou r str ateg y an d polic ies, o vers eei ng ri sk and c orporate gove rna nce, a nd monitor ing prog ress towa rds mee ting ou r object ives a nd an nua l pla ns. It i s accou nta ble to ou r sh are holder s for th e prope r conduc t of th e bus ine ss an d our long -ter m suc ces s, a nd se eks t o repre sent t he inte res ts of a ll st akeholder s. T he CEO, C FO an d Sen ior Ex ecut ive Tea m (SE T ) ta ke the l ead in d evelopi ng ou r st rate gy ; propo sa ls ar e rev iewe d and con st ruc t ively ch al lenge d by t he Boa rd, be fore th e s tr ateg y is n al ly approve d. Audit Commit tee Re por t fr om pag e 90 Nomi nation a nd Gover nance Commit tee Re por t fr om pag e 86 Remu neration Commit tee Re por t fr om pag e 98 Scien ce Commit tee Re por t fr om pag e 88 Sustainab ility Commit tee Re por t fr om pag e 89 T he B oa rd ha s dele gated so me o f it s power s t o t he CEO a nd ope rates w ith t he a ssi sta nce of ve Com mit tee s: Board Corporate Gover nance Repor t from page 77 Bo ard Co mm itte e mem ber ship a nd me eti ng at tenda nce i n 20 21 Bo ard o r Com mit tee C ha ir Dir ector Appointment Date 1 Board 2 Audit Committee Remuneration Committee Nomination and Governanc e Committee Scien ce Committee Sustainability Committee 3 Non-Executive Chair and Executive Directors Leif Johansson 26/04 /20 1 2 8/8 5/6 5/5 Pascal Sorio t 01/1 0/2 01 2 8/8 Aradhana Sarin 01 /08/202 1 3/3 Marc Dunoyer – st epp ed dow n on 1 Aug ust 20 2 1 0 1/1 1/ 20 13 5/5 Non-Executive Directors Eua n Ashl ey 01 /10/2020 8 /8 4/5 Philip B road ley 4 27 / 04/ 201 7 8 /8 6/6 6 /6 5/5 Michel Demaré 01/09/ 2019 8/8 5/6 6/6 5/5 Deborah DiSanz o 01/1 2 /2017 7/ 8 5 6/6 Diana Layﬁeld 0 1/1 1/ 2 02 0 8 /8 2/2 6 Sheri McCoy 01/1 0/2 01 7 8/8 6/6 6/6 1/ 1 To n y M o k 01/01/2019 8/8 5/5 Nazneen Rahman 01/06 /201 7 8/8 5/5 5/5 1/1 Andreas Rummelt 0 1/08/2 021 3/3 1/1 Marcus Wallenberg 05/04/ 1999 7/ 8 7 4/5 1/1 Ge neviè ve Berg er – re tir ed on 1 1 M ay 2021 26/04/2012 4 /4 2/2 Graham Chi pchase – r etir ed on 1 1 M ay 2021 26/04/2012 4 /4 1/1 1   D ateof rstap poi ntme ntorele ct iontot heBoa rd . 2   A llB oa rdmee ti ngsi n2021w erehe ldbyv ideoc onf ere nceduetoC OVI D - 19 re str ic tion s.Force rt ai nmee ti ngsi nthes econdp ar toft heyea r,someD ire cto rs meti npe rsonatt heCo mpa ny’soc einLo ndontop ar tic ipat einBo ardm eet ing s. 3   T heSu st ai nab il ityC omm itt eewa scon sti tut edon1Oc tob er20 21. 4  Ph il ipBroa dle ywasap poin teda ssen iorin depe ndentNo n-E xec uti veDi rec toron1M ar ch20 21. 5  De bora hDi Sa nz omi sse doneBoa rdme et ingduet oil lne ss. 6   D ia naLa ye ldbe cam eamem beroft heS cienc eCom mit teeo n1Oct ober2 021. 7   M arc usWa llen be rgmi sse doneBo ardm eet ingdu etoth emeet ingb ei ngconv enedats hor tnot ice. 73 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Corporate Gover nance Over view Cor porate G over na nce O ver v ie w <3 year s 5 Euan Ashley Michel Demaré Diana La yeld T ony Mok Andreas Rummelt 3-9 year s 4 Deborah DiSanzo Sheri McCoy Nazneen Rahman Philip Br oadley >9 year s 2 Leif Johansson Marcus W allenberg Men 8 W omen 5 British 4 American 3 Swedish 2 Belgian 1 Canadian 1 French 1 German 1 Gender split of Dir ectors Director s’ na tionalities Length of t enure of Non-Ex ecutive Director s Boar d composition as a t 31 December 2021 Le if Joha nss on NG R Non -E xec utiv e Cha ir o f the B oar d Sk ills an d expe rie nce: F r o m 1 9 9 7 - 2 0 11, Le if was CEO o f AB Volvo. Le if se rve d at A B Elec trol ux as CEO f rom 1994-1 9 9 7 . H e was a Non -E x ec utive Di rect or of BMS f rom 1998 -201 1, ser vi ng on the Audit Commit t ee and Compensation and Management Development Committee. Leif was Cha irm an of LM Er ics son f rom 201 1- 201 8 . He hol ds an MS c in Engineering from Chalmer s Universit y of T e chnology , Gothenburg. Other appointment s : Leif holds Board po sitio ns at Au toliv, Inc. a nd Eco lean AB. L eif ha s bee n a mem ber o f the Roya l Swedi sh Aca demy o f Engineering Sciences since 1 994 (Cha irm an 201 2-201 7 ), is a me mber of th e Europ ean R ound T abl e of Industrialists (Chairman 2 009-201 4) an d also o f the Cou ncil o f Advis or s, Boao Forum for Asia. M ichel De mar é R A NG Non-Exe cutive Director Skills and experience: Michel was previously Vice-Chairman of UBS Gr oup AG (2010-2019) , Cha irm an of Syngenta and Syngenta F oundation for Sustainable Agriculture ( 201 3-201 7) and Chairman of SwissHoldings (2013-201 5 ). Betw een 20 05 an d 201 3, Mic hel wa s CFO of AB B Ltd and interim CEO during 2008. He joined AB B from B ax ter Inte rna tion al Inc., whe re he wa s CFO Euro pe fr om 20 02-2005. P rior to t hat, h e spen t 1 8 yea rs at T he Dow C hemi cal C ompa ny , se rv ing as C FO of Dow’s Glo bal Polyoleﬁns a nd Elastomer s division betw een 1 99 7 -2 002 . Other appointment s : Mi che l is a Non-Executive Dir ector of Vodafone Gr oup pl c and Lo uis Dr eyf us Int ’l Hol ding BV, Chai rma n of IMD Bu sine ss Sc hool a nd Cha irm an of No moko AG. Pas ca l Sor iot Ex ecu tiv e Dir ec tor a nd CEO Sk ills an d expe rie nce: Pas cal h as a passion for science and medicine, and signiﬁcant experience in established and emerging mark ets, t ogether with a str eng th of str ateg ic thin king a nd ex ecution, a succ essful track record of managing change and ex ecuting str ateg y , an d the ab ilit y to lea d a dive rs e orga nisa tion. H e ser ved a s COO of Roche’ s pharmaceuticals division from 201 0 - 201 2 and pre viously as C EO of Gen ente ch in Sa n Fran cisc o, where he l ed its successful merger wit h Roch e. Pasc al jo ined t he pharmaceutical ind ustry in 1 986 and ha s worke d in sen ior ro les in m ajor companies around the w or ld . He is a Do ctor of Vete rin ar y Medi cine (École Nationale V étérinaire d ’ Alfor t, Ma ison s-Al for t) and h olds a n MBA fro m HEC Par is. Ara d h ana Sarin Ex ecu tiv e Dir ec tor a nd CF O Sk ills an d expe rie nce: Pr ior to he r cu rren t role, A rad hana w as CFO fo r Alexion. Aradhana joined Alexion in 20 1 7 and was responsible for driving strategi c gro w th , ﬁnanc ial performance and business development at Alexion. She brings operational e xper i ence in bio pha rma pl us mo re than 2 0 year s of professional e xp erience at global ﬁnancial institut ions and has extensive knowledge of global healthcare sys tems, h aving c los ed mor e than 100 tra nsa ctio ns acr oss M& A , eq uit y and debt ﬁnancing. Before joining Ale xion, Aradhana was Managing Director of Healthcare Corporat e and In vestment Banking at Citi Global Banking, focusing on c lient s in the l ife sci enc es an d biopharmaceutical sec t or s. Previously , sh e ser ved a s Mana ging D irec tor of Healthcare Inv estment Banking at UBS , and wo rked at J P Morg an in th e M& A Advisor y and Healthcare gro ups. Ar adha na tra ine d as a me dica l doc tor in In dia an d spe nt two ye ars p rac tisin g in bo th Indi a and Af ric a. Sh e comp lete d he r medi cal tr aini ng at th e Unive rsi ty of De lhi an d rec eive d her MB A from Stanford Business School. Ph ilip Bro adley A R NG Senior indep endent Non- Executive Dire ctor Skills and experience: Philip has signiﬁcant ﬁnancial and int e rnational bu sine ss exp eri ence . He was pre viou sly Gr oup Fi nanc e Dire ctor o f Pru den tial p lc for e ight ye ars a nd Ol d Mut ual pl c for si x year s. He h as ser ve d as C hair man of t he 1 0 0 Gro up of Fin ance D ire ctor s in the U K and Bo ard me mber o f Sta ller gene s Gre er pl c. He is a Fe llow of th e Inst itute of C har ter ed Accountants in England and Wales. Phil ip gra duate d in Phil oso phy , Po litic s and Economics from St Edmund Hall, Ox ford , wher e he is now a S t Edmun d Fel low , a nd ho lds an M Sc in Behavioural Science from the London Sc hool o f Econo mic s. Until M arc h 201 9, Phil ip was a me mbe r of the Oxford Univ ersit y Audit Committee. Other appointment s : Philip is Senior Ind epe nden t Dire cto r of Leg al & Ge ner al Gro up plc , wher e he cha irs the A udit C ommi tte e. He is T rea sure r of th e Lond on Lib rar y an d Chai rman of th e Boar d of Gove rnor s of Eastbourne College. Com mi tte e mem be rsh ip key Commit tee Chair NG Nomi nation and Gover nance A Audit Sc Scien ce R Remu neration Su Sustainab ility 74 A st ra Ze neca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 Cor porate Governa nce Board of Directors as at 3 1 December 202 1 Eu an A sh ley Sc Non-Exe cutive Director Sk ills an d expe rie nce: Euan st udied physiology and me dici ne at Glasgow Uni vers ity, tra ined a s a juni or doc tor at Oxford University Hospitals NHS T rust, an d gain ed a DPh il in ca rdiova scul ar cellular biology and molecular genetics at th e Unive rsi ty of O xfor d. In 20 02, Eua n moved to S tanf ord Un iver sit y , Cal ifor nia wh ere hi s rese arc h focu ses o n genetic mechanisms of cardio vascular health and disease. His laboratory leverages AI and digital health tools, alongside biotechnology and technology partner s in Silicon V alley , to ad vance translati onal and cl inical re sear ch. Eua n’ s awa rds in clud e re cogn itio n from t he Oba ma Whi te House for contributions t o personalised medicine and the American Hear t Association’ s Medal of Honor for precision medicine. Other appointment s : Associate De an and P rofes sor o f Biom edic al Dat a Sci ence a nd Pro fess or of Cardiovascular Medicine and Genetics at S tanfo rd Uni vers ity. Addit i onal In formation Financi al S tat eme nts Na znee n Ra hm an Sc Su NG Non-Exe cutive Director Sk ills an d expe rie nce: Nazne en has signiﬁcant scientiﬁc, medical and data an alys is expe rie nce in r are di sea se an d ca nce r geno mics . She wa s Head o f the Division of Genetics and Epidemiology at th e Inst itute of C ance r Res ear ch, London, and He ad of Cancer Genetics at the Royal Ma rsden NHS Foundation T r ust fo r 1 0 ye ars t o 20 1 8. Na zne en was a lso fo unde r and D irec tor of th e TGLcl inical Genet ic T esting Laboratory . Nazneen qualiﬁed in medicine from Ox ford U niver sit y , a nd ga ined a Cer tiﬁcat e of Co mplet ion of Specialist T raining in medical genetics and a PhD in molecular genetics. Nazneen has a strong commitment to open science and has garnered numerous aw a rds, inc ludi ng a CBE in r eco gnit ion of he r contribution t o medical sciences. Other appointment s : Na zneen is fou nder a nd CEO o f Y ewMa ker and Director of t he Sustainable Medicines Partner ship , delivering science-base d solutions to make healthcare more sustainable. De bora h DiS an zo A Non-Exe cutive Director Skills and experience: Deborah is Pre side nt of Be st Bu y Heal th for B est Bu y Co. Inc. B est Bu y Hea lth pr ovide s digital health solutions in active ageing, virtual care, and consumer health. Deborah holds an appointment at the Ha rva rd TH Ch an Sch ool of P ublic Health teaching Ar tiﬁcial Intelligence in He alth . Until D ece mbe r 201 8, s he se rve d as Ge ner al Man age r of IBM Wats on Hea lth. Pr ior to IB M, unti l 201 4, Deborah held multiple senior ex e cut ive positions at Philips Healthcare where she also se rved as Chie f Execut ive Ofﬁcer . Deborah has been honoured by mul tipl e orga nisa tion s as a top he alth in ﬂue ncer. She h olds a n MBA fro m Bab son Co lleg e and i s a Har vard University Advanced Leadership Ini tiati ve 201 9 Fe llow. Other appointment s : Deborah is Pre side nt of Be st Bu y Heal th for Be st Buy C o. Inc. A ndr eas Ru mme lt Su Non-Exe cutive Director Skills and experience: Andreas joined the Board f ollowing the acquisition of Al exion , wher e he had b een a d irec tor sin ce 2010. Previo usl y he was G roup He ad of T e chni cal O pera tion s and Qu alit y at Nova rt is, an d from 20 06 unt il 201 0 s er ved on t he Exe cutive Co mmit tee. H e was Glo bal CE O of the G ene ric s Divi sion o f Sand oz fro m 20 04 to 200 8, havi ng ori gina lly jo ined in 1985. A ndre as ea rne d his Ph D in pharmaceutical sciences from the University of E rlangen-Nuremberg and re ceive d his exe cutive t rain ing in g ene ral management and leadership from IMD in L aus anne; IN SE AD in Fo nt ain eb lea u; and Harvard Business School. Other appointment s : Andrea s is Chairman and Managing P a rtner of Inte rPha rma Link AG a nd a dire cto r of va riou s priva tely- hel d biote ch and pharmaceutical companies. He is a member of the S cientiﬁc Advisor y Committee of the G lobal A nti biotic Research and Devel opment Par tn ers hip. Di ana Lay eld Sc Non-Exe cutive Director Sk ills an d expe rie nce: Diana has broad global business e x perience whi ch be gan in t he pha rma ceu tica l an d biote ch se ctor. She ha s held s eni or leadership roles in the technolog y sector and international banking, including senior po sit ions at Standard Cha rt ered B ank , as the CE O of a star t -up technology company , and in He alth car e and Li fe Sci enc es at Mc Kins ey & Co. Unt il Dec emb er 2020, Di ana was a N on- Exec utive D ire ctor of Ag greko p lc. She h as a BA f rom Ox ford U niver sit y and a n MA in Pu blic Administration and International Economics from Ha rvard Un iversity . Other appointment s : Diana is President, EMEA Par tnerships at Google, driving t e chnology tra nsfo rma tion a nd is al so Vi ce- Pre side nt, ‘N ext Bi llion U ser s’ & Product Management, leading t he deve lopm ent of p rodu cts a nd se rvi ces for f utur e Goo gle us ers . She is a lso a Council Member of the London School of Hyg iene & Tropi cal M edic ine an d Cha ir of CD C Grou p plc. Sher i Mc Coy A R Su Non-Exe cutive Director Skills and experience: Until February 201 8, Sh eri wa s CEO an d a Dire ctor of Avon Pro duc ts, In c. Prio r to join ing the m in 20 1 2, s he had a distinguished 30-year ca ree r at Joh nson & J ohns on, la tter ly se rv ing as V ice Ch air man of th e Executive Commit tee , responsible for the Pharmaceuticals and Consumer business segments. Sheri joined Joh nso n & John son as a n R&D s cien tist and subsequently managed businesses in eve ry m ajor p rodu ct se ctor, hold ing positions including Worldwide Cha irm an, Su rgic al Car e Grou p and Division President, Consume r . She holds a Bachelor of Science degree in T ex tile C hemi str y fro m the Uni ver sit y of Massachuset ts Dartmou t h, a Ma st ers degree in Chemical Engineerin g f rom Princeton University and an MBA from Ru tger s Unive rsi ty in N ew Jer sey , US. Other appointment s : Sheri serves on the boards of Str yker , Kimberly-Clark, Novo cure a nd La rond e. She i s also a n industrial adviser for EQT , in connection wit h whic h she ch air s Cer ta ra, a nd se rve s on the b oard s of Ga lder ma and P arexel . Ma rcu s W a llen ber g Sc Su Non-Exe cutive Director Sk ills an d expe rie nce: Marcus has international business e xperience across v arious ind ustry sectors, including the pharmaceutical in dustry from his directorship wit h Astra prior to 1999 . Other appointment s : Marcus is Chairman of Skandina viska Enskilda Ba nken AB, S aab A B and FAM A B. He is a me mbe r of the b oard s of Inves tor AB a nd the K nut a nd Ali ce Walle nbe rg Foundation. Tony Mok Sc Non-Exe cutive Director Skills and experience: T o ny is the L i Shu F an Medical Foundat ion endowed Prof ess or an d Chair man o f the De par tme nt of Cli nica l Onc olog y at the Chinese Univ e rsity of Hong Kong. H is work includes multiple aspects of lung cancer research, including bioma rk er an d mole cula r tar gete d ther apy in lu ng ca nce r . T o ny is a for mer Pr esid ent of the Int e rnational Association for the Stu dy of Lu ng Can cer a nd is on t he Boa rd of D irec tors o f the Am eri can So ciet y of Cli nica l Onc olog y . Hi s work has achiev ed numerous aw a rds including t he ESMO Lifetime Ach ievem ent Awar d in 201 8 a nd Gi ant of Ca nce r Care i n 2020. Other appointment s : T ony is a Non-Executiv e Direct or of Hutchison China MediT ech Limited (Chair of Nomination Comm ittee) and co-founder and Chairman of Sa nomics Limited ( merge d with ACT Genomic Limited since 202 1) . 75 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 Corporate Gover nance Strate gic Report Bo ard o f Dir ec tors I n addi tion t o the B oa rd of Di re cto rs, t he Sen ior E xec ut ive Tea m, or S ET, is t he bo dy t hro ugh wh ich t he CE O ex erci ses t he au tho rit y del egat ed to hi m by t he Bo ard . Th e CEO l eads t he SE T an d has e xec uti ve res pon sib il ity for the man agement, development and pe rfo rm anc e of th e busi nes s. T he CE O, CF O and S ET a ls o ta ke th e lead i n dev elop ing t he st rat eg y for rev ie w , const ruct i ve chal lenge a nd approval by t he Bo ard a s pa rt of t he an nua l st rat eg y rev iew pr oce ss. F ur t her in for mat ion a bou t SET mem be rs is a vai la ble on ou r web sit e, ww w .astrazeneca.com. Pas ca l Sor iot CEO Ruud D obbe r Exec utive Vice -Pre sident, BioPha rmaceut icals Busi ness Unit Je Pott Ge nera l Cou ns el an d Chi ef Hu ma n Re sou rce s O cer Ara d h ana Sarin CFO Dav id Fre dr icks on Exec utive Vice -Pre sident, On colo gy Bu si ness U nit Is kra R eic Exec utive Vice -Pre sident, V ac cines & Im mune Therapies K a ta ri na Ageborg Exec utive Vice -Pre sident, Sust aina bilit y an d Ch ief Com pli anc e O cer Pa m Cheng Exec utive Vice -Pre sident, Ope rations & In form ation Technol ogy Su san G al brait h Exec utive Vice -Pre sident, Oncolo gy R& D Menel as (M ene ) Panga los Exec utive Vice -Pre sident, BioPha rmaceut icals R& D L e o n Wa n g Exec utive Vice -Pre sident, I nter nat ion al a nd Ch ina P re side nt Mar c Dun oy er Ch ief E xec utiv e O cer, A lex ion an d Ch ief St rat eg y O cer, A str aZ ene ca 76 As tr aZ ene ca A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Corporate Gover nance Sen i or Executive T ea m (SET) as at 3 1 December 202 1 1. Boa rd leade rsh ip and comp any pu rpo se A . Boa rd’s role Th e Board’s role i s to prom ote the lon g-ter m sus tain able s ucce ss of the C ompa ny . Th e Dir ecto rs’ diver se ra nge of sk ills, ex peri ence and industry knowledge, and ability t o ex e rcise inde pendent and objective jud geme nt, he lp the Boa rd to ope rate ef fec tively in i ts over sight of d elive ry of t he Group’ s strategy , generation of shareholder valu e and co ntrib ution s to wide r soci ety. The Board’ s effe ctiv e operation is underpinned by a sound gov ernance str uctu re, des crib ed on pa ge 73. Thr ough a pro gra mme of re gular B oard a nd Com mit tee meetings, Dire ctors receive information on Astra Z eneca’ s ﬁnancial per formance, the R &D pipeline and critical business issues. The Board is accountable to our shareholders for the p rope r cond uct of th e busin ess a nd our lon g-ter m succ ess, a nd se eks to rep rese nt the in teres ts of all s takeh olde rs. B. Pu rpo se, cu ltur e and s trat egy Th e Board b elieve s that ou r Purpo se, to pus h the bo undar ies of s cien ce to del iver life-chan gi ng medicines, positions AstraZene ca for long- term sustainable success. Ou r Code of Et hics an d our Value s unde rpin the behaviours that support our culture. For m ore i nfor ma tion o n our P ur po se, o ur Value s an d our Cu lt ure , see p age 10. Th e Board i s resp onsi ble for s etti ng our str ategy a nd pol icie s, overs eein g risk a nd corporate go vernance, and monitoring pro gres s towards m eeti ng our ob ject ives an d ann ual pl ans. T he Boa rd cond ucts a n annu al revi ew of the Gr oup’ s over all st rateg y . C. Resources and controls The Board ensures that the neces sary res ourc es are i n plac e to help the C ompa ny meet its objectiv es and measure its per f ormance against them. Th e Intern al Audi t Ser vic es (IA ) and Compliance functions provide quar terly rep or ts to the Au dit Com mit tee on the ir ac tiviti es and a nnua l reviews of key th emes , proce sses and systems (including arrangeme nts for whistleblowing) . The Board has f ull over sight o f thes e matte rs by way of the Au dit Co mmit tee Cha ir’ s rep or ts to the Board after each Committee meeting. Board me mber s are a lso abl e to acce ss the info rmat ion prov ided to th e Audit C ommit tee. For more infor mation, see the Audit Commit tee Report f rom pa ge 90 . Th e Board h as a for mal sys tem in pla ce for Dir ecto rs to dec lare a c onﬂic t, or po tentia l conﬂict, of interest. For mo re in for mat ion , see Co n ic ts of i ntere st on pa ge 211. D. Stakeholder engagement Th e Board a ims to en sure a g ood dia logu e is maintained with shareholders, so that their view s are und ers tood an d cons ider ed. Th e Board also engages with and considers wider stakeholder groups, including the workforce, in its decision making. Mo re in for mat ion i s set ou t on pag es 8 0 to 84 a nd t hrou ghout t he S tra teg ic Rep or t. O ur se ct ion 172 (1) st atem ent is s et out o n page 7 0. E. Workforce policies Bas ed on o ur V a lues , expec ted be haviou rs and key p olicy p rinc iples , the Cod e of Ethic s em power s our work for ce to make de cisi ons tha t are in the b est in teres ts of the G roup, so ciet y and th e Compa ny . It is a pplic able to all within the Group w orldwide, including the Board. For m ore i nfor ma tion a bou t our C ode of E th ics , se e page 4 7 . 2 . Divi sion of resp onsi bil itie s F. C h a i r Leif Johansson, our Non- Ex e cuti ve Chair , is re spon sible f or the Bo ard’s ov er all ef fec tivene ss in di recti ng the Co mpany. Mr Jo hans son was ﬁ rst e lec ted to the Boa rd in Ap ril 201 2 a nd was co nsid ered to be independ ent on his appointment as Cha ir in Jun e 20 12. F ur t her in for mat ion a bou t the C ha ir’s a nnu al ev alu ati on is i nclu ded o n page 8 5 and i nf orm ati on ab out t he Ch ai r’s te nure i s inc lude d on pag e 79. G. Board composition, independence and division of res ponsibi lities Th e comp ositi on of the Bo ard is s et out on pag es 7 4 and 75. Th e major ity o f the Boa rd consists of independent Non-Executive Direc t o rs. Directors’ independe nce is con side red a nnual ly by the Boa rd, as de scrib ed on p age 79. The Directors are col lectively r esponsible for th e succ ess o f the Gro up. The ro les of the B oard, B oard Co mmit tee s, Chai r and CEO ar e docu mente d, as are t he Boar d’ s res er ved powe rs an d dele gated a uthor itie s. The Board’ s responsibilit ies and t he gover nanc e stru ctur e by which i t dele gates aut hori ty ar e outlin ed on the C orp orate Gove rnan ce Over vie w on page 73. Th e Board m aint ains a li st of mat ter s that ar e res er ved to, and c an onl y be app roved by , the Board. These include: the appointment, termination and remuneration of any Director; app roval of th e annua l budg et; app roval of any ite m of ﬁxed c apita l expe nditur e or any pro posa l for the a cquis ition o r disp osal o f an inve stme nt or bus ines s whic h ex ce eds $1 50 mi llion; the r aisi ng of cap ital o r loan s by the C ompany (s ubjec t to cer ta in excepti ons); the gi ving of a ny guar antee i n resp ect of a ny bo rrowin g of the Com pany; a nd allo ttin g shares of the Compan y . Matters that hav e not b een exp res sly re ser ved to the B oard are d ele gated to th e Commi ttee s of the Boa rd or the C EO . H. N on- Exec utive D ire ctor s’ rol e and t ime commitment Th e Non- Execu tive Dir ector s exerci se obj ective j udge ment in r espe ct of Bo ard decisions, prov iding scrutin y and challenge so a s to hold ma nage ment to ac coun t. Non -E x e cuti ve Dire ctor s offe r stra tegic gui danc e and sp ecia list ad vice b ased o n the bre adth of ex peri enc e and kn owledg e they br ing to the Bo ard. No n-E xecut ive Dire ctor s re gular ly mee t witho ut the E xecuti ve Dire ctor s or manageme nt prese nt. The Company’ s senior independent Non- Exe cutive D irec tor ser ves a s a soun ding boa rd for th e Chair a nd as a n inter media r y for th e other D irec tors w hen ne ces sar y . The senior indep endent Non-E x ec utiv e Dire ctor is al so availa ble to sh areh olde rs if the y have concern s that contact through the normal cha nnel s of Chai r or Exec utive Di rec t or s has fai led to re solve, or f or whic h such c onta ct is inappropriate. Phi lip Broadley was appointed senior indep endent Non-E x ec utiv e Dire ctor on 1 Ma rch 2021 . As we ll as the ir work i n relati on to for mal Board and Board Committee meetings, Non-Executive Directors commit t ime thr ougho ut the yea r to mee tings a nd tele phon e call s with var ious leve ls of execu tive ma nagem ent an d other key s takeh olde rs, vis its to As tra Zene ca’ s si tes thro ugho ut the wor ld (whet her in pe rs on or vir tua lly) an d, for new Direct ors, induction sessions and site visits. Therefore the Board members’ actual time commitments exceed the minimum expe cta tion of 15 days a year, par ticu larl y for the Ch air an d Chair s of Boa rd Com mit tees. When contemplating taking up addit ional appointment s, N on-Executive Directors con sult th e Chai r to ensur e thoug ht is give n to any poten tial im pact o n their ti me commit ment t o Ast ra Z eneca. St atement of compli ance Ou r statem ent of c ompli ance d escr ibes h ow we appli ed the p rinc iples s et out i n the 201 8 UK C orpo rate Gove rnan ce Cod e (the Co de) for th e year e nded 31 De cemb er 2021 . A co py of the Co de can b e found o n the Fina ncia l Repo rti ng Cou ncil’s website, w w w .frc.o rg.uk. Th rough out the a ccou nting p erio d we have comp lied w ith all th e provis ions of t he Code o ther th an provi sion 19, which r elate s to the Cha ir’ s tenu re. Our a ppro ach is de scr ibed o n page 4. Corporate Gover nance Repor t / Compliance wit h the UK Cor porate G overnanc e Co de 77 A st raZ ene ca A nnu al R epor t & For m 20 -F I n form ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Cor porate G over na nce Re por t Co mp l iance with t h e U K Co r por a te Gov er nance C ode Car eful co nsid erati on is give n to the nat ure of the p otenti al app ointme nt and t he ty pe of co mpany invo lved (for exa mple, w hethe r the c ompa ny is a publi c liste d comp any or pr ivately h eld), to he lp ass ess th e likely time requirement. Th e per for manc e of the Non -E x e cuti ve Dir ecto rs is as ses sed a nnua lly as pa rt o f the Board’ s performance ev aluation, as described on pa ge 85. Sub ject to s peci ﬁc Boa rd app roval, Dir ecto rs and S ET me mbe rs may ac cept external appo intments as non-ex ecutive dire ctor s of othe r comp anie s and re tain any rel ated fe es pai d to them, p rovide d that su ch appointment s a re not considere d by the Boa rd to preve nt or re duce th e abili ty of the execu tive to per for m his or h er rol e within the G roup to th e requi red st anda rd. I. Company Secretar y Th e Compa ny Sec reta ry is r espo nsib le to the Cha ir for en suri ng that a ll Boa rd and Bo ard Committee meetings are p ro perly conducted, that the Directors receive appropriate info rmat ion pr ior to mee tings to e nabl e them to make a n effe ctive c ontri butio n and th at governance requirem ents are considered and imp leme nted. T he 2021 Boar d evaluati on set out o n page 8 5 provid es det ails of th e effec tiv e operation of the Board. 3. Comp osition , succ ession a nd eva luat ion J. Appointments a nd succe ssion pla nning The Nomination and Governance Committee and , where a ppro pria te, the full B oard, regularly reviews t he composition of t he Board and t he sta tus of suc ces sion to b oth SE T and Board-level positions. Directors hav e regular con tact w ith, an d acce ss to, suc ces sion ca ndida tes for SE T pos ition s. The C ommit tee als o rec ognis es the im por ta nce of dive rsi ty when conside ring potential appointments. Th ere is a fo rmal, r igor ous an d tran spare nt pro ced ure for a ppoin tment s to the Boa rd. The Nomination and Governance Committee Repor t details changes in Board composition dur ing the ye ar , a nd the ap point ment an d ind uctio n proc ess es, fr om page 8 6. In ac cord ance w ith Ar tic le 66 of th e Ar ticl es, all D irec tors r etire at e ach AGM an d may of fer themselves for re-elec tion by shareholder s. Th e Notice o f A GM wil l give det ails of th ose Dir ecto rs se ekin g elec tion o r re- ele ction. K . Skil ls, exp eri enc e and k nowle dge When the Nomination and Governance Com mit tee revie ws the co mposi tion of th e Boa rd and i ts Com mitte es, i t uses a m atrix tha t reco rds the s kills a nd expe rien ce of current Board members, and compares this wit h the skil ls and exp eri ence i t beli eves are app ropr iate to the C ompa ny’ s over all bus ines s and s trateg ic nee ds, bo th now and i n the fut ure. Th e Commi ttee i s also m indfu l of Dire ctor s’ le ngths of te nure a nd the ne ed to ref resh me mber ship ove r time. For m ore i nfor ma tion , se e the N omi nat ion a nd Gover nance Commit tee Report from page 86. L. Boar d evaluation In 2021 , th e Boar d unde rto ok an inte rnal Board per formance ev aluation. More information on the evaluation process, including the results and actions taken, ca n be foun d on page 8 5. 4. Au dit, r isk a nd i n ter na l cont rol M. I nter nal a nd exte rna l aud it The Audit Committee is responsible for reviewing the relationship and ind epen denc e of our ex tern al audi tor , Pricewat erhouse Coopers LLP . The Committee mai ntai ns a poli cy for the p re- appr ov al of a ll aud it ser vic es an d audit-r elate d ser vic es und er taken by t he exter nal au ditor , the pr incip al pur pose of w hich is to e nsur e that the in depe nde nce of th e e xte rna l audito r is not impaired. For m ore i nfor ma tion , se e page 9 7 and N ote 31 to t he Fi na nci al S tate ment s on pa ge 196 . Th e Audit C ommit tee al so revi ews the ind epen denc e and ef fe ctiven ess of I A. For m ore i nfor ma tion , se e page 9 2. N. F air , balanced and understandable assess ment Th e Board c onsi der s this A nnual R epor t, take n as a who le, to be fa ir , bal ance d and understa ndable , and pro vide s the information ne ces sar y for sh areh olde rs to as ses s AstraZeneca’ s position and performance, bus ines s mode l and s trateg y . Th e Boar d’ s as ses smen t is des crib ed on pa ge 96. Th e Board a nd the Au dit Co mmit tee revi ew the Company’ s quarterly ﬁnancial results ann ounc emen ts to ens ure they p rese nt a fai r , balanced and understandable assessment of the C ompany ’ s po sitio n and pr ospe cts to shareholders. O. Ris k man agem ent Th e Board i s resp onsi ble for th e Comp any’ s risk management syst em and int ernal controls, and their effectiveness. The Board delegates some responsibilit ies for risk management over sight to t he Audit C ommi ttee, s uch as qua rte rly rev iews of the C ompa ny’ s p rinci pal and key a ctive ri sks. Du ring 20 2 1, the Dir ector s con tinue d to review th e eff ective nes s of our system of controls, r isk ma nagement (in cludi ng a robu st as ses smen t of the emerging and Principal Risks) a nd high-level internal control proce sses. This included an annual Gov er nance and Assurance Report to all D irec tors, w hich i s cons idere d in det ail by the Au dit Com mit tee and r eviewed by the Board. Any a reas o f conc ern a re highl ighted i n the Audit Committee Chair’ s update t o Dire ct ors at th e relevan t Boar d meeti ng and d iscus sed by the Bo ard. T he Rep or t is bas ed on a fu ll yea r end revi ew of the Co mpany’s ris k and control processes (incorporating ﬁnancial, operational and compli ance controls ) and ﬁndings from a ssurance processes. Th e Dire ctor s believe th at the G roup ma inta ins an ef fe ctive, em bedd ed sys tem of inte rnal con trols a nd com plie s with the FR C’ s guidance entitled ‘ Guidan ce o n Risk Management, Internal Control and Related Financial and Business Repor ting ’ . For m ore i nfor ma tion a bou t the w ays i n whi ch we m ana ge ou r bus ine ss ri sk s, ou r proc edu re s for ide nti fy in g our eme rg ing r isk s, ho w we des cr ib e our P ri ncip al R is ks a nd un cer ta in tie s, an d our V ia bil ity s tat emen t, se e Ri sk ma nag eme nt and c ont rols o n the f ollow i ng page , an d the R isk O ver v iew f rom pa ge 48 . 5. Rem u nera tion P . Remuneration policies and practices The Remuneration Committee is responsible for determining, approving and reviewing the Company’ s global remuneration principles and f ram eworks, to e nsur e that they s uppo rt the s trateg y of the Co mpany a nd are d esig ned to promo te long-t erm sustainable success. For more infor mation on the Remuneration Committe e’ s wor k, se e pag e 98. Q. Dev eloping ex ecu tiv e remune ration policy The Remuneration Committee routinely reviews the Direc t o rs ’ Remuneration Polic y and exe cutive re mune rati on arr ange ment s to en sure the y contin ue to pro mote the de liver y of the l ong-te rm str ategy a nd sup por t the Company’ s ability to recruit and retain execu tive tal ent to del iver aga inst t hat strategy . The Committ ee also con siders remuner ation arra ngements in the conte x t of corpor ate governance best pract ice and ar rang eme nts for th e wide r work force , and re gular ly con sults w ith its m ajor inve stor s on re mune ratio n prop osal s. No Di recto r is involv e d in d et ermining their own remuneration arrang ements or outcomes. For m ore i nfor ma tion , se e the D ire cto rs’ R emu nerat ion Re por t, f rom p age 9 8. R. Remuneration outcomes and independent judgement T o ensure it maintains indepe ndent judgement when determining remuneration outcomes, the Remuneration Committee consider s a range of d ata including detailed business and individual performance information . The Committee also consults with other Board Com mit tees to ut ilise th eir exp er tise wh en determining per formanc e o ut comes. For m ore i nfor ma tion , se e the D ire cto rs’ R emu nerat ion Re por t, f rom p age 9 8. 78 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Corp ora te Governa nce Cor porate G over na nce Re por t Co mp l iance with t h e U K Co r por a te Gov er nance C ode c ont inue d Fu r ther in format ion on Di rectors’ app oint ment s Mr Jo hans son was ﬁ rst e lec ted to the Bo ard in A pril 201 2 a nd was co nsid ered to b e indepen dent on his a ppointment as Chair on 1 Ju ne 201 2. Provis ion 1 9 o f the Cod e re comme nds a c ompany c hair ’ s ten ure sho uld not ex tend b eyond nin e year s from th eir app ointm ent to the b oard, a lthou gh the p erio d ca n be exte nded fo r a limite d time to fa cilita te effec tiv e succe ssion planning. Ack no wle dging tha t he would have s er ved as a D irec tor for nin e year s by 3 1 De cem ber 2021 , t he Boa rd be lieved it wo uld be in t he bes t intere sts of sha reho lder s for Mr J ohan sson to s eek re -el ecti on at the 20 2 1 AGM a nd con tinue to se rve a s Chair, t o lea d the Boa rd’ s over sight of the acquisition and int egration of Alexion. Ou r appro ach for 20 22 is expl aine d on page 4. In De cem ber 2021 , t he Boar d cons ider ed the independence of the other Non-Executive Dir ecto rs for th e purp ose s of the UK Corporate G o vernance Code an d the Nasdaq Lis ting Ru les. T he Boa rd con side rs tha t all the N on-E xecu tive Dire ctor s except Ma rcus Wallenberg are indepen dent. Marcus Walle nber g was app ointe d as a Dir ector o f As tra in May 1989 an d subs eque ntly b ecam e a Dir ecto r of the Com pany in 1999. He i s a Non -E x e cuti ve Dire ctor of Inve stor AB, w hich has a 3 .33% intere st in the i ssue d sha re ca pita l of the Com pany as a t 9 Febru ar y 2022. For th ese re ason s – his overa ll len gth of ten ure and relationship with a signiﬁcant shareholder – the B oard do es not b elieve th at he ca n be determined independent under the UK Corporate G o vernance Code. Howev er , the Board believes t hat he has brought, a nd continues t o bring, considerable business experience and mak es a valuable cont ribution to the wor k of the Bo ard. As we ll as be ing a Non -E x e cuti ve Dire ctor of As tra Zene ca and C hair of th e Boar d’ s Sustainability Committee, Nazneen Rahman is th e Dire ctor of th e Sust ainab le Med icine s Par tnership (SMP) , a multi-stakeholde r , not-for-pro ﬁt coll abor ation w ith the ai m of advanci ng th e en vironmental sustainability of me dicin es. As tra Zene ca is a st rateg ic col labo rator in t he SMP . D r Rahm an has re cuse d her self f rom ac ting as th e lead con tact f or the SMP i n its re lation ship wi th Astra Zeneca, and this relationship, including project w ork and o verall programm e management, is handled by ot her members of the S MP team. 20 21 A G M voti ng o utcome s At As tra Zene ca’ s AGM in 20 2 1 s ome sha reho lder s expre sse d con cern s abou t the num ber of S heri M cCoy’s other d irec tors hips of lis ted co mpani es and t he poten tial im pact on he r time c ommit ment to A stra Zene ca. Th e Board b elieve s that Ms M cCoy ha s brought, and continues t o bring, considerable business experience and kno wle dge of the pha rma ceuti cal in dustr y a nd makes a va luab le con tribu tion to th e work of th e Board a nd Com mit tees of w hich sh e is a mem ber , as se t out i n the sta temen t on the AGM s ecti on of our we bsite a t ww w .a stra zene ca.c om. Th e Boa rd is sa tisﬁe d that a ll Dire ctor s, incl uding Ms Mc Coy , c ontinu e to make ef fect ive and valuable contributions t o the Board and con tinue to d evote suf ﬁcie nt time to discharging th eir responsibilit ies as Direct ors of Ast ra Z eneca. At the AGM i n 202 1 , vote s to appr ov e a new Directors’ Remuneration P olicy and amendm ents to the Ast raZeneca Performan ce Sha re Plan we re pas sed by s hare holde rs, howe ver a signiﬁcant por tion of shareholders voted a gains t each r esol ution. T he Remuneration Committee Chair and managem ent representatives subse quently hel d disc ussi ons wit h our maj or inves tors, and w ith prox y voting a dviso ry b odie s, to understand the rationale behind those voting outcomes. F ur t her in for mat ion i s inc lude d in t he Di rec tor s’ Re mune rat ion Re por t, on p age 101. R isk m anag ement and c ontrol s Global Compliance and Internal Audit Ser vices (IA) Global Compliance helps the Group achie ve its s trate gic pr iori ties by do ing bus ines s the rig ht way , wi th integ rit y and hig h ethic al standards. Gl obal Comp liance f ocuses on delivering a globally a ligned approach that add ress es key ris k area s acro ss the b usine ss, including those relating to third partie s a nd anti-bribery / anti-corruption. We do this b y reinforcing compliant behaviours through our Co de of Ethic s, our p olici es, tr aining a nd adv ice an d guida nce. We als o cond uct r isk as ses smen t activ ities a nd fos ter a Spe ak -Up culture where individuals can raise concerns. We take al l alleg ed co mplia nce br each es or concerns seriously . We i nv e sti gate and tak e appropriate disciplinary and remediation action to address and prevent reoccur rence tho ugh our i ntern al Com plian ce, HR an d Lega l functions and ma y also engage external adv iser s whe n nece ssa ry. Dep ende nt on bre ach seve rit y , ma nage ment an d Leg al may be c onsul ted to dete rmine w hethe r the Gr oup ne eds to dis clos e and / o r repo rt th e ﬁndin gs to a regulatory or gov ernment authorit y . Global Compliance provides assurance ins ights to th e Audit C ommi ttee o n compliance matters including compliance breaches, assoc iat e d disciplinary actions and corresponding remediation. Comple ment ing this , IA ca rrie s out a ra nge of au dits th at include compliance-related a udits and periodically reviews the a ssurance activities of ot her Group assurance functions. Th e resul ts fro m these a ctivi ties a re rep or ted to the Au dit Com mit tee. Glo bal Co mplia nce and I A work wi th spe ciali st com plian ce functions throughout our organisation t o sha re outc omes a nd to coo rdina te repo rti ng on compliance matters. IA is e sta blish ed by the Au dit Com mit tee on be half o f the Boa rd and a cts as a n independent and objectiv e assuranc e function gui ded by a ph iloso phy of addi ng value to improve the operations of the Group. T he scope of IA ’ s responsibilit ies encompasses, but i s not limi ted to, the exa minati on and evaluation of the ade quacy and effectiveness of the G roup’s governa nce, r isk ma nage ment and i ntern al con trol pr oces ses i n relat ion to the Group ’ s deﬁned goals and objectives. Am ong oth ers , intern al con trol ob ject ives considered by IA i nclude: > compliance with signiﬁcant policies, plans, procedures, laws and regulations > consistency of operations or programmes wit h esta blish ed obj ecti v es a nd goa ls, and effective performance > safeguarding of asset s. Bas ed on i ts acti vity, IA is re spon sible fo r repor ting signiﬁcant risk exposures and con trol is sue s ident iﬁed to th e Boar d and to senior manag ement, including fraud risks, gover nanc e iss ues an d other m atte rs ne ede d or re que sted by the Au dit Co mmit tee. It may also evaluat e spe ciﬁc operations at the re ques t of the Audi t Comm itte e or management, as appropriate. 79 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Corporate Gover nance Repor t / Other govern ance inform ation Cor porate G over na nce Re por t O t her gover n a nce i n for m at ion Considering the int e rests o f our stak e holders is fu ndam enta l to our Gr oup’ s st rateg y . Th e followin g tabl e iden tiﬁes o ur mos t strategically signiﬁcant stak eholde rs and sum mari ses th e enga geme nt that h as be en und er taken by m anag emen t durin g 2021 . Patients and patient net works Payer s In vestor communit y Healthcare professionals Academic and R&D partner s Commercial collaborators and partne rs Ove rv iew Sig ni c anc e of the st akeholder to the busi ness Pati ents a re at th e hea rt of wha t we do. Ou rstake hold ers include individual patients,care-giver s and patient advocacy organisatio ns represe nting the diverse populations t hat our me dici nes wi ll ser ve. We lis ten to the ir exp erie nce s and embed these insights into ever y as pec t of our wo rk to ensure that the medicines and ser vices w e develop ha ve the gre ates t impa ct on th eirli ves. AstraZeneca works closely with pa yers, which includes governments and medical insurance companies, to understand the impact of pricing medicines on public and privat e budgets. Ove rv iew Sig ni c anc e of the st akeholder to the busi ness The Board and management maintain regular and construc tiv e dialogue with inve stor s to comm unic ate ou r str ateg y . Wepr ovide o bjec tive informatio n about p erformance to en able i nvesto rs to pu t a fair val ue on the C omp any and en sure o urcon tinue d acc ess to capital . Healthcare professionals (HC Ps) are the int er face with patie nts. Th ey supp or t our b usin ess by providing insights into clinic al trial design and prescribing, advising patients on administering medicines, providing s af ety reports, collaborating in clinical studies and assisting wit h the ethical and transpare nt distribution of medicines. We c ollaborat e with academic ins titu tion s andbi otech p ar tne rs globally to acce ss t he best science, to stimulate innovation and to deliv er life-changin g medicines to patients. Partne ring is a n imp ortant el emen t of our b usin ess , supplementing and strengthe ning our pipeline. Collaborations help us access disease area expertise through AstraZeneca and non- Astra Zeneca medicines. By combining forces, Astra Zeneca an d our pa rt ner s can b ring scientiﬁc innov ation to patients ar ound th e worl d more q uick ly . I nteres ts Is sue s and f acto rs wh ich a re mos t im por ta nt to t he st akeholde r group > Diver se insights embed ded in the drug dev elopment process. > De signing clinical trials that reﬂect real-world clinica l pr acti ce in a di vers e pati ent population, are minimally burdensome to pat ients and measure out comes the y care a bout m ost . > Ensuring healthcare systems are de signed w ith the patient in mind. > Providing transpa rent, accessible information in plain, local language. > Ensuring the safety , efﬁcacy and affordable accessibility of our medicines. > Attracting business investment. > I nvestm ent in r ese arch a nd scientiﬁc collaborations. > A cce ss to inn ovative medicines. > Pricing of medicines, including breakthrough therapies and the impact on public bu dgets . > Co ntainment of reimbursement expenditure. > T he sa fety a nd ef ﬁca cy of medicines. I nteres ts Is sue s and f acto rs wh ich a re mos t im por ta nt to t he st akeholde r group > Financial and commercial performance. > R&D strategy , r esource allocation and pipeline development. > Culture, values and behaviours. > E xposure to geopolitical and macro-e conomic risks. > Environmental, social and governance (E SG) matters. > Development of medicines for unmet clinical needs. > Education and inf ormation on advances in me dical s cience. > Accurate and balanced information on licenced medicines, including up-to-date safety data. > Uninterrupted supply o f qualitymedicines. > Ethica l a nd transpare nt interactionswith industry. AstraZene ca had more than 2, 000 active collaborations ongoing in 2021 : > T o advance innov ative technology and science. > T o address key scientiﬁc challenges. > To acce ss th e next generation of science leaders. > Share d vision /v a l ues. > Developmen t and research of medicines that addres s unmet patient and clinical need. > T r ust and transparency in resear ch, dis closures and relationships with stakeholders. > Willi ngness to collaborate wit h indu str y pe ers to optimise out comes for common stakeholders, e .g. patients, ph ysicians, policymakers and healthcare systems. Engage ment Ex amples of engagemen t in 2 021 > Engaged people representing diverse patient populations at e ver y stage in ou rdevel opme nt an d clinical trial p rogrammes. > E xpanded our Patient Partnership Pr ogrammes int o ne w disease areas. > G athered div erse insights from patients and patient stakeholders to co-create programmes ac ross business units. > Est ablished patient support and affordability programmes. > Dis cussions t o ok place with go vernments and policymak er s to increase understanding of the business model and regulation of the pharmaceutical ind ustry , to sup por t inve stme nt in li fe sciences and to impro ve ac ces s to new me dici nes. > Engaged in discussions on evol ving th ecur rent reimburse ment s ystem for me dici nes in t he US. > Hosted site visits and tours at our ma n ufacturing and R&D facilities for int e rnational and local polit icians. Engage ment Ex amples of engagemen t in 2 021 > Ongoing communications including quarterly results calls, i n-person and virtual meetings and ro adshows. > R egul ar even ts at me dic al conferences and periodic up dates o n por tf olio a nd pipeline dev e lopments. > Provided and supported HCP educational events. > Est ablished HCP advisory boards. > Engaged HCPs as investigators in cli nical trials. > R esp onde d to more t han 1 1 8,0 00 HC P enqu irie s and processed ov er 60,000 adve rs e event re por ts from HCPs. > Sponsored collaborations an d more t han 50 0 studentships (PhD, post -doctoral an d undergraduate) annually . > Worked side-by-side with academic researcher s in mo re than 10 de dica ted university laboratories. > Sha red compound assets and data for acade mic re sear ch; mor e than 35 ongoing or planned cli nica l tria ls an d more t han 425 pre- clinical studies. > Joint semina rs, education sessions and consortia with research institut ions, e .g. Royal Society , Academy of Medical Sciences and Par tne r of Cho ice N etwo rk. > Re gul ar alliance leadership meetings established transpare nt working re latio nshi ps wit h ‘ one te am’ mentality and approach across companies. > Joint responsibility for deliverables and outcomes across functions at all levels. > Discu ssions took place with key st ak ehol ders, e .g. regulators, policy makers, patient groups and the medical community to inform strategy , clinical dev e lopment an d how to be st add res s unmet needs. Outc omes Ac tions whic h resu lted > Evo lved, e nha nced a nd embedded diverse patient and patient stak eholder insights into our work. > I ncre ase d numb er of patient support programmes. > Collabor at e d with patient advocacy organisations on key h ealt hcar e syste m transformation projects to bring abo ut tangi ble healthcare syst em change at a c ountr y leve l. > Established working re latio nshi ps wit h key government stak eholders. > Regular meetings, roundtables and e vents organised t o increase understanding about how governments can support life-sciences inv estment and improve patient acces s to new medicines. Outc omes Ac tions whic h resu lted > M ore ac ces s to sen ior and next -level/ ope rational management, including incre ased vir tual engagement. > Following d iscussion with shareholders, streamlined external-facing mat erials to pr ovide i ncre ase d transpare ncy . > I ncre ase d focu s on ESG matters within results announcements and shareholder engagements. > HCP advisor y boards inf orme d our c linic al re sea rch and produ ct strat egy. > Collaboration in clinical stu dies h as le d to new products. > E x change of information with HCPs which suppor ts cli nical decision making. > Enable d innovative solutions though research collaboration. > New technology , new targets and new bioma rk e rs. > Publications. > Established capability t o offer studentship and post- doctoral programmes to facilitate scientiﬁc discov e ry . > O ptimisation of outcome s through combined skillsets and use of t e chnologies/platforms to re sea rch new m edic ine s, en abli ng fas ter de liver y of medicines to patients. > Enhanced speed of recruitment and completion of tr ials w ith ab ilit y to ada pt – multiple tria ls initiated across multiple d isease/ patient types. > G r eater collaboration and relationships with industr y par t ners and stakeholders. 80 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Cor porate G over na nce Re por t Co n n ec ti n g w i t h o u r stakeh o lde rs Patients and patient net works Payer s In vestor communit y Healthcare professionals Academic and R&D partner s Commercial collaborators and partne rs Ove rv iew Sig ni c anc e of the st akeholder to the busi ness Pati ents a re at th e hea rt of wha t we do. Ou rstake hold ers include individual patients,care-giver s and patient advocacy organisatio ns represe nting the diverse populations t hat our me dici nes wi ll ser ve. We lis ten to the ir exp erie nce s and embed these insights into ever y as pec t of our wo rk to ensure that the medicines and ser vices w e develop ha ve the gre ates t impa ct on th eirli ves. AstraZeneca works closely with pa yers, which includes governments and medical insurance companies, to understand the impact of pricing medicines on public and privat e budgets. Ove rv iew Sig ni c anc e of the st akeholder to the busi ness The Board and management maintain regular and construc tiv e dialogue with inve stor s to comm unic ate ou r str ateg y . Wepr ovide o bjec tive informatio n about performance to en able i nvesto rs to pu t a fair val ue on the C omp any and en sure o urcon tinue d acc ess to capital . Healthcare professionals (HC Ps) are the int er face with patie nts. Th ey supp or t our b usin ess by providing insights into clinic al trial design and prescribing, advising patients on administering medicines, providing s af ety reports, collaborating in clinical studies and assisting wit h the ethical and transpare nt distribution of medicines. We c ollaborat e with academic ins titu tion s andbi otech p ar tne rs globally to acce ss t he best science, to stimulate innovation and to deliv er life-changin g medicines to patients. Partne ring is a n imp ortant el emen t of our b usin ess , supplementing and strengthe ning our pipeline. Collaborations help us access disease area expertise through AstraZeneca and non- Astra Zeneca medicines. By combining forces, Astra Zeneca an d our pa rt ner s can b ring scientiﬁc innov ation to patients ar ound th e worl d more q uick ly . I nteres ts Is sue s and f acto rs wh ich a re mos t im por ta nt to t he st akeholde r group > Diver se insights embed ded in the drug dev elopment process. > De signing clinical trials that reﬂect real-world clinica l pr acti ce in a di vers e pati ent population, are minimally burdensome to pat ients and measure out comes the y care a bout m ost . > Ensuring healthcare systems are de signed w ith the patient in mind. > Providing transpa rent, accessible information in plain, local language. > Ensuring the safety , efﬁcacy and affordable accessibility of our medicines. > Attracting business investment. > I nvestm ent in r ese arch a nd scientiﬁc collaborations. > A cce ss to inn ovative medicines. > Pricing of medicines, including breakthrough therapies and the impact on public bu dgets . > Co ntainment of reimbursement expenditure. > T he sa fety a nd ef ﬁca cy of medicines. I nteres ts Is sue s and f acto rs wh ich a re mos t im por ta nt to t he st akeholde r group > Financial and commercial performance. > R&D strategy , r esource allocation and pipeline development. > Culture, values and behaviours. > E xposure to geopolitical and macro-e conomic risks. > Environmental, social and governance (E SG) matters. > Development of medicines for unmet clinical needs. > Education and inf ormation on advances in me dical s cience. > Accurate and balanced information on licenced medicines, including up-to-date safety data. > Uninterrupted supply o f qualitymedicines. > Ethica l a nd transpare nt interactionswith industry. AstraZene ca had more than 2, 000 active collaborations ongoing in 2021 : > T o advance innov ative technology and science. > T o address key scientiﬁc challenges. > To acce ss th e next generation of science leaders. > Share d vision /v a l ues. > Developmen t and research of medicines that addres s unmet patient and clinical need. > T r ust and transparency in resear ch, dis closures and relationships with stakeholders. > Willi ngness to collaborate wit h indu str y pe ers to optimise out comes for common stakeholders, e .g. patients, ph ysicians, policymakers and healthcare systems. Engage ment Ex amples of engagemen t in 2 021 > Engaged people representing diverse patient populations at e ver y stage in ou rdevel opme nt an d clinical trial p rogrammes. > E xpanded our Patient Partnership Pr ogrammes int o ne w disease areas. > G athered div erse insights from patients and patient stakeholders to co-create programmes ac ross business units. > Est ablished patient support and affordability programmes. > Dis cussions t o ok place with go vernments and policymak er s to increase understanding of the business model and regulation of the pharmaceutical ind ustry , to sup por t inve stme nt in li fe sciences and to impro ve ac ces s to new me dici nes. > Engaged in discussions on evol ving th ecur rent reimburse ment s ystem for me dici nes in t he US. > Hosted site visits and tours at our ma n ufacturing and R&D facilities for int e rnational and local polit icians. Engage ment Ex amples of engagemen t in 2 021 > Ongoing communications including quarterly results calls, i n-person and virtual meetings and ro adshows. > R egul ar even ts at me dic al conferences and periodic up dates o n por tf olio a nd pipeline dev e lopments. > Provided and supported HCP educational events. > Est ablished HCP advisory boards. > Engaged HCPs as investigators in cli nical trials. > R esp onde d to more t han 1 1 8,0 00 HC P enqu irie s and processed ov er 60,000 adve rs e event re por ts from HCPs. > Sponsored collaborations an d more t han 50 0 studentships (PhD, post -doctoral an d undergraduate) annually . > Worked side-by-side with academic researcher s in mo re than 10 de dica ted university laboratories. > Sha red compound assets and data for ac ademic re sear ch; mor e than 35 ongoing or planned cli nica l tria ls an d more t han 425 pre- clinical studies. > Joint semina rs, education sessions and consortia with research institut ions, e .g. Royal Society , Academy of Medical Sciences and Par tne r of Cho ice N etwo rk. > Re gul ar alliance leadership meetings established transpare nt working re latio nshi ps wit h ‘ one te am’ mentality and approach across companies. > Joint responsibility for deliverables and outcomes across functions at all levels. > Discu ssions took place with key st ak ehol ders, e .g. regulators, policy makers, patient groups and the medical community to inform strategy , clinical dev e lopment an d how to be st add res s unmet needs. Outc omes Ac tions whic h resu lted > Evo lved, e nha nced a nd embedded diverse patient and patient stak eholder insights into our work. > I ncre ase d numb er of patient support programmes. > Collabor at e d with patient advocacy organisations on key h ealt hcar e syste m transformation projects to bring abo ut tangi ble healthcare syst em change at a c ountr y leve l. > Established working re latio nshi ps wit h key government stak eholders. > Regular meetings, roundtables and e vents organised t o increase understanding about how governments can support life-sciences inv estment and improve patient acces s to new medicines. Outc omes Ac tions whic h resu lted > M ore ac ces s to sen ior and next -level/ ope rational management, including incre ased vir tual engagement. > Following d iscussion with shareholders, streamlined external-facing mat erials to pr ovide i ncre ase d transpare ncy . > I ncre ase d focu s on ESG matters within results announcements and shareholder engagements. > HCP advisor y boards inf orme d our c linic al re sea rch and produ ct strat egy. > Collaboration in clinical stu dies h as le d to new products. > E x change of information with HCPs which suppor ts cli nical decision making. > Enable d innovative solutions though research collaboration. > New technology , new targets and new bioma rk e rs. > Publications. > Established capability t o offer studentship and post- doctoral programmes to facilitate scientiﬁc discov e ry . > O ptimisation of outcome s through combined skillsets and use of t e chnologies/platforms to re sea rch new m edic ine s, en abli ng fas ter de liver y of medicines to patients. > Enhanced speed of recruitment and completion of tr ials w ith ab ilit y to ada pt – multiple tria ls initiated across multiple d isease/ patient types. > G r eater collaboration and relationships with industr y par t ners and stakeholders. 81 As tra Z enec a An nua l Re por t & Form 2 0 -F I nfo rm atio n 202 1 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Cor po rate G over na nce R epo rt / Con nec ti ng w ith ou r st ak ehold ers In ad dition to t he prin cipa l stakeh olde rs de scri bed on p ages 8 0 and 81 , th e Board c onsi der s the foll owing st akeho lder g roups imp or tant fo r the bu sines s ope ratio ns and s trate gic dire ctio n of the Co mpany. Community Wh ereve r we work in t he wor ld, we aim to m ake a positive i mpact on people and the communities in which the y liv e through our community i nvestment. Employees Be a G reat Pl ace to Wor k is a ce ntra l pilla r of As tra Zen eca’s stra tegy, as de scr ibed i n our Str ateg ic Rep or t. We nee d to acq uire, r etai n and deve lop a ta len ted an d diver se wor kfo rce in a competitive e n vironment. It is vital our employees ar e unite d in pur sui t of our Pu rpo se and Val ues whi lst en sur ing we ma inta in a str ong A stra Zen eca culture. The Board’ s engagement with the wor kfo rce is d esc ribe d on pa ge 84 an d mor e inf orma tion a bout B e a Gre at Plac e to Work is s et out o n page 15. Health authorities We e ngage with health authorities globally regarding the manufacturing, development, review an d appr oval, an d mar keting o f our pr oduc ts. Gov er nm ents AstraZeneca par tners closely w ith go vernments around the w or ld to suppor t he althcare innov ation an d rese arc h, faci lita te acce ss to in novati ve treatments, and build resilient and sustainable healthcare s ystems. Multilateral and non-gov e rnmental organisations (NGOs) AstraZene ca partne rs with multila teral organisations and NGOs to deliver science-based health programming that addresses global health is sues a nd su ppor ts t he del iver y of the U N Sustainable Development Goals. AstraZene ca ’s commitment t o reduce health inequalit y has also be en de mons trate d by the s uppl y of Va xz evr ia whe re 24 7 m illio n dose s were d elive red t hrou gh the C OV A X pr ogr amme i n 2021 . Media An a ctive a nd co nstr ucti ve rela tion ship w ith the me dia is i mpor ta nt to bui ld tru st wit h each o ne of the Company’ s k ey stak eholders by transparently re por ting o n the Gr oup’s acti vitie s, in cludi ng the re sult s of tria ls an d busi nes s upda tes, a s well as s eek ing to en han ce and p rote ct the b road er re puta tion of t he org anis atio n. The m edia c an inﬂuence knowledge of, and sentiment tow ards, a company . Suppliers and third-par ty providers As tra Zene ca re lies o n integ rate d supp ly cha ins an d third -pa rt y prov ider s to pro duc e and de liver me dici nes to pa tien ts acr oss th e worl d. Dur ing th e global pandemic, supply cha ins acros s a l l sectors were compromised. De spit e this, AstraZeneca procurement work ed closely with our suppliers to un der stan d any ri sks to su pply o f good s and se rv ices , and ag ree m itiga tion s trate gie s that h ave en sure d ther e has b een n o disr uptio n to supp ly . For m ore inf orm ation , see pa ge 38. How t he Boa rd engage s wit h st akeh olders Th e stakeh olde r tabl e on page s 80 an d 8 1 sets out managem ent’ s main interactions wit h cer tai n k ey st akehol der s. Feed back fro m thes e intera ctio ns is prov ided to th e Boa rd in a var iet y of ways, whi ch allow s the Boa rd to und ers tand th e key intere sts of stakeholders and consider them in its decision making process. The Board under tak es additional direct engagement with stakeholders to bet ter understand their int erests and concerns, so th ese ca n be fac tored i nto its decision making. Ex ampl es of the B oard’s enga geme nt are s et out i n the foll owing co lumns . Infor matio n on how st akeho lder s and oth er fac tors we re considered in the Board ’ s principal decisions in 2021 is s et out on t he follow ing pag e. > Dur ing 2021 , a nu mber o f Dire ctor s, inc ludin g the Cha ir , the CEO a nd the CFO, met inve stors a t road shows an d one-on -one m eetings. > The Chair of the Remuneration Com mit tee took p ar t in an ex t en sive con sult ation, w hich in clud ed 1 6 of o ur lar ges t share hold ers a s well thr ee prox y advisers. These engagements provided an in sight i nto how inves tors vi ewed the Directors’ Remuneration Policy . Ho w the se inves tor views we re con side red by the Re mune rati on Comm itte e is set o ut in the Directors’ Remuneration Report from pag e 98. > Due to C O VID - 1 9 r estr ictio ns, the 20 2 1 AGM was a c lose d meet ing. However, all Dir ecto rs at tende d the Co mpany’s vir tua l sharehol der engagement event in April 202 1 , which allow ed shareholders to inte ract w ith, an d ask que stio ns of, the Board. > The C hair of th e Boar d and the C hair of the Remuneration Committee replied to an inve stor le tter to a ll phar mace utic al companie s, which highlighted As tra Zene ca’ s co mmitm ent to eq uita ble acc ess to va ccine s withi n the con text of the WHO roadmap . > Investo r repo rt s and ﬁna ncia l anal ysts’ con sen sus dat a are ma de availa ble to the Board. Feedback is regularly provided to the B oard by ma nage ment o n their interactions with investors. > The Au dit Co mmit tee revi ewed an d fed into th e Compa ny’ s r espo nse to the U K Gov ernment’ s proposals for r estoring trust in au dit and c orp orate gove rnan ce. > The C EO and the C FO , a long wi th othe r members of management, met governmental agencies and regulators to dis cuss m atte rs inc ludin g the pr icing of me dicin es and e quit able a cces s. > The C EO atte nded th e G 7 a nd COP 26 event s, whe re he met wo rld le ader s to discuss and understand concerns regarding various sustainability matters, including the risks arising from climate cha nge an d acce ss to he althc are. > The B oard’s usua l visi ts to Astr aZe nec a site s were no t poss ible du ring 2021 du e to COVID - 1 9 t ravel re stric tion s. Inste ad, Dir ecto rs und er took a nu mber of v ir tual engage ments including deep dives into dif fer ent bu sines s are as, si te visit s and employee ‘ roundtable’ discussions, which provided insights into the Group’ s operations and employees’ views. > The i ntegr ation of A lexio n has be en a key are a of Boa rd focu s. T o bet ter un der stan d the im pact , the Boa rd has r ecei ved a number of management reports, which identify interests of v ar ious s tak eholde rs, including employees, regulator s, patients and inv e st ors. The Remuneration Com mit tee has a lso un der take n a thorough revie w of t he existi ng Alexion remuneration arrang ements. 82 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Cor porate G over na nce Re por t Con nec t i ng w it h o u r s t a keholder s c ont inue d P ri ncipal D eci sions i n 2021 Ac qu isit ion of Ale xion Ph ar mac eutica ls , I nc. and 2 021 Group F un ding Pl an Du ring 2021 , t he Boar d overs aw the acquisition o f Alexion (the Acquisition) , and app roved a nu mber of i tems c onne cted to completion of the tra nsaction, f o r example the shareholders’ circular and SE C registration st ateme nt ahea d of the ge nera l mee tings of shareholders to approv e the Acquisition, various ﬁnancial and accounting reports and representation letter s, various legal agreeme nts, including relating to s t o ck ex change listings and debt is suance. Further det ails of t he Acqui sitio n are on p age 6. The Board considered: debt an d equi ty inve stor s; pati ents; empl oyees; capi tal allocation priorities; the success of the Company; the consequences of the decision in the long t erm; and maintaining high standards of business conduct. How th e Boa rd ha d reg ard fo r the se mat ter s: > Reviewe d the un met me dical n eed o f rare diseases, the patient beneﬁt and the hig h-g rowth , long-te rm str ategi c oppor tun ity the Acquisition c reat e d . > Received regular updates from ma nagem ent on p rogr ess of th e Acquisition. > Ensured the do cumentation pro duced ahe ad of sh areh olde rs’ votes on t he Acq uisit ion was of a s ufﬁ cien tly hig h st anda rd, and c ould be r elie d upon by shareholder s, regulators and other stakeholders. > Con side red the i mpac t of debt is sua nces on th e Group’s viab ility a nd ca pita l allocation priorities, alongside the ﬁnancial beneﬁts from the Acquisition, including increas ed proﬁtability and streng thened c a s h ﬂ o w. > App roved the 20 2 1 Gro up Fundin g Plan and i ssu ance of n ew Astr aZe neca s hare s, to be us ed as c onsi dera tion. > Scrutinise d integration plans to ensure the re was no di srup tion to the d elive ry of me dicin es to pati ents, to e mploye es or to the operation of the Group. > Re viewed management’ s en gageme nt w ith the wo rkf orce to un der stan d empl oyee inte rest s and co ncer ns thr ougho ut the transaction. Es ta blis hment of a S ust ai na bilit y Comm itte e In Oc tobe r 202 1 , th e Board e sta blish ed a Sus tain abili ty Co mmit tee to mon itor the ex ecution of the Co mpany’ s s ustainabili ty strategy , ov erse e the communication of the Company’ s sustainability activities to its stakeholders, and provide input to the Board and Board Committees on sus tainabi lity mat ter s, as de scr ibed o n page 89. The Board considered: invest ors; communities; employ ees; gov e rnments; regulators; patients; the impact of the Company’ s operations on the community and e nviro nment; t he long -term s ucce ss of the Company; and maintaining high standa rds of business conduct. How th e Boa rd ha d reg ard fo r the se mat ter s: > Con sider ed feedb ack receiv ed fr om sharehol ders to increase the integration of ESG in to strate gy and p er form anc e ta rgets , which h ad bee n rec eived d uring consultations and other engagements. > Recognise d t he increasing impor tance of sustainability matters to our business and all stakeholder s, including patients, current and potential emplo yees, gov e rnments and regulators, and the e xpe ctation that AstraZeneca should be a good corporat e citizen. > Unde rsto od the n eed to have a p ositi ve imp act in th e area s and env ironm ents i n which AstraZeneca operates. > Recognised t he importance of sustainabl e operations t o ensure long- term value creation for in vestors. New exe cut ive appoi ntment s In Aug ust 2021 , A rad hana Sa rin wa s app ointe d as an E xecuti ve Dire ctor an d CFO of As tra Zene ca. D r Sari n succ eed ed Mar c Dun oyer , wh o stepp ed down a s CFO and reti red fr om the Bo ard in Au gust 20 2 1. Mr Du noyer re main ed par t of th e SET in his n ew role a s CEO , A lexio n and Chi ef Strategy O fﬁcer , AstraZeneca. The Board considered: invest ors; em ployee s; the long -term s ucce ss of th e Company; and maintaining high stan dards of business conduct. How th e Boa rd ha d reg ard fo r the se mat ter s: > Reviewe d Dr Sa rin’ s a nd Mr Du noyer’s expe rie nce to en sure th at they ha d the skil ls re quire d to ex e cute th e roles to a h igh st anda rd and e nsure t he deli ver y of our strategy . > Considered the Board’ s skills matrix, as well as th e nee ds of the SE T and t he bus ines s, to ensure the appointments would furthe r strengthen management and help the Company t o deliv e r its strat egic priorities, in or der to de liver val ue to sha rehol der s, and p romo te the suc ces s of the Com pany . > Considered the continuity and r eassurance the appointments provided t o employ e es of the e nlar ged G roup an d investor s. Bot h ca ndida tes were k nown an d trus ted by em ployee s and i nvesto rs, h aving demonstrated strong lead ership and expe r tise in th eir pr evious r oles . App oint ment of Phi lip Broad ley as s enior indep endent Non-E xecutive Di rector In Ma rch 2021 , Phi lip Bro adley su cce eded Gr aham C hipch ase as t he seni or ind epen dent Non -E x e cuti ve Dire ctor , a head of M r Chipc hase’s reti reme nt fro m the Boa rd in May 2021 . T he senior indep endent Non-E x ec utiv e Dire ctor is a key role , ser ving a s a soun ding bo ard for t he Cha ir and in term edia ry fo r the othe r Dire ctor s and shareholder s w hen neces sary . The Board considered: investo rs; th e lon g-ter m succe ss of the Com pan y; and maintaining high standards o f business conduct. How th e Boa rd ha d reg ard fo r the se mat ter s: > Rec ogni sed the i mpor ta nce of e nsur ing tha t the sen ior ind epe ndent N on- Execu tive Dir ecto r had the a bilit y to look a fter t he inte rest s of investo rs and c hamp ion the highest standards of busines s conduct. > Revie wed Mr Broadle y’ s experience of the UK l isted c ompa ny regim e and understanding of the wider governance and regulator y environment in which As tra Zene ca ope rates to e nsur e he had the a pprop riate s kills a nd expe rt ise to fulﬁl the r ole. Ad ho c Boa rd Comm it tee on V axz ev ria > In Mar ch 2021 , an a d hoc Co mmit tee of the Boa rd was fo rmed to h ave broad ove rsig ht of the d evelop ment a nd supp ly of Va x ze vr ia , Astra Z eneca’ s COVID- 1 9 vaccine. The Com mit tee com plete d its wor k in Octob er 2021 ; the B oard c ontinu es to be re gula rly updated on development and supply of our COVID- 1 9 treatments. The Board considered: invest ors; gov ernments; pay e rs; global par tners; suppliers; communit ies; t he Compan y’ s reputation; access to healthcare; maintaining high stan dards of busines s con duct; t he nee d to foste r the Com pany’s business relationships with su ppliers, customers and other stak e holders. How th e Boa rd ha d reg ard fo r the se mat ter s: > The C ommit tee s uppor te d the Boa rd’ s over sight o f Va x z ev ri a manufa cturing, supply chain, ef ﬁcacy and safety , government relationships an d com muni catio ns stra tegy by be ing ab le to me et fre quent ly with key se nior exe cutive s over a key pe riod f or Va x ze vr ia d urin g 2021 . > Whe n esta blis hing the C ommi ttee, t he Boa rd con side red th e best p ossi ble sh or t - and l ong-te rm ou tcome fo r citize ns and patients globally , the Company’ s shareholders and other stakeholders in re spe ct of Va x ze vr ia . Set o ut be low are exam ples o f how key stake holde rs, s . 1 72(1 ) dut ies an d other mat ter s were co nsid ered by t he Boar d when m akin g its Pri ncipa l Deci sion s in 2021 . For t he s.172 (1) st ateme nt, s ee pag e 70. Cor porate G over na nce Re por t P rinci pa l Decisi ons 83 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Corporate Gover nance Repor t / Pri ncipal Decisions Enga gi ng wit h our work force As tra Zene ca is co mmit ted to be ing a gre at pla ce to work . Engag emen t with e mployee s is an i mpor ta nt ele ment i n ensu ring a n envi ronme nt in whi ch all e mploye es are res pec ted, whe re ope nne ss is valu ed, dive rsit y ce lebr ated an d ever y voice h eard. We rely o n our glo bal wor kfo rce to uph old our Valu es, de liver ou r stra tegic p rior ities and wo rk to sus tain a nd imp rove shor t- and lon g-ter m per for manc e. For Ast raZ enec a, ‘glob al work forc e’ inclu des ou r full-ti me and par t-time e mploye es, ﬁxe d-term wo rker s and exte rna l contr actor s work ing ful l- or pa rt-time , any whe re in the wo rld. Th e Dire ctor s believe th at the Bo ard as a who le is re spons ible fo r gathe ring v iews of the w ork force and consequently chose not to imp leme nt any of the t hree m ethod s of wor kfor ce eng agem ent pr escr ibe d in the 201 8 UK Co rpor ate Gover nanc e Code . Instea d, the Boa rd con tinue s to utilis e and deve lop the various mechanisms and long-s tandi ng channels of engagement in place across the Group that enable and facil itate engagement with the global workforce. These mechanisms inc lude th e Board ’ s revi ew of the glo bal wor kfor ce Puls e sur vey and of t he Work force Cul ture rep or ts. Bo ard Di recto rs al so con duct site visits, which facilitate understanding of bu sine ss ope ratio ns and p rovide oppor tunities for interactions betwee n Dir ecto rs and t he work forc e, and e ngag emen t wit h high- potent ial em ployee s. Due to th e glo bal COVID - 1 9 pan demi c, thes e face -to- fac e enga geme nts too k place v ir tually i n 2021 . For more infor mation on h ow individua l Commit tees in tera ct w ith t he wo rkfo rce , see t he Au dit Co mm itt ee Re por t fr om pag e 90 a nd th e Di rec tors ’ Remu ner atio n Re por t fr om pag e 98 . Eng aging wi th the wi der wor kfo rce ca n pre sen t chall enge s due to the s ize of the wor kfor ce and t he glob al footp rint, a s well a s the var iet y of role s throu ghout t he organisation. Vir t ual engagements ha ve helped ensure that individual Director s, as we ll as Boa rd Com mit tees, h ave had the o ppor tuni ty to me et wit h a rang e of employees from across the global workforce, and to h ear a nd unde rst and th eir view s. The channels outlined on this pag e e nsure tha t the Boa rd has di rect a cce ss to the vi ews of the g lobal wo rk force; p rovide m eanin gful info rmat ion and d ata tha t the Boa rd can u se when considering the impact of its strategic decisions on employ e es; and provide oppor tunities for meaningful dialogue. Th e Board c onsi der s thes e views an d the potential impacts on the w orkforc e whe n it makes ke y decisions. For m ore i nfor ma tion , se e Be a Gre at Pla ce to Work , f rom pa ge 40 . W o rkforc e cu ltu re Du ring 2021 , t he Boar d conti nued to pe riod icall y review th e W o rk force C ulture rep or t, whic h demo nstr ated how o ur V a lues and behaviours are embedded throughout all l evels of the wo rk force. W ithin t he repo rt , there is a summa ry metrics dashboard, which is divided into categories reﬂec ting key asp ect s of Astr aZe nec a ’s cult ure (Performance and Developmen t, I ntegrity , Engagement, Reputation , and Sustainability). Where the Board has concerns that the cul ture do es not re ﬂect o ur Values , the Boa rd seeks assurances from management that rem edia l actio n has b een ta ken and, w here nece ssar y , requests senior manage ment’ s attendance at Board meetings t o discuss cor rective actions. Employe e opin ion su rve ys (P u lse) T wic e a year th e work force i s invite d to take par t in a n empl oyee opi nion su rvey , whi ch se eks em ployee s ’ view s of the bus ines s. Th e resul ts are re viewed by ma nage ment a nd trends are monitored. The results are sha red wit h the Boa rd, whic h enab les th e Dire ctor s to und ers tand t he views a nd sen timen ts of the wo rkf orce. In t he Novemb er 2021 sur vey , Al exion em ployee s were invi ted to give th eir view s on work ing at A stra Zene ca acr oss mul tiple c atego ries s uch as T a lent & Development, Susta i nability , Inclusion & Dive rsi ty , a nd Pur pose & Valu es. 87% of emplo yees s tate d th ey bel ieve s tron gly in As traZen eca ’ s fu tu r e dire ctio n and key pr ior itie s in t he Nove mb er 20 21 P u l s e s u r v e y. Vi r tua l site v isit s and enga gements w it h high -potenti al employee s The Board, its C ommittees and i ndividual Director s have had numerous virtual inte ract ions to pr ovide exp osure to t ale nt and leaders hi p, provide opportunities for dialogue, and enable dir ect insight and understanding into business oper ations. Ac tion s and outc omes Th e Board c onsi dere d the wor kfo rce throughout its principal de cisions in 202 1 . Direc t o rs ensured that, where required, queries raised during engagements w e r e fed bac k to manag eme nt or dis cuss ed by the Boa rd. Th e Board r ece ived re gular u pdate s on the s teps ta k en by m anage ment to c reate s afe wor king e n vir onme nts and s uppo rt th e ment al and p hysic al wellb eing of t he work for ce. >1 0 v ir tu al si te vi sits a nd enga gement s wit h high-poten tia l employees. W o rkforc e Cult u re repor t a nd An nua l Global Rem u nera tion Over view Th e Board wa s provi ded wi th infor matio n out lining p rogr ess ag ains t a rang e of metr ics related to w ork force culture and engagement. Thi s infor matio n is provi ded bi annu ally to en able D irec tors to mo nitor tr ends a nd, if required, take action. The Remuneration in t he wid er con text se ctio n from pa ge 1 19 shows how the wo rk force i s reward ed in lin e with our principles. 9 1% of emplo yees t ook pa r t in t he Novem be r 2021 P u l s e s u r v e y. 84 As tr aZ enec a A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Corporate Gover nance Cor porate G over na nce Re por t P rinci pa l Decisi ons c ont inue d 2 021 ove r vie w Du ring th e year , th e Boar d cond ucted t he ann ual eval uatio n of its own p er forma nce and t hat of it s Commi ttee s and i ndivid ual Dir ecto rs. Th e 2021 evaluat ion was c arri ed ou t internally , althoug h Lintstock Ltd (Lintstock), a London-based corpo rat e advisor y ﬁrm that provides objectiv e and independent counsel to lea ding Eur opea n comp anie s, provi ded sof twa re and s er vice s for the eva luati on questionnaire. Lintstock has no other commercial relationship with the Company or a ny indivi dual D irec tors. B ase d on Boa rd me mber s’ resp onse s to the web -bas ed que stio nnair e coveri ng a wide r ange of to pics , Lintstock prepare d a repor t which w as discussed by the Boa rd at its meeting in De cemb er 2021 , a nd was us ed by the Ch air as th e basi s for indi vidua l conver sati ons wi th eac h Boar d memb er pr ior to the f ull Boa rd discussion. The Company’ s last externally fac ilita t ed B oard eva luatio n occu rre d in 2020. As p ar t of each D irec tor’s indivi dual dis cuss ion wi th the Cha ir duri ng the Bo ard evalu ation, h is or he r contr ibuti on to the wor k of the B oard a nd per son al devel opme nt needs were consi dered. Directors’ training ne eds ar e met by a co mbina tion of: in terna l pre sen tatio ns and up dates , and ex terna l spe aker p rese ntati ons, as p ar t of Boa rd and Board Committee meetings; speciﬁc training sess ions on par ticular topics, where required; and t he opp or tunit y for Di recto rs to at tend exte rna l cour ses at t he Com pany’s expen se, sho uld they w ish to do so. Th e Board i ntend s to contin ue to com ply wit h the UK C orp orate G ov er nanc e Code g uidan ce that the evaluation s hould b e ex t e rnally fac ilita t ed a t leas t ever y thre e year s and exp ect s to com mis sion t he nex t exte rna lly fac ilita t ed r eview in 2023. The Nomination and Governance Committee als o reviews t he com posi tion of the B oard to en sure tha t it has th e appr opri ate expe rti se, while also recognis ing the impor tance of d i ve r s i t y. For more infor mation on the Nomination and Gover nance Com mi tte e’s work , se e the N omi nat ion a nd Go ver nan ce Commit tee Report from page 86. 2 021 Outco mes and a ct i ons a gai nst pr ior yea r recommend a tion s > The B oard c ontinu es to ope rate ef fec tivel y wit h an atmo sphe re that e nabl es ope n and fr ank dis cuss ion, an d its re lation ship wi th managem ent, including the SET , was highly rated, although the continuing impact of COVID- 1 9 restrictions on Board d ynamics and m anag eme nt inter actio ns was no ted. > No signiﬁcant points were raised reg arding the c ompo sitio n or diver sit y of the Bo ard, although both remain activ e conside rations in an nual B oard eval uatio ns and th e work of the Nomina tion and Gov ernance Committee. > The Board’ s Committees, no w supplemented by the S usta inabi lity C ommi ttee, w hich wa s es tabli shed i n Octob er 2021 and t heref ore not inc lude d in the 2021 evalu ation, c ontin ue to operate effectively . > Eac h Dire ctor co ntinue s to per for m effectively and demonstrat e commitment to his o r her ro le, as do es the Ch air of the Boa rd (who se evalu ation by al l other B oard me mber s, abs ent th e Chair, was led by th e senior independen t No n-Exec utiv e Direct or). > The continuing COVID- 1 9 restri ctions in 2021 hind ere d effo rt s to addre ss t wo ac tions a risin g from t he 2020 evalu ation – increasin g oppor tunities for Board interaction wit h stakeholders, and re -as sess ing the f orma t and ca denc e of the a nnua l sche dule of B oard me etin gs – and t hese r emai n objec tives a s res tric tion s ease i n the futu re. > The B oard’s visi bilit y of how ce rt ain key risks are identiﬁed and proactively ma nage d – the othe r them e aris ing fro m the 2020 eval uatio n – was com mente d on in the 2021 evalu ation a s an are a for fur the r focu s, draw ing on exp eri ence f rom the p ande mic and m atte rs re latin g to Va xz ev ri a in 20 2 1. > Dur ing 2022, the B oard w ill review t he met hod us ed for e ngage ment w ith the Com pany’s work forc e to ass ess wh ethe r imp roveme nts ca n be made, a nd will re-intro duce more numerous and structure d inte ract ions wi th empl oyees, a s COVID - 1 9 restrictions ease . > The ev a luat ion identiﬁed the need for continued education a nd br ieﬁ ng sessions to de velop fur ther Board members’ knowledge and understanding of rare dis ease s and A lexion , Astr aZe neca R are Disease, acknowledging that the app ointm ent of t wo new Boa rd mem ber s fro m Alexi on dur ing 2021 will al so hel p to und erp in the Boa rd’ s level of ex per tis e in this area. > The B oard’s overs ight of s ucce ssio n pla nning f or the mo st sen ior Boa rd rol es, whi ch focu sed o n the role s of CFO an d Cha ir of the Bo ard in 20 2 1, was high ly rate d, but i t was re cogni sed th at the Bo ard ne eds to re -es tabl ish a bet ter ba lanc e of time between ov erseeing SET succes sion plans, as we ll as Boa rd suc ces sion, d uring 20 22. A s par t of t he Boa rd p erfo rm anc e eva luat ion,D ire cto rs were a ske d toco nside rthe fol low ing a rea s: > Boa rd composition > St ake holder over sight > Bo ard dynami cs > Me eti ng ma nage ment a nd suppor t > Boa rd Commit tees > Pa ndem ic andac qu isit ion ofA lex ion (cas est udie s) > St rateg ic overs ight > R isk m ana gement a nd int ern alc ontr ol > Succ ession pla nn ing and peopleover sight > Pr ioritie s for change 85 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Corporate Gover nance Repor t / Board per f orma nce evaluation Cor porate G over na nce Re por t Bo a rd p er for m a nce eva lu ation Compo sition of t he Boa rd As p ar t of its ro le, the No minati on and Governance Committee is responsible for reviewing the composi t ion of t he Board, t o en sure tha t it has t he app ropri ate expe rti se while also recognis ing the impor tance of dive rsit y . T he Com mit tee review s the composition of the Board using a matrix t hat re cords t he skil ls and ex peri ence o f curre nt Boa rd mem ber s, com pari ng this wi th the sk ills and ex per ienc e it beli eves are a ppro pria te to our ove rall b usine ss an d strate gic ne eds , both now an d in the fu ture. T he matr ix is se t out on pa ge 87 . Any d ecis ions re latin g to the app ointm ent of D irec tors a re made by th e ent ire Boa rd bas ed on th e meri ts of the ca ndida tes and th e releva nce of th eir backgro und and e xpe rience, mea sured aga inst o bjec tive cri teria , with ca re take n to ens ure tha t appo intee s have enou gh time to devote to ou r busin ess . I nclusion a nd dive rsit y Dive rsi ty is i ntegr ated ac ross o ur Code of Ethi cs and a sso ciate d work forc e polic y , and we p romo te a cultur e of diver sit y , res pec t and e qual op por tuni ty , w here individual success depends on ly on personal abi lity a nd con tribu tion. We st rive to trea t our employees with f airness, integrit y , hones ty , cour t esy , consideration, respect, and d ignity , regardles s of gender , race, nat ionality , age, sexu al ori entat ion or ot her for ms of dive rsi ty . Th e Board i s provi ded ea ch year w ith a comprehensive ov er vie w of t he AstraZenec a wor kfor ce, cover ing a wi de rang e of metr ics and measures (including trends around gender dive rsit y , le ader ship, e thnic di versi ty a nd age proﬁle) . The latest Hampton-Alexander Rep or t, pub lishe d in Febr uar y 2021 , na med As tra Zene ca PLC as one of t he top 1 0 be st pe rfo rme rs in the F TS E 1 0 0 for rep rese ntati on of wom en on the c ombin ed execu tive com mit tee and t heir di rect r epor ts . For the yea r ende d 3 1 D ece mber 20 2 1, women rep rese nted 4 1.8% of the SE T and it s leaders hi p teams. The Board views gender , nationality , cultural and ethn ic div ersit y a mong B oard member s a s impor tant considerations when revi ewing it s comp ositi on, and h as met th e recommendations of the Hamp ton-Alexander and Pa rker Rev iews. C onsid erin g diver sit y in a wid er sen se, the B oard a ims to mai ntain a bal ance i n terms o f the ran ge of expe rie nce and skills o f individual Board members, which includes relevant international busine ss, pharmaceu t ical industr y and ﬁnancial expe rie nce, as we ll as ap prop riate sc ienti ﬁc and regulatory knowledge. The biographies of Bo ard me mber s set ou t on pag es 7 4 and 75 give more information about current Dire ctors in this respect. Th e Board h as ado pted an I nclus ion an d Diversity Policy ( the P olicy) , which is applicable t o the Boa rd and its Committees. The Policy re in forces the Board’ s ongoing com mitme nt to all a spec ts of dive rsi ty an d to fostering an inclusive environment in which eac h Dire ctor fe els val ued an d resp ecte d. Whi le the Bo ard ap point s candi dates b ase d on me rit a nd ass ess es Dir ecto rs aga inst me asur able, ob jec tive crite ria , the Boa rd re cogni ses th at an ef fec tive Boa rd, with a broad strategic per spective, requires diversit y . Th e Policy se ts out th e Boar d’ s ai m to mai ntai n a comp ositi on of at le ast 33% fem aleDi recto rs an d at lea st one D irec tor from an ethnic m inority background. Th ePolicy pr ovide s a commi tment to u se atle ast on e profe ssio nal se arch ﬁ rm, whi ch has s igne d up to the ‘Volu ntar y Co de ofCo nduc t for Exe cutive S earc h Firms’ , tohel p recr uit Di recto rs fro m a broa d, qua liﬁe d group of c andi dates, to i ncre ase diversit y o f thinking and perspe ctive. Nom in atio n and Gov ern anc e Comm it tee members > Leif J ohansson ( Cha ir ) > Phi lip Broadley > Mi che l D em aré > N aznee n Rahman T he Nomi nation and Gover nance Com mi tte e’s ter ms of r efer enc e ar e ava ila ble o n our w ebsi te, ww w .astrazeneca.com. “ T he Nomi nat i on a nd G over na nce Com mit tee re com mends to t he Board new Boa rd appoi nt ments a nd con siders, more broad ly , succe ssion plans at Board level. ” 86 A st raZ ene ca A nnu al R epor t & For m 20 - F In for mat ion 20 21 Corp orate G overnance Nom in at i on a nd Gove r na nce Com mit te e Repor t Th eBoard ’ s ap proac h to inclu sion a nd diversity continues t o yield successful results.Currently , 36 % of the C ompany’ s Non -E x ecu tive Dir ecto rs are wo men, andwo men ma ke up 38% of the ful l Boar d. Thi s mee ts the Poli cy’ s a im of 33% fema le representation on the Board. T he Bo ard ’ s In clus ion a nd Div ersi ty Po lic y ca n be fou nd on our website, ww w .a straze neca.com. I nfo rm atio n ab out ou r appro ach t o dive rsit y i n the or gan isa tion b elo w Boa rd lev el ca n be fo und i n the Ou r Peo ple se ct ion , fro m page 41 . App oint ments du ri ng the ye ar Du ring 2021 , a nd ef fec tive 1 Augu st in ea ch ca se, Ar adhan a Sar in was app ointe d as an Exe cutive D irec tor and C FO , s ucce edi ng Ma rc Dunoye r , and A ndre as Ru mmelt wa s appointed as an indepe ndent Non-Executive Dir ecto r . Dr Sa rin wa s previo usly E VP , CFO of Al exion, a nd Dr Ru mmel t had be en a me mber of A lexio n ’ s b oard s ince 2010. Th e appoi ntmen t proc ess es were l ed by the C ommit tee a nd involved m eeti ngs wit h multiple Director s. Dr S arin’s previo us expe rien ce as a C FO , extensive kno wledge of Alexion, global healthcare syst e ms , capital market s and strategic transa ctions w ere impor tant factors in the Commit t ee’ s decision t o recommend he r to the Boa rd for ap point ment a s CFO . Kn owledg e of Alex ion was s imila rly a key factor behind its recommendation to a ppoin t Dr Rummelt, alongside the additional industry-speciﬁc e xperience he brings to the B oard, in p ar ticul ar tec hnica l R&D, manufacturing and quality assurance expe r tise. T he Boar d appr oved the Committee’ s recommendations i n respect of these appointments. Non- Exec utive D ire ctor s’ induc tion s and training Newly appointed Non-E x ecutive Director s are p rovide d with c ompr ehen sive info rmati on ab out the G roup a nd thei r role as Non -E x ecu tive Dir ecto rs. T hey also t ypi call y par ticipat e in tailored induction programmes tha t take acc ount of th eir in dividu al ski lls and ex per ienc e. On his a ppoi ntmen t as an indepen dent Non-Executive Director , Dr Rummelt commenced an ongoing induction programme i ntended t o provide an un der stan ding of th e Grou p , as wel l as of his d uties a s a Dire ctor of a l isted c ompa ny . Du eto COVID - 19 res tric tions , thisind ucti on programme is mainly tak in g place v irtually , t ypica lly by vid eoc onfer ence, u ntil itis possible to rec ommence face-to-face meetings and sit e visits. Although e lements of his i nduc tion wil l be adju sted fo r his exis ting expe r tise an d Comm itte e memb ers hip, key areas covered during 2021 and continuing into20 22 inclu de: > mee ting wit h memb ers of t he Boa rd, SE Tand ot her se nior ma nage ment > meeting with external legal advisers > mee ting wit h the exte rna l audito r > whe n poss ible, vi sits to va riou s sites including R&D centres, co mmercial sites and o per ation s facili ties int he UK, S weden , the US a nd els ewhe re > acc ess to a re ading r oom whi ch prov ides information on the Group, including ﬁnancial per formance, pipeline i nformation, policies including the Global Standard on De aling i n Astr aZen eca S ecur itie s and ru les relating to inside information, inv e st or and ana lyst r epor ts , and me dia upd ates. In add ition, t heread ing roo m cont ains gui danc e on dire ctor s’ dutie s and lis ted company requireme nts. Ongoing training and development As tra Zene ca is co mmit ted to devel oping a culture of lif elong learnin g , including for Dir ecto rs. At le ast a nnuall y , the C hair dis cuss es wit h each D irec tor his o r her con tribu tion to th e work of th e Board a nd personal dev elopment needs. Direct ors’ tra ining n eed s are met by : acombi natio n of inte rnal p res entat ions a nd upda tes, an d exte rna l spea ker pre sent ation s, as pa rt of Board and Board Committee meetings ; speciﬁc training sessions on particular topics, where require d ; and the oppor tunity for Dir ecto rs to at tend ex terna l cour ses a t the Com pany’s expe nse, sho uld they w ish to do so. In ad ditio n, Dire ctor s are en cour aged to at tend si te visit s duri ng the yea r . Dur ing the se vis its, D irec tors me et wit hloca l mana geme nt and h ave tours o fAstr aZen eca s ites an d fac ilitie s, aswel las thos e of our st rateg ic par tn ers . Thes esitevis its fu rth er Dir ecto rs’ und ers tand ing of theG roup’s busin ess a nd ope rati ons, a swellas pr ovidin g an insi ght into t he particular challenge s fac ed locally . Additionally , such visits pro vide Directors wit han oppo rt unit y to enga ge with key stakeholders. As mentioned elsewhere in this repor t, CO VID - 1 9 restric tions signiﬁcantly cur ta iled B oard m embe rs’ abi lity to t ravel for site v isits d urin g 202 1 , b ut suc h visit s will recommence when possible. Suc cession pl an ning The Nomination and Governance Committee consider s both planned and unplanned (unanticipat e d) succession scenarios, and met ﬁ ve times i n 2021 . The C ommit tee s plit the m ajori ty of i ts time b etwe en suc ces sion planning for Non-E x ecutive Director s, successfully concluding succession plans for th e role of C FO , a nd con tinue d routi ne succes sion planning for t he roles of Chair of the B oard a nd CEO. The s earc h ﬁrm Sp ence r Stu ar t was eng aged to a ssi st the Co mmit tee wit hitswork . Spe ncer S tuar t pe riod icall y under tak es ex ecutive search assignments fort he Company and has no other connection with AstraZene ca or its individual Directors. Ou r sear ch for a Ch air of the B oard a s par t of routine succes sion p lanning is proc eeding well, l ed by Philip B roadl ey in his c apaci ty as senior indepe ndent Non-E x ec utiv e Dire ctor , and h e chai rs the C ommit tee fo r this pa rt o f its a gend as. We have ide ntiﬁe d a shor tli st of strong candidates, and meetings between the m and Bo ard me mber s sta rte d to take pla ce in the fo ur th qua rte r of 2021 . Cor porate g overn ance The Nomination and Governance Committee als o advi ses the B oard p erio dica lly on signiﬁcant developments in corp orate gov ernance and the Company’ s compliance wit h the UK Co rpor ate Gover nanc e Code. Se efrom pa ge 77 for th e Comp any’ s st atemen t of comp lian ce with th e UK Cor por ate Gover nanc e Code du ring 20 2 1. Leif Johans son Chair Non-Executive Directors’ experience, as at 31 December 2021 Commercial Financial Reporting Management Sales & Marketing Tech & Digital Business Science Regulatory Pre-AZ Pharma Biologics Medical Doctor/Physician Industry-specic US Europe Asia Geographic 11 5 8 3 5 6 0 8 3 3 8 9 7 87 A st ra Zen eca A nn ual R epo rt & For m 20 - F In for mat ion 2 021 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Nomin ation and Gover nance Commit tee Report 88 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Corp ora te Governa nce Ac tiv itie s dur ing t he yea r Th e Scie nce Co mmit tee hel d ﬁve mee tings in 2021 , v ir tually, as a res ult of the g loba l COVID- 1 9 pandemic. Key are as of foc us for th e Scie nce Com mit teein 2021 inc lude d: > AstraZeneca R &D strategic science capabilities: including digital health, data science and ar t iﬁcial intelligence, knowledge graphs, T -cell circuits and engagers and antibody drug conjugates. > Alexi on R&D: providin g an in- dep th revi ewand int roduc tion fo r the Sc ienc e Com mit tee mem ber s of the Al exion por tfolio, its scientiﬁc capabilities, talentand organisation. > Corporat e s corecard out turn and goal sett ing: pro viding insight and feedback to the Remuneration Committee in support of 2021 ach ieveme nts and 20 22 goal s ett ing. > In-licensing agreements: including a revi ew for the B oard of th e scie ntiﬁc c ase s for a gl obal d evelopm ent an d commercialisation agreeme nt for epl onter sen, a l iver -ta rgeted a ntise nse oli gonuc leoti de (ASO ) , T TR i n Phase I II development with Ionis Pharm aceuticals and a n exclusi ve globa l colla bor ation a nd lic ence a gree ment w ith Neu rimm une AG for NI006, an investigational human mon oclo nal an tibod y curr ently in P hase Ib devel opme nt for the t reatm ent of transthyretin amyloid cardiomy opathy (A T TR-CM) . Nazn een Rahman Ch ai r of the S cien ce Com mit te e Role of t he Com mit tee Th e Scie nce Co mmit tee’ s c ore rol e is to prov ide as sura nce to the B oard r egar ding th e qua lit y , com petiti venes s and in tegri ty of th e Gr oup’ s R& D acti vitie s. This i s done by way of meetings and dialogue with our R& D leaders and other scientist employ e es, when cir cums tanc es all ow visit s to our R&D s ites thr ougho ut the wor ld, and r eview an d ass essme nt of: > the ap proa ches we ad opt in re spe ct of our c hose n ther apy are as > the scientiﬁc t e chnology and R&D capabilities we deplo y > the scientiﬁc strategy for maintaining our pipeline and competitiveness > the de cisi on-m akin g proc esse s for R& D projects and programmes > the qu alit y of our sc ient ists, t heir ca ree r oppor tun ities and talent de velopment > benchmarking against industr y and scientiﬁc best practice, where appropriate. The Science Committee period ically revie ws imp or tant b ioeth ical i ssue s that we fa ce and as sist s in the for mulat ion of, and a gree s on behalf of the Board, appropriate policies in relation t o such issues. It also c onsiders fut ure tre nds in me dica l scie nce a nd tech nolog y . Th e Sci ence C ommi ttee d oes no t review in dividu al R&D p roje cts bu t does r eview, on beh alf of the Boa rd, the R& D asp ect s of spe ciﬁc bu sine ss development or acquisition proposals and advises the Board on i ts conclusions. “ The S cience Com mit tee’ s core ro le is to p rov i de as su ra nce to the Boa rd regard ing th e qua li ty , com petitiv eness a nd i nteg r it y of t h e Gro up’ sR & D ac tiv it ie s. ” Sc i ence Com mit tee members > N aznee n Rahman ( Chair ) > E uan Ashle y > Geneviève Berger 1 > Dia na L ay eld 2 > T ony Mok > Marc us W a llenb erg > EV P , Onc olog y R & D 3 > EV P , BioPha rm aceutic als R& D 3 1 M emb er u nti l ret ire ment f rom t he Bo ardo n 11 M ay 20 21 2 A ppoi nted t o the Co mm itt ee on 1Oc tob er20 21 3 C o- opte d mem ber of t he Com mi tte e T he f ul l role of t he S cien ce Com mi tte e is se t out in i ts te rms o f refe renc e, av ai lab le at ww w .astrazeneca.com. Scien ce Co mm i t tee Repor t 89 A str aZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Sustainab ility Co m mi ttee Re port und ers tand ing to Boa rd mem ber s of sustainabil ity initia tiv e s, their progress, who exe cutes th em, an d how this is d one. Ac tiv itie s dur ing t he yea r Following a nu mber of introductor y meetings and d iscu ssio ns to develo p the rol e and ope rati on of the Co mmit tee, th e full Com mit tee met fo rma lly for th e ﬁrst t ime in De cemb er 2021 . It s cons ider ation s inclu ded: > Sustainability strategy: an ove rv iew of the m ateri alit y refre sh und er taken i n 2021 . This ex e rcise updated the mat e riality as ses smen t unde rt aken in 201 8, to i denti fy the a reas t hat are of m ost im por tan ce to As tra Zene ca and i ts sta k eho lder s now , and c ontin ues to gu ide the s trateg y . Mo re information about the mat e riality refresh is se t out on p age 30. > Sustainability targets: consideration of Am bitio n Zero Ca rbo n targ ets for Per for manc e Shar e Plan awar ds. > Finance : a n o ver view of t he invest ment behind Ambition Z e ro Carb on and dis cuss ion of in itiati ves to fur the r redu ce CO 2 em iss ions over tim e. > Inv estor relations update: an up date on inves tor sen timen t and an ove rvi ew of our engagement with inv e st or s on sustainability mat ter s over the yea r . > Disclosures: a review of d raf t disc losu res relating to sustainabilit y , inclu ding the Sustainabili ty Report and T CFD disclosures . I loo k for ward to co ntinui ng to lead t his Com mit tee and d evelopi ng its key ro le in AstraZeneca’ s sustainab ility go vernance fr amewor k in 2022. Nazn een Rahman Ch ai r of the S ust ai na bil it y Comm it tee Chair ’ s in tro d ucti on I took o n resp onsib ilit y for over see ing sustainabil ity matters on behalf of the Boa rd fro m Janua r y 202 1 . T his po sitio n was p reviou sly he ld by Gen eviève Ber ger , Non -E x ecu tive Dir ecto r , who re tired f rom the Boa rd at the 20 2 1 AGM. Si nce 201 5, th is role had fo rme d a key par t of our s usta inabi lity gov ernance framew ork, pro viding an add ition al con duit be twee n the Boa rd and sus tain abili ty ac tiviti es in the b usin ess, i n addition to the regular direct interactions that take place between the E VP Sustainabili ty & Chief Compliance Ofﬁc er and the Directors at bot h Board a nd Aud it Comm itte e meet ings. Thi s year , the exi sting g overna nce ar rang emen ts have evolve d natur ally to reﬂect the ever -incre asing signiﬁcance of sustainabil ity to A st raZeneca’ s business, and the increasing time commitme nt that oversight of su stai nabili ty ma tter s dem ands – f or example, increased rep orting requireme nts and d elive ry of o ur Amb ition Z ero Car bon pro gra mme. In Oc tobe r 2021 , the Bo ard con stitu ted a new Bo ard Co mmit tee – the Sustainability Committee – consisti ng of myse lf as Ch air , S heri M cCoy , A ndre as Rummelt and Marcus W allenberg who bring a bre adth of ex per tis e and exp erie nce in sustainabil ity matters. AstraZeneca’ s sustainab ility stra tegy w ill con tinue to b e develop ed by the S ET an d app roved by the f ull Boa rd. Th e Sust ainab ilit y Com mit tee’ s ro le is to mo nitor the exe cutio n of that strategy , to ov erse e the communication of ou r sust ainab ilit y activ itie s with our st akehol der s and to prov ide inp ut to the Boa rd and o ther Bo ard Co mmit tees o n sustaina bility matters as requi red. Commit t ee meetings provide a n oppo rtunity for Committee me mber s to inter act cl osel y with tho se charged with ex e cuting our susta inability str ategy, and the reby br ing a de epe r “ A t Astr aZen ec a we a re com mit te d to oper ati ng in a wa y that recogn is es t he interc onnec t i on between b usiness g row t h, the nee ds of so ciet y and the limita ti ons of o u r planet. ” Sus tainab ility Comm itte ememb ers > N aznee n Rahman ( Chair ) > Sher i McCoy > Andr eas Rumm el t > Marc us W a llenb erg St andi ng atte ndees at Commit tee meeti ngs in clude t he EV P , Su sta in ab ili ty & Ch ief Comp lia nce O cer, t he EV P Ope rat ions & IT a nd t he V P Glob al SH E & Ope rat ions Sustainab ility . T he f ul l role of t he Su st ai na bil ity Com mi tte e is se t out i n its te rm s of reference, ava ilable at ww w .astrazeneca.com. Su stain ab ili t y Com mit te e Repor t Of p ar ticul ar note in 20 2 1, the Com mitte e dedicated signiﬁcant ti me to : > the rev iew of mat ter s relate d to the acquisition and integration of Alexion, including reviewing the shareholder documents, monitoring the implicat ions on ﬁnancial repor ting of the combined Group, and r eviewin g the ri sk mana geme nt and ﬁnancial control environments; and > monitoring the ﬁnancial repor ting implications of Va xz ev ri a , the A stra Zen eca COVID- 19 vaccine, includi ng supply agreeme nts and in ventor y . The Commit t ee has focused considerable attenti on on ensuring a clear u nderstanding of the imp act of vac cine a rran geme nts on t he Group’ s ﬁnancial position and performa nce, and ensuring disclosures are appropriat e. We hope s hare hold ers ﬁn d this Re por t us eful an d infor mative, a nd, as ever, welco me any feedback. Phi lip Broadley Ch ai r of the A udit Co mm itte e Chair ’ s in tro d ucti on Welc ome to the Re por t of the A udit Com mit tee (the C ommit tee). Th is Rep or t de scrib es the wo rk of the C ommit tee a nd foc uses o n the sig niﬁc ant mat ter s it considered during 2 02 1 . With COVID- 1 9 restri ctions continuing t o impact Committee members’ ability t o meet in- per son, we have c arr ied on m eetin g vir tua lly an d have worked h ard to en sure th at our d iscu ssio ns and di alog ue are a s effe ctive as in p er son me eting s, whic h we look fo rwa rd to res uming a s soo n as pra ctic able. We be lieve that th is has e nabl ed us to co ntinu e to prov ide the l evel of over sight a nd cha lleng e to ma nagem ent th at is req uire d of the Com mit tee. Committee meeting agendas through t he yea r inclu de sta nding i tems to en sure th e Committee is fulﬁ lling its regular r esponsibilities, as we ll as ad ho c items t hat eit her re quire th e Com mit tee’ s at tent ion or a llow the Co mmit tee to gai n deep er ins ight in to cer tai n area s of the bus ines s or sp eciﬁ c matte rs. We have a lso arran ged numerous virtual interactions with the b usine ss ou tside o f forma l Comm itte e me eting s to enha nce the C ommit tee’s understanding of the busines s a nd provide valu able in sigh ts abou t the key is sues a nd challenges relating to t he wider organisation. “ In 2 02 1 t he C om mittee gave pa r tic ula r at tention to the presen t a t io n of t he A le x ion ac q ui sit ion a nd acc ount i ng for t he pro duc t ion of V axze vri a , w hil e co ntin uin g i ts reg ular oversig ht of the Comp a ny’s i nte r na l con t ro ls and  nancia l r e p o r t i n g .” 90 As tr aZ enec a A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Corporate Gover nance Aud it C om mit te e Repor t Audit Com mit tee mem bers > P hilip Bro adle y ( Chair ) > Mi che l D em aré > Debora h DiS an zo > Sher i McCoy Rou ti ne att ende es at Com mi tte e mee ti ngs in clude : the C FO; t he Ge nera l Cou nse l; t he E VP S ust ai na bil it y and C hie f Compl ia nce O cer ; t he V P Et hi cs & Tran spa renc y and De put y C hie f Comp lia nce O cer ; the V P , IA ; t he SV P Fi na nce, G roup Cont rol ler; a nd the Comp any ’s e xt er nal aud itor. T he Comm it tee, a nd sep ar ately t he Comm it tee Ch ai r, a ls o mee t pri vate ly and o n an i ndiv idu al ba si s w ith at te ndee s whic h help s ens ure t he e ec ti ve ow o f m ate ri a l i n for ma tio n b et we en t he Com mi tte e an d ma nag ement . The CE O a nd ot her mem be rs of the SE T att end when re qu ire d by t he Com mit tee . T he f ul l role of t he Au dit Co mm itt ee is s et out i n its t er ms of re fere nce , avai la ble at ww w .astrazeneca.com. Comm itte e over view Composition of the Commit tee In De cem ber 2021 the B oard d eterm ined th e Com mit tee met th e UK and U S comp ositi on re quire ments by v ir tue of Phili p Broad ley and Michel Dema ré having recent and relevant ﬁna ncia l exper ienc e for the p urpo se of the U K Corporate G o vernance Code ( the Code) , havi ng com peten ce in ac coun ting an d/or audi ting for the purpose o f the D isclosure and T ransparency Rul es, an d bein g ﬁnanc ial exp er ts for th e pur pos es of the S arba nes- Oxl ey Act (SO x). Th e Board a lso de termi ned tha t all me mber s of the C ommi ttee a re inde pen dent fo r the pur pos es of the C ode an d that the C ommit tee me mber s as a wh ole have co mpeten ce rel evant to the s ecto r in whic h the Com pany ope rate s, by vir tue of th eir exp erie nce of working in science-driven, healthcare and/ or pha rma ceuti cal in dustr ies o r a resul t of thei r ten ure wit h Ast raZeneca. The Committee member s ’ qualiﬁcations, skills and ex per ienc e are det aile d in the ir biog raph ies on pa ges 7 4 an d 7 5 a nd Com mitte e mee ting at tenda nce is s hown on pa ge 73. Rol e of the C ommi tte e The Committee’ s main re sponsibi lities i nclude monitoring the integrity of ﬁnancia l re porting and formal announcements relating to ﬁnancial pe rfo rma nce, revi ewing th e effe ctive nes s of inte rnal c ontro ls and r isk ma nage ment sys tems, and ove rse eing t he exte rnal a nd inter nal au dit pro ces ses. T he Com mit tee rep or ts to the Bo ard the p rinci pal ma tter s it co nside rs an d any sig niﬁc ant con cer ns it ha s or that h ave been rep or ted to it. Fur the r deta il abo ut the Com mit tee’ s ro le and wo rk dur ing the ye ar is se t out be low . Ac tiv itie s dur ing t he yea r Financial reporting Effec tiv e interna l c ontrols, appropriate acc ounti ng pra ctic es and p olici es, an d the exerci se of exp erie nce d judge ment by t he Committee and the Board underpin Astra Zeneca’ s ﬁnancial rep orting integrit y . Th e Commi ttee r eviewed key e leme nts of th e Fina ncia l State ment s and the e stim ates an d judgements contained in the Group ’ s ﬁnancial dis clos ures, a s well as c onsi deri ng the appropriateness of management ’ s and the external audit or’s a nalysi s and conclusions on judgemental accounting matter s. The signiﬁcant ﬁnancial reporting issues considered are de scrib ed in de tail i n the tab le from p age 93. Further information on the s igniﬁcant accounting mat ter s cons ider ed is in clude d in the Fi nanci al Review unde r Critical accounting pol icies, and e stim ates fr om page 6 6 and wi thin ou r Gro up Acc ountin g poli cies f rom page 1 38. Th e Commi ttee a lso co nsid ered t he completeness and accuracy of the Group’ s ﬁnancial per formance against its int e rnal and ex ter nal key pe rfo rman ce ind icator s. Th e Commi ttee d iscu sse d and revi ewed the pre par ation of th e Dire ctor s’ Viab ilit y st ateme nt and co nsid ered t he ade quacy of the analysis suppor ting the assurance prov ided by th at sta temen t, as well a s the going concern assessment and adoption of the g oing co nce rn bas is in pre pari ng this An nual Re por t an d the Fina ncia l State ments . Mo re in for mat ion o n the b asi s of pre par atio n of Fi na nci al St ate ment s on a goi ng con cer n ba sis i s set out o n pa ge 213 a nd in t he F ina nci al S tat emen ts on pa ge 13 8. Th e Commi ttee c onsi dere d the ex terna l aud itor’s repo rt s on its au dit of the G roup Fina ncia l State ment s, as well a s repo rt s from management, IA , Global Compliance and the exte rna l audito r on the ef fec tivene ss of ou r syste m of inter nal c ontrol s and, in p ar ticul ar , our internal control over ﬁnancial repor ting. This included consideration of compliance wit h appli cabl e provis ions of th e Sar bane s- Oxl ey Act – in pa r ticula r , the s tatus o f com plia nce wit h the pro gram me of inte rnal controls over ﬁnancial repor ting implemented pur sua nt to sec tion 40 4 of that Ac t. Follow ing the acquisition o f Alexion, management recommended ex cluding Ale xion from the rep or t on Inte rnal C ontro ls Over Fi nanc ial Rep or ting fo r the year o f acqui sitio n, as a llowed by the S EC. The Co mmit tee con side red p racti ce in thi s area , the ne eds of v arious stakeholders and the workload required. The Commit tee concurred with ma nagem ent in t akin g the exempti on, as ma nagem ent wor ks to unde rst and a nd inte grate A lexion’s contr ols wit h the AstraZeneca frame work. Th e Commi ttee a lso sp ent si gniﬁc ant tim e during the year discussing ﬁnancial reporting considerations relating to the acquisi t ion of Alexion, including the purchase price accounting valuation and potential impacts on segment al repor ting. Th e Commi ttee c ontin ued to de dica te sig niﬁc ant time to c onsi deri ng the ef fec ts of COVI D- 1 9 on th e Compa ny’ s b usine ss, internal controls and ﬁnanc ial reporting. Th e Commi ttee i s aware of th e signi ﬁcan ce of vac cine ar ran geme nts, a nd the ne ed to en sure a cl ear un der stan ding of th e impac t on the Group ’s ﬁnancial position and pe rfo rma nce, give n the wid e publi c intere st in vaccine deliver y . F ur t her in for mat ion on the se sig ni ca nt n anc ial re por ti ng is sue s cons ider ed is s et out i n t he ta ble f rom pa ge 93. Risk identiﬁcation and management The Commit t ee continued its regula r reviews of the G roup’s appro ach to ri sk mana geme nt, the o pera tion of it s risk r epor tin g fram ework and risk mitigat ion. This included consideration of how the risk management pro ces s was em bedd ed in the G roup a nd the Committee assuring itself th at management’ s acc ount abili ty for r isks wa s clea r and functioning. When identifying risks, the Committee con side rs th e t ota l land scap e of ris ks. Th e most s igniﬁ cant of th ese, a s meas ured through potential impact and probability , are o ur Prin cipal R isks. We th en con side r tho se spe ciﬁc r isks wh ich are c hall engin g our b usin ess pr ese ntly , o ur key acti v e ris ks. Fina lly , we s can the h orizo n and id entif y ris ks whi ch may ch allen ge us in th e futur e, our emerging risks. This framew ork provided the conte xt for the Commit t ee’ s consideration of the D irec tors’ V iabil ity s tateme nt. Th e Directors’ Viability statement is unde rpinned by the a ssur ance p rovide d thro ugh a ‘str ess test’ analysis under which key proﬁtability , liquidity and funding metrics are t ested against se vere downside scenarios. Each of these scenarios assumes that the associated risks crystallise and that management will take mitigating actions against tho se ris ks. The C ommit tee c onsi dere d in det ail the va lidit y of eac h sce nari o . Thi s included obtaining additional analysis from managem ent as t o the indirec t o r unintended consequences of its proposed m itigating actions includ ing, f or e xample, assessing the li k ely r espo nse of a b roade r ran ge of stakeholders. The Committee also assessed whether the proposed mitigations w e re viable. Th e Commi ttee i s upda ted on key ac tive and emerging risks facing the Company through qua rte rly r isk man agem ent re por ts fr om the CFO. Dur ing the ye ar , th e Commi ttee considered the particular risks associated with operating during the pande mic , including maintaining manu facture and supply of the Com pany’s prod ucts i n all ma rkets, a nd the impact of the ac quisition of Alexion on the landscape of risks. The Committee’ s consideration of risk ma nagem ent was s uppo rte d by ‘ d eep di ve ’ revi ews of key topic s and me etin gs with tea ms from w ithin th e busi ness , as well a s its c onsi dera tion of cy ber r isks, a s fur ther de scrib ed on p age 92. F ur t her in for mat ion a bou t the P ri nci pal R is ks f aced b y t he Grou p and t he V iab il ity s tate ment i s set ou t in t he R isk O ver v iew se ct ion f rom pa ge 48 . Legal and Compliance Th e Commi ttee r ece ived qua r t er ly rep or ts fro m the Ge nera l Coun sel to mo nitor th e status of signiﬁcant lit igation matters and gove rnm ent al inve stig atio ns. I t als o rec eive d qua rte rly re por ts of wo rk car rie d out by IA and F inanc e, incl uding th e statu s of follow -up ac tions wi th man agem ent. Q uar terl y repo rt s fro m Glob al Comp lian ce provi ded over sig ht of ke y compliance i ncidents (both subst ant iated and unsubstantiat e d) , trends arising and the dispersion of incidents acros s our business functions and management hierarchy . The rep or ts inc lude d any cor rec tive acti ons ta k en so th at the Co mmit tee co uld as ses s the e ffe ctiven ess of c ontro ls, an d monito r and e nsu re the tim eline ss of re medi ation. 91 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Audit Commit tee Report The Committee considered the ge ographic pre sen ce, rea ch and c apab ilitie s of the IA a nd Compliance functions and the appropriateness of the Group’ s resource allocation for t hese vital assurance functions. Th e Commi ttee’s prio riti es incl ude over see ing com plia nce wit h Astr aZe neca’s Code of Ethics, and ensuring high ethical standards and t hat we ope rate wi thin the l aw in all cou ntrie s whe re we ope rate. Du ring th e year , the C ommit tee rev iewed da ta fro m repo rts made by employees via t he AZethics helpline, onli ne faci litie s and oth er rou tes reg ardin g pote ntial b reac hes of th e Code of Et hics, toge ther w ith the re sult s of enqu irie s into those matters. The Committee contin ued to monitor a nd revi ew the ef fec tivene ss of our a nti- brib er y and a nti- cor rupti on con trols ac ros s the Group, prioritising its focus on countries/ regions where we have signiﬁc ant operations and c ount ries i n which d oing bu sine ss is ge nera lly con side red to po se hig her compliance risks. T he Commit t ee also dis cuss ed the m onitor ing, rev iew , e duca tion and impro vements made to support assurance tha t the ris k of mode rn slave ry a nd hum an traf ﬁcking is eliminated, to the fullest extent practicable, from AstraZeneca’ s supply chain. For m ore i nfor ma tion o n our C ode of E th ics , see p age 47, an d on A nti -br ibe ry a nd a nti -co rr upt ion , see p age 79 . Internal audit (IA) Th e Commi ttee c arr ied ou t the an nual ef fec tivene ss revi ew of IA by con side ring its p er form ance a gain st the inte rna l audit pla n and key ac tiviti es. In 2021 , I A provi ded assurance over compliance with signiﬁcant policies, plans, proce dures, la ws and re gulati ons, a s well as r isk -ba sed a udits acr oss a b road ra nge of key bu sine ss ac tiviti es, an d conti nued it s them atic re por ting to the bu sine ss. T he 2021 audit p lan was ali gned to o ur key active r isks an d wide r risk ta xonomy. IA als o ope rates a n emer ging ri sk pro ces s whic h was use d to dyna mica lly ada pt the 20 2 1 a udit pl an to provi de focu sed, rea l-time a ssu ranc e over new an d evolvin g risks impacting the Company . This included a revie w of the transition planning activit ies for th e integ ratio n of Alexi on and a n audit ove r the controls around v ac cine ﬁna ncing . The Committee not ed IA ’ s continued cont ributions in su ppor tin g and de liveri ng value to t he business and the Committee during t he y ear . The Committee supports IA ’ s continued ef for ts to de ploy its r esou rces i n line wit h the sha pe and s ize of the ove rall or ganis atio n and was s atisﬁ ed with t he qual ity , expe rie nce an d expe r tise of th e IA func tion. Exte rnal aud it Th e Compa ny’ s ex tern al aud itor , P wC, prov ided q uar terl y repo rt s to the Com mitte e over key au dit and a ccou nting m atte rs, an d busines s proce sses, internal controls and IT systems. Th e Commi ttee ove rsaw t he cond uct, pe rfo rma nce an d quali ty of th e e xte rna l audit , in pa rt icula r throu gh its rev iew and c halle nge of the c overag e of the ex t er nal au ditor’s audi t plan and subsequent monitoring of th eir progres s against it. The Committee maintain ed re gular c onta ct with P wC thr ough fo rmal a nd informal reporting and discussion throughout the ye ar , wi th a conti nued fo cus on m aint ainin g aud it ef ﬁcie ncy and q ualit y whil st work ing arra ngements continue to in volve an element of re mote work ing. T he Comm itte e also sought management’s feedback on the con duct o f the audi t and c onsid ere d the level o f and ex t ent to w hich th e audito rs challenged manageme nt’ s assumptions. Th e Commi ttee e ngag ed wit h the exte rnal aud itor in a pi lot pro gram me on us ing Audi t Qu alit y Indic ator s (AQIs). The ex ter nal aud itor and t he Com mitte e agre ed ﬁve in itial AQI s to be mo nitore d and re por ted f rom 2021 . In ad dition t he Audi t Commi ttee C hair m et wit h cer tai n PwC au dit tea m memb ers d uring the ye ar to gain a d eep er und ers tand ing of the wor k per for med an d audit e ffo rt re quir ed on one o f the Gro up’ s mo re sign iﬁca nt area s of estimation, being the Group’ s impairm ent asse ssment. Th e Commi ttee r eviewed a udit a nd non- audit fee s of the ex terna l audi tor duri ng the yea r , including t he objectivity and indepe ndence o f the ex tern al audi tor thro ugh the a pplic ation o f the Au dit an d Non-A udit Se rv ice s Pre-A pprova l Polic y , as de scr ibed f ur ther on p age 97 . F ur t her in for mat ion a bou t the au dit a nd non -au dit fe es fo r 2 021 is d isc los ed i n Note 31 to t he F ina nci al S tat ement s on p age 19 6. Cyber security and information gov ernance Th e Commi ttee r ece ives an nual pr ese ntatio ns fro m the Chi ef Digi tal O fﬁc er an d Chief Info rmati on Of ﬁce r and h er team . In 2021 , the C ommit tee rev iewed th e top cybe r risk s fac ing As tra Zene ca and th e eff ecti v en ess of our p roce dure s to defen d our IT sy stems aga inst i ncrea sed l evels an d new form s of attack from external agents. The Committee als o cons ider ed ste ps bei ng taken to r educ e the risk of technolo gy disruption at AstraZeneca sites. Engagement with employ e es and other stakeholder s The Commit t ee regular ly interacts with me mber s of man agem ent be low the SE T and se eks wid er en gagem ent wi th the Gr oup’ s em ployee s and oth er sta kehold ers . Due to COVID - 1 9 t ravel re stri ction s and so cial distancing measures, th e Committee und er took a se rie s of vir tual i nterac tion s wit h a wide ra nge of tea ms fro m acro ss the organisation. The Committee also arranged ‘dee p dive’ reviews of key to pics a nd inte ract ions to fol low up on ce r tain IA ﬁ nding s, to better understand identiﬁed areas for improvement and interrogate the business’ s response to those ﬁndings. In 2021 , th ese in terac tions a nd revi ews inv olved Committee members meeting with represe ntatives from the following teams: IT /IS, Operations, Alexion corporate functions (ﬁnance, accounting, ta x, treasury , internal audit, compliance and legal); the Canadian market ing company ; the Ital ian market ing company; the Malaysian marketing c ompany ; the Oncology Busin ess Unit; Procurement; and t he T urk ish ma rketin g comp any . T he bre adth of t hese in terac tion s is cru cial a s it enhances the Committee ’s understanding of the business and provides valuable insights into th e key issu es and c halle nge s relat ing to, and c urre nt and e mer ging ri sks as soci ated wit h, our ac tiviti es in the se are as. T he Committee welcomes the opportunity to en gage di rectl y with e mployee s in the se meetings which pro vide an oppor tunity t o gau ge emp loyee se ntime nt and h ear th eir view s direc tly . T he Co mmit tee als o use s these interactions to c ommunicat e the impor tance it attaches to compliance and our ‘S pea k Up ’ cul ture. Repor ting and regulator y environment Th e Commi ttee h as kept a brea st of developments in the repor ting and regulatory environment. This has include d updat es on the T ask Force for Climat e-related Financial Disclosures framew ork and AstraZeneca’ s priorities in preparation for compli ance, alongside consideration o f reporting imp licat ions. T he Com mit tee als o ov er saw AstraZeneca’ s response to t he consultation on th e BEIS Whi te Paper o n Resto ring T r ust in Au dit and C orpo rate Gove rnan ce, an d con side red th e Compa ny’ s 20 20 Annu al Rep or t disc losur es in lig ht of the Fi nanci al Rep or ting Co uncil ’ s (FRC) r eview of how issuer s had incorporated the new co rporate gover nanc e disc losu res wit hin thei r 20 1 9 ann ual re por ts, a s well as c onsid erin g the obs er vation s set ou t in a numb er of the mati c revi ews iss ued by the FR C durin g 2021 . Committee per f ormance The Committee conducted the annual evalu ation of i ts own pe rf orma nce, wi th each Com mit tee mem ber a nd othe r atte ndee s res pond ing to a que stion nair e prepa red by a thir d par ty. The re sult s were re por ted to an d dis cuss ed wit h the Com mit tee and th e Boar d. Th e Commi ttee wa s rate d ver y highl y ov er all. Me eting s were se en to be wel l stru cture d, org anis ed and m anag ed. Th ere was a h igh lev el of engagement from the Commit t ee me mber s. Th e Commi ttee wa s see n to bene ﬁt fro m ex ce llent te chni cal sk ills, ver y in -de pth discussions and strong leade rship f rom the highly-skilled Chair . The Committee’ s effective ada ptati on to vir tual m eeti ngs was a lso note d. 92 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Aud it C om mit te e Repor t c ont inue d Mat ter considered Comm ittee’s conclusion and re sponse Acquisition accounting Se e Fi na ncia l Re vie w f rom pa ge 52 a nd Note 2 7 to t he Fi na nci al S tate ment s f rom pa ge 178. Astra Z eneca completed the acquisition of A le xion in Ju ly 2021 for tot al con side ratio n of $4 1. 1 bil lion. At the d ate of acqu isiti on, Ast raZ enec a has un der take n a fai r valuat ion of the i denti ﬁabl e asse ts and li abili ties acq uire d, the con side ratio n paid a nd the re sult ant go odwill and r eco rded th e nec ess ar y acco unting e ntri es in accordance with IFRS 3 Bu siness Combinations. Fur ther more, f rom the d ate of acq uisit ion onwar ds, As tra Zene ca has c onso lidate d Alexi on’ s re sults i nto the Gro up’ s ﬁn anci al rep or ting uti lising d ata tr ansfe r proc ess es and ﬁ nanc ial co ntrol s that wer e thorou ghly te sted an d validat ed pre-close. Th e Commi ttee r ece ived re gular r epor ts f rom ma nage ment dur ing the ye ar prov iding u pdates o n the tra nsit ion pla nning and d ay one ﬁn ancia l read ines s for the ac quis ition. I n par ti cular, the Com mit tee focu sed o n secu ring a s tabl e and controlled ﬁnancial transition , on ensuring an effective con trol e nvironm ent ir resp ect ive of the SOx exem ption being applied t o Alexion controls, and ongoing delivery of external repor ting commitments. Th e Commi ttee c onsi dere d the ap proac h to the pur chas e accounting v aluation and concurred with ma nagement on th e area s of esti matio n or judg eme nt. The C ommi ttee review ed the ﬁnal acquisition accounting and disclosures and considered management’ s proposed subsequent tre atmen t of inta ngibl e asse t amor ti satio n, fair va lue upli ft of inv e nt or y and present ation o f future acquisition-re lat ed co sts und er our p olicy fo r Core ﬁ nanc ial mea sure s. Vacci ne an d other COVID- 1 9 activities’ accounting Se e G roup Acc ounti ng Policie s f rom pa ge 13 8. Astra Zeneca continued to enter into arran gements with gover nme nt bodi es, ce rt ain vac cine al lianc es, a nd exte rnal con trac t manu factu rer s as par t of th e Group’s determination to dev elop and supply Va x z ev ri a , the Astra Z eneca COVID- 1 9 vaccine. AstraZeneca has supplied a sig niﬁc ant pro por tion o f contr acted vo lume s in the yea r , rea lisin g prod uct sa les of $ 3,91 7 m illion ove r the yea r . Some of t hese gov e rnment arrangements included grants or ad vance d fund ing to sup por t both r esea rch an d devel opme nt cos ts and th e est ablis hmen t of suppl y chai ns. Eac h govern ment a nd alli ance a rra ngem ent re quire d a thorough and considered assessment to det ermine different per f ormance obligations and ensure appropriat e accounting treatme nt. Du ring th e last qu ar ter of the ye ar As tra Zene ca commenced supply of Va x ze vr ia on c ommercial terms as i t trans ition ed the vac cine a ctivi ties towar ds bus ines s as usual , wit h moderat e proﬁtability . Pr oduct Sales of $1 ,7 81 millio n in the la st qua rte r came f rom a ble nd of ea rly pa ndem ic (not-for - proﬁ t) contr acts a nd rec ent or der s. In the ye ar , th e major it y of dose s delive red re lated to pandemic (not -for -proﬁt) contracts. Th e Commi ttee i s aware of th e signi ﬁcan ce of vacc ine ar rang eme nts, an d of the wid er pub lic inte rest i n vaccin e accounting, and so f ocused considerable attention on en surin g a clea r unde rst andin g of the im pact on t he Group’ s ﬁnancial position and perform ance. Th e Commi ttee wa s pre sente d with a de taile d ass ess ment of ar eas of in crea sed r isk co nduc t ed by m anage men t and has b een p rovide d with u pdates t hroug hout t he year . Th e Commi ttee r ece ives qua rte rly up dates o n the st atus (and an y ﬁnancial reporting implications) of vaccine arrangements and transactions. Th e Commi ttee a lso di scus sed a nd cha lleng ed the applicable accounting pr i nciples applied, which were as ses sed to be a ppro pria te. The Committee recognise d management’s proactive as ses smen t and co ntinua l clos e monito ring of t he COVID - 1 9 p ande mic on th e area s of inc reas ed ris k, as note d in the Gr oup’ s Ac coun ting Poli cies f rom pag e 1 38. Th e Commi ttee a lso rev iewed the d iscl osure s that have be en inc lude d in this A nnual R epor t re latin g to the vacc ine supply arrangements and concluded t hese to be appropriate. Sig ni ca nt  na ncia l r epor ti ng i ssue s con sidere d by t he Com mit tee in 20 2 1 93 A st raZ ene ca A nnu al R epo rt & For m 20 - F In for mat ion 2 021 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Audit Commit tee Report Sig ni ca nt  na ncia l r epor ti ng i ssue s con sidere d by t he Com mit tee in 20 2 1 co ntinue d Mat ter considered Comm ittee’s conclusion and re sponse Alternative per formance measures (AP Ms) S ee F ina nci al R evi ew f rom pa ge 52 . As tra Zene ca rep or ts APMs to pr ovide he lpful sup plem enta ry i nform ation to th e IFRS me asure s to en able a be tter u nder sta ndin g of the Gro up’ s ﬁn ancia l pe rfo rma nce an d posi tion. In 2021 , A PMs were f ur ther s et out to r epor t the i mpac t of vacci ne acti vity s epa rate fro m the re st of th e busin ess. The acquisition of Alexion resulted in more signiﬁcant item s bein g clas siﬁe d as no n-c ore, es peci ally re latin g to the u n win d of fair va lue upli ft of i nv ento ry, amor tis ation o f all ocate d fair va lue of pur chas ed int angib le as sets an d sha re- base d payme nt cha rge s. The se item s, coup led wi th mate rial i mpair men ts booke d duri ng the yea r , res ulted i n an IFR S quar ter ly los s and a Co re qua rte rly pr oﬁt. Management carefully analyses the presentation of var ious ite ms to ens ure it i s fair an d bala nced , and foll ows gui delin es iss ued by ESM A and th e SEC, as well a s FRC thematic revie ws. The Committee carefully c onsidered management’ s pre sen tatio n of vaccin e per for manc e at a reven ue level an d de emed i t appr opri ate in ligh t of the re gulato ry a nd investo r foc us on vac cine pe rf orma nce. The Committee further considered management’ s asse ssment and recomme ndation t o pre sent identiﬁed Alexion it em s as non-c ore , and concurred with ma nagem ent th at the pre sen tatio n was con siste nt with prev ious p rece dent a nd ena ble d a bet ter com pari son of performance across periods. Th e Commi ttee r eviewed p ropo sed di sclo sures f or non-G AA P items in line with the v arious regulator y gui danc e, and co ncur red wi th mana geme nt that t he presentation enable d additional helpful guidance. V aluation of intangi ble assets S ee F ina nci al R evi ew f rom pa ge 52 a nd Not e 10 to th e Financi al S tat eme nts f rom pa ge 156 . Th e Group c arr ies si gniﬁc ant in tangi ble as sets o n its balance sheet arising from the acquisition o f businesses and I P right s to medi cine s in develo pmen t and on th e ma rket. Ea ch quar te r , the CFO re por ts on t he car ry ing valu e of the Gr oup’ s in tang ible as sets a s well as t he speciﬁc assets identiﬁed as at risk of impairment. In res pec t of inta ngibl e ass ets that a re ide ntiﬁe d as at r isk of imp airm ent, th e Commi ttee r ece ives info rmat ion on th e dif fer ence b etwe en the c arr yin g value a nd mana geme nt’s cur rent e stim ate of disc ounte d futur e cash ﬂ ows for ‘at ri sk’ pro duct s (the he adroo m) . Pro ducts w ill be id entiﬁ ed as ‘at ris k’ bec ause t he hea droom i s smal l or , for exa mple, i n the ca se of a me dicine i n develop ment , there i s a signi ﬁcan t devel opme nt mile stone s uch as th e publi catio n of clini cal trial results which could signiﬁ cantly alter management’s fore cas ts for th e produ ct. T he review s also c ov er th e impact on any relat ed contingent consideration arising from previous business combinations. Th e Commi ttee c onsi dere d the imp airm ent rev iews of the Gro up’ s in tangi ble as sets . Impai rmen ts of $1 ,492 mi llion ar ising f rom the p or tfol io pri oriti satio n of stra tegic p roje cts were c onsi dere d in the th ird qua rte r , with t he key prod uct be ing Ar dea’ s i mpair men t of $ 1 , 1 72 milli on due to th e decision to discontinue de velopment of verinurad. Th e Commi ttee a ssu red it self of t he integ rit y of the Gr oup’ s accounting policy and models for its assessment and valu ation of i ts inta ngib le ass ets, a nd rela ted hea droo m, including u nderstanding the k ey assumptions and se nsiti vitie s within t hose m odel s, alon g with the i ntern al and ex ter nal es timate s and fo reca sts for t he Grou p ’ s cos t of ca pita l relat ive to the bro ader i ndust ry. The Co mmit tee was satisﬁed that the Group had appropriately accounted for the identiﬁed impairments. Reve nue recognition S ee F ina nci al R evi ew f rom pa ge 52 a nd Not e 1 to th e Fi nan cia l Statements f rom pa ge 14 5. Th e US is our l arge st sing le mar ket and s ales a ccou nted for 32.8% of our Pro duct S ales i n 2021 . Revenu e reco gniti on, par ticularly in the US, is affected by rebat es, chargebacks, retu rns, o ther reve nue ac crua ls and c ash di scou nts. Follo wing the Ale xion acquisition, t hese revenue adj ustme nts in clude i tems re lated to Ra re Dis eas e produ cts. Th e Commi ttee p ays at tentio n to manag eme nt’ s es timate s of the se item s, its a naly sis of any u nusua l moveme nts an d the ir impa ct on reve nue rec ogni tion. Th e Commi ttee r ece ives re gular r epor ts f rom ma nage ment and t he exte rnal a uditor o n this co mplex a rea. T he US ma rket rem ains hi ghly c ompet itive wit h diver se mar keting and p rici ng str ategie s adop ted by the Gr oup an d its pe ers . Th e Commi ttee r eco gnise d the cl ose mon itori ng and con trol by ma nage ment a nd the co ntinu ous dr ive to imp rove the ac curac y in fore cast ing for m anage d mar ket reb ates an d ex cis e fees , which h as sup por ted a st abilis atio n of the overa ll gros s-to -net de duc tions. 94 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Aud it C om mit te e Repor t c ont inue d Mat ter considered Comm ittee’s conclusion and re sponse Litigation and contingent liabilities S ee Not e 30 to t he Financi al S tat eme nts f rom pa ge 189 . As tra Zene ca is involve d in vari ous le gal pr oce eding s con side red t ypic al to its b usin ess a nd the ph arma ceut ical industr y as a whole, including litigation and inv es t igations relating t o product liability , commercial disput e s, inf ringe ment o f IP righ ts, the va lidit y of cer t ain pate nts, ant i-tru st law , a nd sa les an d marke ting pr actic es. Th e Commi ttee wa s regu larl y infor med by th e Gene ral Cou nsel o f , a nd con side red ma nage ment a nd the ex terna l aud itor’s asse ssm ents of, IP li tigati on, act ions, g overnm enta l inv estigations, and claims that might result in ﬁnes or dam ages a gain st the Gr oup, to ass ess w hethe r provi sions sho uld be t aken an d, if so, whe n and in w hat amo unt. Of t he mat ters t he Comm itte e cons ider ed in 2021 , th e more signiﬁcant included : the European Commission V accine Lit igati on; the con tinue d defen ce of the N exium and Pril osec produ ct lia bilit y liti gation i n the US; the A rray a nd Amplimmune commercial litigations; and pat e nt cha l lenges rel ating to Symbicor t , T agrisso , Enher tu , Far xi ga and Ultomiris in the U S. Th e Commi ttee wa s sati sﬁed t hat the G roup was e ffe ctive ly managing its litigation risks including see king appropriate rem edie s and c ontinu ing to defe nd its IP r ight s vigor ousl y . Ta x c h a r g e s and liabilitie s S ee Not e 4 to th e Financi al S tat eme nts f rom pa ge 149. AstraZ e neca’ s Approach to Taxation, which wa s pu blishe d in December 2 02 1 and co vers i ts app roac h to govern ance, ri sk man agement and complia nce, ta x plan ning, dea ling wit h ta x aut hor it ies a nd th e lev el of t ax r isk t he Gr oup is pr epa red t o ac cept , ca n be fou nd on our website, ww w .astrazeneca.com. Th e Group h as bus ines s acti vitie s arou nd the wor ld and inc urs a su bsta ntial a moun t and var iet y of busi ness t axe s. As tra Zene ca pays co rpo rate inc ome ta xes, c ustoms d utie s, excise t axe s, sta mp dutie s, em ployme nt and m any othe r bus ines s ta xes in all j uris dicti ons whe re due. I n additi on, we col lect a nd pay em ployee t axes a nd ind irec t taxe s such as va lue- adde d ta x. The t axes th e Grou p pays and c olle cts represe nt a s igniﬁcant contribution to the countries and so cietie s in whi ch we ope rate. T a x risk c an ar ise fr om unc lear l aws and re gula tions a s well as di ffe renc es in their interpretation. Th e Commi ttee r eviews th e Group’s appr oach to ta x, including go vernance, risk management and c ompl iance, ta x pla nning, d eali ngs wit h tax a uthor itie s and the l evel of ta x ris k the Gro up is pre pare d to acc ept. Du ring 2021 , t he Comm itte e unde rto ok a review o f Al exion’ s t ax a ffa irs a nd the ta x imp licat ions of in tegra ting it in to the Gro up. In addi tion at i ts Dec embe r mee ting, the Com mit tee con side red th e potenti al imp act of US t ax refo rm on th e Group w hich wo uld ari se sho uld sub stan tive enactm ent occur . Th e Commi ttee wa s sati sﬁed w ith the G roup’ s p rac tice s regarding tax liabiliti es, including , most notably , its res pons e to develo pment s in the co rpo rate inc ome ta x environment. Segmental repor ting S ee t he Key J udge ment w ith in No te 6 to t he Financi al S tat eme nts on p ages 1 52. Th e nature o f the Gro up’ s bu sines s cha nged d uring t he yea r , with m ateri al sal es of Va x ze vr ia and the ac quisition of Alexion. The Group has carried out signiﬁcant Va x ze vr ia tra nsac tion s in the pe riod, a nd exte rna lly rep or ted pe rfo rma nce exclud ing the im pact o f these t rans acti ons to ali gn to guida nce is sue d. The ac quis ition of A lexio n res ulted i n the addi tion of th e Rare D isea se Ar ea to As tra Zene ca’ s po rt foli o , with t he Alex ion CEO jo ining the S ET an d repo rti ng to the CEO. Man agem ent ha s reviewe d both ch ange s in the yea r and dete rmin ed they d o not res ult in a se para te segm ent ba sed on k ey d ecisions on resource allocation and p erformance mon itorin g bein g car ried o ut at a Gr oup level by t he SE T . Th e Commi ttee r ece ived re por ts fro m mana geme nt regarding considerations f o r se gmental repor t ing arising from signiﬁcant changes in t he business. Th e Commi ttee c onsi dere d the an alysi s provid ed by ma nagem ent re lated to th e repo rti ng of vacc ines a nd acquisition o f Alexion, and concurred with management tha t pres entin g Astr aZe neca’s per for manc e unde r one se gmen t was app ropr iate. Sig ni ca nt  na ncia l r epor ti ng i ssue s con sidere d by t he Com mit tee in 20 2 1 co ntinue d 95 A str aZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Audit Commit tee Report Fai r , ba lanc ed a nd unders ta ndable assessme nt As in p revio us year s, at th e instr ucti on of the B oard, th e Comm itte e unde rto ok an as ses smen t of this A nnual R epor t to en sure tha t, taken a s a whole , it is fai r , bal ance d and understa ndable a nd p ro vides the information ne ces sar y for sh areh olde rs to as ses s the Company’ s position and performance, bus ines s mode l and s trateg y . Th e Comm itte e review ed the Company’ s go vernance str uctu re and a ssur ance m echa nism s for the pre par ation of th e Annu al Rep or t and, in par ti cular, the con tribu tor and S ET me mber veriﬁcat ion process. The Committee received an e arly d raf t of the A nnual R epor t to revi ew its p ropo sed c ontent a nd the st ruct ural cha nge s from th e prio r year an d to unde rt ake a revi ew of the rep or ting fo r the yea r , follow ing which the Committee members provided their individual and collective feedback. In addition, in ac cord ance w ith its te rms of re fere nce, the C ommit tee (al ongs ide the B oard ) took an ac tive pa rt in r eviewin g the Com pany’s quar t er ly announce ments and considered the Company’ s other public disclosu r es which are managed through its Disclosure Committee. T o ai d its revi ew fur ther, the Com mit tee als o re ceive d a summa r y of the ﬁna l Annu al Repor t’ s content, including the Company’s suc ces ses a nd setb acks du ring th e year an d an in dica tion of wh ere they we re dis close d within t he document. The processes described abov e allow e d the Com mit tee to provi de as sura nce to the B oard to as sist i t in maki ng the st ateme nt req uired of it u nder th e Code, w hich is s et out f rom pa ge 78. I nter na l cont rol s Information on the Co mpan y’ s internal controls is i ncluded in the Audit, Risk and Inte rnal C ontro l sec tion in th e Corp orate Gove rnan ce Rep or t on page 78. Follo wing the acquisition of Alexion Pha rmac eutic als, I nc., the Com mit tee concurred with management’ s recommendation that the Company ex clude this b usin ess f rom its a sse ssme nt of the effec tiv ene ss o f internal control over ﬁnancial rep or ting a s at 3 1 D ece mber 20 2 1 , in acc orda nce wi th SEC Sta ff G uidan ce, as de scrib ed on p age 1 26. T he Co mmit tee re ceive d regul ar upd ates to he lp ens ure an effe ctiv e control environment, irres pective of the Alexion SOx e xemption. Du ring th e peri od cover ed by this A nnua l Rep or t ther e was no ch ange in o ur inte rnal con trol over ﬁ nanc ial rep or ting th at occ urre d tha t has mate rial ly af fecte d, or is re ason ably likel y to mater ially a ffe ct, ou r inter nal co ntrol over ﬁnancial repor ting. At the Fe brua ry 20 22 Com mitte e mee ting, the CFO p rese nted th e conc lusio ns of the evalu ation by th e CEO and CFO o f the ef fec tivene ss of ou r discl osure c ontro ls and pro ced ures th at is re quire d by Item 1 5(a) o f For m 20-F a t 3 1 D ece mber 20 2 1. Base d on the ir evalua tion, th e CEO and th e CFO concluded that, as at t hat date , the Company mai ntai ned an e ffe ctive sys tem of dis clos ure con trols a nd pro cedu res. D urin g the yea r the Com mit tee was al so upd ated on th e mat ters considered by the Disclosure Committee each q uarter . Ex ter na l audito r Pw C is the Co mpany’s exte rnal a uditor. In May 20 2 1, PwC was r eapp ointe d as the Com pany’s audi t or fo r the ﬁna ncia l year en ded 31 Dec embe r 2021 , its ﬁ fth c onse cuti v e yea r as audi tor , havi ng ﬁr st bee n app ointed fo r the ﬁ nanci al year e nde d 3 1 D ece mber 201 7 , foll owing a co mpeti tive tend er ca rrie d out in 201 5. Af ter ﬁve ye ars i n the role , Richa rd Hug hes wil l step down a s the le ad audi t par tn er at P wC on the c onclu sion of t he 2021 aud it, in lin e with pa rt ner rot ation r equir emen ts. We than k Richa rd for hi s cond uct of th e audit dur ing his te nure. R icha rd will be r epla ced by Sa rah Qu inn. Th e sele ctio n proc ess fo r the n ew lead au dit pa rtn er was d esign ed to ide ntif y the be st qua liﬁe d par tne r for the rol e, to ensu re audi t quali ty . A s hor t lis t of candidat es was identiﬁ ed follo wing discussions between the Committee and Pw C. The ca ndida tes were t hen inte rv iewed by the Au dit Com mit tee Cha ir and th e CFO . The Committee made the ﬁnal selection based on feedback from those int e rviews as we ll as an a sse ssme nt of the c andid ates’ expe rie nce an d exper tis e. We look fo rwa rd to work ing wi th Ms Qui nn, who ha s exte nsive kn owledg e of our in dustr y a nd of UK an d US repor ting requirements, and who we believe will c ontin ue to ens ure the qu alit y of the au dit. Sig ni ca nt  na ncia l r epor ti ng i ssue s con sidere d by t he Com mit tee in 20 2 1 co ntinue d Mat ter considered Comm ittee’s conclusion and re sponse Retirement beneﬁts S ee F ina nci al R evi ew f rom pa ge 52 a nd Not e 22 to t he Financi al S tat eme nts f rom pa ge 168 . Accounting for deﬁned beneﬁt pension and ot her reti reme nt ben eﬁts i s an impo rt ant ar ea of foc us. Th e Gro up rec ogni ses tha t the pre sen t value of th ese lia bilit ies is se nsit ive to chan ges in l ong-te rm inte rest r ates, fu ture inﬂ ation a nd mor ta lity ex pec tatio ns. As a re sult , the as sumpt ions us ed to valu e the lia biliti es for th e Group’s mai n retire men t bene ﬁt obli gation s are up dated eve ry qua rte r . Sim ilarl y , ‘ma rk -to -ma rket’ a sset va luati ons ar e als o proc ured. T his e nable s an upd ated fu nding l evel to be c alcul ated ea ch qua rte r . The G roup i s cogni sant o f the wider regulator y environment and local requireme nts around funding levels and contri butions. Th e UK Pensi on Sch eme Ac t 2021 came in to force o n 1 Oc tober 20 2 1 a nd a se ction of t he Act fo cuse s on the fun ding of a nd sec urit y provi ded to UK d eﬁne d bene ﬁt pension schemes with additional requirements placed on corporate sponsor s. Th e Commi ttee m onito rs the f undin g level of the G roup’s deﬁned beneﬁt obligations on a quar t e rly basis and the funding requireme nts in e ach case, alongside key developments. Th e Commi ttee r eviews th e Group’s globa l fund ing obj ective a nd key acti vitie s, eng agem ent wi th loca l ﬁduciar y bodies, and comparisons of fundi ng solv e ncy rel ative to the w ider m arket. Th e Commi ttee wa s sati sﬁed t hat the G roup’ s c ontr ibuti on pol icy and a ctua rial a ssum ption s used to va lue lia biliti es were a ppro pria te durin g the yea r . Th e Commi ttee wa s rea ssur ed by the Gr oup’ s e ngag ed and balanced approach to managing the r isks a ssociated with the funding of its deﬁne d beneﬁt obligations. Th e Commi ttee i s cogn isan t of the ne ed to adh ere to loc al fun ding re gulat ions a nd bes t prac tice a nd to the se curi ty provided b y the Group, which under writes obligat ions t o me mber s. In the U K, the C ommit tee is awa re that t he Gro up has d evelop ed a fra mework to e nsur e comp lianc e wit h the UK Pen sion Sc heme A ct 2021 and wi ll moni tor implement ation in 2022. 96 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Aud it C om mit te e Repor t c ont inue d Non-audit services and safeguards Th e Commi ttee m aint ains th e Audit a nd Non-Audi t Ser vices Pre -Approval Policy (the Po licy) fo r the pre -ap proval of a ll audit services, aud it -relat ed services and other as sura nce se rv ices u nder t aken by the exte rna l audito r . The p rinc ipal pu rpos e of the Pol icy is to en sure th at the in depe nden ce of the ex tern al aud itor is no t impai red. The pre-appro val procedures permit ce rtain aud it and au dit-re lated s er vice s to be pe rfo rme d by the exte rnal a uditor, subje ct to ann ual fe e limits a gree d with th e Comm itte e in adva nce. Pre -ap proved a udit an d audit-r elate d se rvi ces b elow the c lear ly tri vial th resho ld (wit hin the over all an nual fe e limit) a re subj ect to ca se- by-ca se app roval by the SVP F inanc e, Group Controller . Pre-approved audit se rvices included se rvi ces in r espe ct of th e annua l ﬁnan cial statement audit (includin g quar terly and half-y ea r reviews ), attestation opinions under se ction 4 04 of the S arba nes -Ox ley Act, st atutor y aud its for s ubsid iar y ent ities , and othe r pro cedu res to be p er form ed by the ind epen dent a uditor i n orde r to form an opinion on the G roup ’s c onsolidat e d Financial Statements. The pre -approved audit - related se rvi ces , which th e Comm itte e beli ev es a re se rvi ces re aso nably r elate d to the pe rfo rma nce of the a udit o r review of th e Company’ s Financial Statements, include d cer tain ser vices required by law or regulation, suc h as ﬁna ncia l state ment s, audi ts of em ployee be neﬁt p lans a nd cap ital m arket tra nsac tion s. The Pol icy pro hibit s any ta x ser vices. A udit -related service s include d the assuranc e in relation t o ta x r egulatory ce rti ﬁcate s requ ired to be i ssu ed by the ex tern al aud itor . Th e Commi ttee r eviewed a nd prov ided app roval for P wC to pe rfo rm no n-aud it se rvi ces tot allin g $6. 1 millio n in rel ation to suppor t ing the is suance of t he Shareholder Cir cular a nd US F- 4 ﬁlings , as well a s EMTN deb t issu ance, i n prep arati on for th e Alexi on tra nsac tion. T hes e ser vic es incl uded c apit al ma rkets tec hnic al advi ce, pr ivate opin ions on wor king ca pita l, priva te dilige nce re por ts on working capital, pro ﬁt f orecasts an d Fi nancial Position and Prospects procedures, and public opin ions on S IR5000 GA AP reconciliation. Th e CFO (suppo rte d by the SVP Fi nanc e, Gro up Con trolle r), moni tors the s tatu s of all se rvi ces b eing p rovide d by the exte rna l aud itor . Au thori ty to ap prove wor k ex c eed ing the p re-a gree d annu al fee l imits a nd for any individual ser vice abov e the clearl y tr ivial thre sho ld is del egate d to the Cha ir of the Com mit tee toge ther wi th one oth er Com mit tee mem ber in t he ﬁrs t inst ance. A standing a genda item at Committee me eting s cover s the ope ratio n of the pre- approv al procedure s and regular repor ts are p rovide d to the fu ll Comm itte e. All s er vice s othe r than th e pre -appr oved aud it and audit-related service s, require approval by the C ommit tee on a c ase -by-c ase b asis. In 2021 , P wC prov ided a udit se rv ices i nclu ding inte rim revi ews of the re sult s of the Gr oup for the p erio ds end ed 31 Marc h 2021 and 30 Ju ne 2021 and a udit-re lated a nd othe r ass uran ce se rvi ces in r elati on to the ac quisi tion of Alexion and the associated debt issuance. $34.9m $20.3m 2021 2020 Statutory audit fee ¹ A udit-relat ed and ot her assur ance services ² A udit/non-audit services 1 20 21 s tat utor y aud it fee exc lude s $ 0. 3m (20 20 : $ ni l), in re lat ion to pre- acq ui sit ion Ale xio n a udit fe es, re cog ni sed in N ote 31 to t he Fi na ncia l St atem ents o n page 19 6. 2 2 021 aud it-re late d and o the r ass ura nce s er vic es exc lude s $ 0.7m (20 20: $ nil ), in re lat ion to pre -acq ui sit ion A lex ion se rv ice s, rec ogn is ed in Note 31 to the F ina nci al St ate ment s on pa ge 196 . Th e incre ase to the s tatu tor y audit fe e for 2021 is la rgel y driven by t he incl usion o f post-acquisition Ale xion audit fees. The inc reas e to audit-r elate d and oth er as sura nce se rvi ces i s large ly dri ven by ser vi ces pe rfo rme d by PwC in th e year , in re lation to the acquisition o f Alexion and t he associated debt issuance. Fee s for aud it-rela ted and o ther a ssur ance se rvi ces a mounte d to 27 % of t he fees p ayable to Pw C for aud it ser vic es in 2021 (2020: 6%) . Th e Commi ttee i s mindf ul of the 70% non -aud it ser vic es fee c ap und er EU regulation, t ogether with the ov erall propor tion of fe es for au dit an d audit-re lated s er vice s in determining whether to pre-a pprov e such se rvi ces. Fe es fo r audit-re lated a nd othe r as sura nce se rv ices p ayable to P wC in 2021 were 3 4 % of aver age au dit fee s over 201 8 to 2020. T he incr ease to t hese p erce ntag es is pr imar ily dri ven by the ad dition al se rvi ces required in respe ct of the Alexion acquisition. Pw C were be tter p lace d than a ny alter native prov ider to p rovide th ese s er vice s in term s of the ir fami liari ty wi th the Co mpany’s bus ines s, skills, cap ability and ef ﬁciency . All such se rvi ces we re eith er wit hin the sc ope of th e pre -ap proved s er vice s set ou t in the Poli cy or we re pres ente d to Commi ttee m embe rs for p re- approva l and al l such s er vice s were pe rmit ted by the FR C Ethica l Sta ndard . F ur t her in for mat ion o n the f ees p aid to P w C for aud it, aud it-r elat ed a nd oth er se rv ice s is pr ovid ed i n Note 31 to t he Fi na nci al S tate ment s on pa ge 196 . Assessing external audit effect iv eness In ac cord ance w ith its n orma l prac tice, th e Committee considered the per formance o f Pw C and it s comp lianc e with the independence criteria under the rele vant statutory , regulat or y and e thical standards applicable t o audit or s. The Committee assessed PwC’ s effect iveness princip all y aga inst fo ur key facto rs, n amel y: judg emen t; min dset a nd cultu re; skil ls, cha racte r and kn owledg e; and qua lit y contr ol. As pa rt o f that as ses smen t, it als o took ac count o f the views of senior managem ent within the Financ e function and r egular Committee attendees. Th e Commi ttee c oncl uded t hat the P wC aud it was ef fe ctive for t he ﬁnan cial ye ar end ed 31 Dece mbe r 2021 . In Feb rua ry 202 2 , the Co mmit tee recommended to the Board the r eappointment of P wC as the C ompa ny’ s au ditor fo r the ﬁna ncia l year en ding 31 Dec emb er 2022. Accordingly , a resolution to reappoint PwC as au ditor wi ll be put to s hare hold ers at t he Com pany’s AGM in Ap ril 2022. Th e exter nal au dit will b e put ou t to t en der in or b efore th e 2027 ﬁnanc ial yea r , in or der to comply with UK legal requirem ents regarding the au ditor’s tenu re and au dit ten deri ng. The Com mit tee revie ws the ef fec tivene ss of P wC as th e exter nal au ditor on a n annu al bas is and may ch oose to c omme nce a ten der e arlie r if it de ems th is to be in th e best i ntere sts of the Company’ s shareholders. Th e Commi ttee d oes no t beli ev e tha t tend erin g the aud it at thi s time woul d be in the b est i nteres ts of sh areho lder s and i s co gnisa nt of the s cale a nd com plexit y of the Astra Z eneca Group, particularly following the recent acquisition of Ale xion. A sufﬁciently lon g tran sitio n peri od woul d be requ ired to en sure a new a uditor b uilt up th e nec ess ar y knowledge and business familiarity to en sur e the d eliver y of a n effe ctive a udit an d con seq uentl y any pla ns to tende r the exte rna l audit s hould a llow time f or an orderly transition. Regulation Th e Commi ttee c onsi der s that th e Compa ny has complied with the Competition and Markets Aut hority’s St at utory Audit Service s for Large Companies Market In vestigation (Mandatory Use of Competit ive T ender Pro cess es an d Audit C ommit tee Re spons ibili ties) Or der 201 4 in re spe ct of it s ﬁna ncia l year co mmen cing 1 Ja nuar y 2021 . 97 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Audit Commit tee Report W e have so ugh t to be clear a n d t ranspa re n t in how w e l in k rem u n eratio n of o u r ex e cu tives to s uccessf ul deliv er y of o u r st r ateg y , our response to the pa n demic and sha re ho lder r etu rn s. On b ehal f of the Boa rd, I am pl eas ed to present Astra Zeneca’ s Direc t o rs’ Rem uner ation R epor t fo r the year e nde d 31 Dece mbe r 2021 . 2021 has b een a tr ans forma tiona l year fo r As tra Zene ca. Th e Comp any deli vered s tron g ﬁnancial per formance and completed the acquisition o f Alexion, further supporting its strategic ambitions and stre ngthening its ﬁnancial position. In addit ion, AstraZeneca , toge ther w ith its pa r tner s, rel ease d for sup ply 2.5 bill ion dos es of Va x ze vr ia to over 180 countries and launched Evu she ld , the only lon g-ac ting an tibod y with Pha se III da ta de monst ratin g bene ﬁt in bot h the preve ntion and t reatm ent of COV ID- 19. Key Co mm itte e act ivit ies i n 2021 At the C ompany ’ s 2021 AGM, th e Boar d put a new Re mune ratio n Policy fo rwa rd for ap proval by sha reho lder s for the s eco nd con secu tive year . The Committee acknowledges that se ekin g appr ov al fo r a revise d Policy a t two con sec utive AGMs wa s an unu sual s tep, however we a re still c onvin ced tha t doing so wa s in the be st inte rest s of the Com pany and i ts sha reho lder s over the l ong ter m. The Com mit tee was pl eas ed that t he reso lutio ns were a pprove d. However , t he Comm itte e also re cogni sed th at sha rehol der su ppor t for t he 2021 Policy wa s lower th an the pr eviou s y ea r’ s (2021 : 60%; 2020: 95% ). Follow ing the AGM, I und er took an ex tens ive cons ulta tion pr oces s to lis ten to sha rehol der s’ and prox ies’ fee dbac k. Fur ther de tail o n the 2021 con sult ation s and the s teps ta ken by the Com mit tee to add ress c once rns, c an be foun d later i n this le tter . I woul d like to thank tho se that to ok par t in th e e x t en sive consultation for their constructive feedback. The Dire ctors’ Remuneration Rep or t conta in s the fol low ing se ct ions: > Ch ai r’ s let ter p age 98 > Remu nerat ion at a gl anc e pa ge 10 2 > How ou r per for ma nce mea sur es for 2 02 2 suppo rt t he del iver y of our s tra teg y pa ge 10 3 > How the Re munerat i on Comm ittee en sures ta rgets a re st retc hi ng page 10 4 > A nnu al Re por t on Remuneration page 1 05 “ Th ree year TSR of 59 % demonst rates anot h er p eriod of exce l l ent pe r f ormance for sha re holde rs, while s uccess fu lly del i ver ing t he A lex ion acq u isit ion a nd b eing at the fo ref ro nt of t h e response to C O V I D - 1 9 .” App oint ment of the ne w CFO On 1 Au gust 20 2 1, Marc D unoyer s teppe d down a s CFO and E xecut ive Dire ctor of As tra Zene ca PLC and too k on a new rol e as CEO, Al exion a nd Chie f Strate gy Of ﬁc er , Astra Zeneca, while remaining a membe r o f the S enio r Execu tive T eam . Followin g an exte nsive s earc h, Ara dhana S arin , CFO of Al exion pr ior to the a cquis ition , was app ointed as CFO a nd Exe cutive D irec tor of As traZ enec a fro m 1 Augus t 2021 , bas ed in th e UK. T he Committee carefully considered the t e rms o f our new C FO ’ s remuneration arr angements. In designing a competitiv e remuneration pac kage, th e Comm itte e focus ed on cu rre nt ma rket ben chma rks, a nd took in to acco unt Dr S arin’s existin g reward a t Alexi on in the US (whi ch incl uded t he existe nce of c ontra ctua l change of control se verance arrangements tha t Dr Sar in was e ntitle d to choo se as an alte rnat ive to acce pting t he CFO role i n the UK ). Dr S arin’s 202 1 rem uner ation a rra ngem ents, as s et out fr om pag e 1 05 of t he Ann ual Repor t on Remuneration, are aligned t o our pay -for -performance philosophy a nd market -competitive remuneration. It allow ed us to ac t quic kly an d deci sively to s ecur e a str ong ca ndida te to succ eed Mr D unoyer a s CFO. The s hor t- and lon g-ter m ince ntive opp or tuniti es are c onsi stent w ith the 2021 Polic y , and b ase pay i s in line wi th releva nt be nchma rks. T he on-t arge t pay pos ition ing for th e new CFO, as set o ut on pa ge 1 01 , is a round th e uppe r quar til e of our Eur opea n peer group, which appropriately r eﬂects As tra Zene ca’ s re lative si ze within t his gro up. 98 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Corporate Gover nance Direc t ors ’ Re mun erat ion Repor t Remunerat ion C omm itte e members > Miche l Dema ré ( C hai r) > Phi lip Broadley > Leif J ohansson > Sher i McCoy T he f ul l role of t he Re mun erat ion Com mi tte e is se t out i n its te rm s of re fere nce , ava ila ble o n our we bsi te, ww w .astrazeneca.com. AstraZeneca Global pharma peers a verag e European pharma peer s aver age FTSE 100 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 450 400 350 300 250 200 150 100 Rev iew of t arge ts and p er form ance mea sure s follow ing t he acq ui sition of A lex ion Follo wing the acquisition of Alexion, which com plete d in July 20 2 1, the Com mit tee revi ewed the t arget s for the 20 2 1 a nnua l bon us sco rec ard an d the 201 9 Per for man ce Sha re Plan ( PSP) pe rfo rma nce me asure s. Where require d , the e xisting ambitious tar gets were i ncre ase d mid-yea r to reﬂe ct the im pact of the Alexion acquisition on the Company’ s res ults a nd the e conom ics of th e tran sact ion app roved by the B oard. B efore a pprovi ng the amendments to t he e xisting targets, the Committee had additional sessions with management to unde rstand and challenge the pro posa ls. We are c onﬁde nt that t he revis ed ta rgets a re of eq uivale nt level of s tretch, a nd will c ontin ue to ince ntivi se our le ade rs to deliv e r except ional performance. Th e proc ess of s etti ng stre tching t arge ts is e xtensive, robust and iterative , in volving mu lt iple interactions with management, the Board and the Committee (which i ncludes thre e mem ber s of the Aud it Com mitte e). Fur ther d etail s on this p roce ss ar e set ou t on pa ge 1 0 4. As th e Chair o f the Com mit tee, I als o attended the Science Committee’ s meeting at wh ich the S cien ce tar gets we re reviewe d to ensure I fully understand the assumptions and s cen ario s which f orm the f ounda tions of the ir rec omme ndati ons. I wil l work wi th the recently-establish ed Sustainabi lity Committee nex t year in a s imila r mann er to ens ure tha t pro pose d ESG mea sure s and ta rget s are both appropriat e and suitably stret ching. 202 1 Pe rf orman ce Gr owt h and T her apy Ar ea Le ader sh ip Reven ue grow th ha s been s tron g throu ghout 2021 and we ll bala nce d acro ss all di seas e are as, wi th doub le- digit g row th in all ma jor regions, including Emergin g Markets. W e achiev ed these results despite COVID- 1 9 continuing to impact the diagnosis and tre atmen t of othe r disea ses i n some ma rkets and sustaine d pricing pressure s in China. Our strong pi peline progress has underpinned the transition to long-t e rm sustainable grow t h wit h ﬁve of our me dici nes cr ossi ng new blockbuster thresholds. In Jul y 2021 , the G roup co mplete d the acquisition of Alexion, which represe nts a sig niﬁc ant step f orwa rd in pr ogre ssin g our strategic and ﬁnancial de velopme nt and supports the Company ’ s transition t o long-term sustainable growth. Alexion w ill help to accelerate expansion int o immunology and r are di seas e, fur the r sust ain ind ustr y- leading double-digit revenue gro wth and imp rove our pr oﬁtab ilit y and ca sh ﬂow. Given Alexion’ s pipeline, expe rtise in immunology and strong research platforms, the acquisition will accelerate the combined Group’ s strategic ambitions – driving inno vation and the speed of de liver y of the n ext wave of sc ienc e and accelerating the development o f medicines to hel p more pa tient s arou nd the wor ld. For m ore i nfor ma tion o n Ra re Di sea se, s ee pa ge 24 . Accelerate Innov ative Science AstraZ eneca deliv ered unpreceden ted pip eline r esul ts as we co ntinue d to real ise the ful l potenti al of our m edic ines a nd adva nce the n e x t wav e of sc ienc e, with ret urn on investment in our pipeline continuing to out per for m our pe ers . W e s ecu red 32 pi pelin e pro gres sion eve nts, e ithe r NME Phas e II sta rt s or Pha se III inve stme nt deci sion s in 2021 , of whi ch 26 cou nt towards th e annu al bon us outc ome. T hree key hi ghlig hts fro m the pipeline deliver y include: new NME Approval for Saphnelo , the ﬁr st t ype I in ter feron re ceptor a gonis t for sys temic lu pus er y them atosu s (SLE ) , w hich is t he only n ew me dicin e to be app roved in over 10 year s; the b reak thro ugh da ta with Enher tu s ho wing enormous promise in breast cancer treatment wit h dat a pres ented i n Sep temb er 2021 demonstrating that DESTI NY -Breast03 showe d a rema rka ble 72% reduc tion in t he ris k of dise ase p rogre ssi on or de ath for How we h a ve pe rfor med i n 2021 T otal sha rehol der retur n (TSR) 2 0 19 to 21 1 +59 % 1 C alc ul ated u sing a t h ree -mont h ca lend ar av erag e, fr om 1 Oc tobe r to 31 Dece mb er, pr ior to t he st ar t and a t the e nd of th e relevant period. Mor e in for mat ion on t he TS R pe er gr oups f or PS P awa rds c an b e foun d on pag e 122 . De liver y aga in st st rate gy – 2 021 G roup sco reca rd p erfo rm anc e 2 Ta r g e t 20 21 outcome Deliver Growth and Therapy Area Leadership To t a l R e v e n u e $33. 1bn $34.7bn Innov ative Science: A nnual pipeline progression Pipeline progression ev ents 22 26 Regulator y events 31 37 Achiev e Group Financi al T ar ge ts Cas h ﬂow $5.6 bn $6.3bn Core E PS $5 .25 $5.34 2 For d eta il s of the R emu nerat ion Co mm itte e’s con sider atio n of Group s core ca rd outc omes a nd a de scr ipt ion of pe rfo rma nce mea su res, s ee f rom pa ge 108. F ur t her de tai l of 2 021 co mme rci al a nd sci ent ic p er for ma nce ca n be fo und i n th e St rate gic R epor t f rom pa ge 12 . AstraZ e neca Glob al ph ar mac eut ica l pe ers av erag e F TS E 100 European p harmaceutical pee rs Enhertu com pare d to the cur rent s tand ard of care (trast uzumab emtansine or T -DM 1 ); and Far x iga a pprove d for chr onic ki dney dis eas e, sig niﬁc antly re duci ng ris k of death by 31 %. In response to shareholder feedback, the Com mit tee has a gree d a new nam ing conve ntion i n relat ion to the s cienc e mea sure s in the a nnua l bonu s scor ecar d and th e PSP , to mor e clea rly de linea te the dif fer ence b etwe en the t wo ty pes of me asu re, whic h asse ss dif fer ent as pec ts of the sc ienti ﬁc pip eline. Y ou wi ll see th rough out thi s repo rt t hat the Accelerate Innov ative Science measure under the b onus s core card i s now call ed ‘Inn ovative Science: Annual pipeline progression ’ and the Accelerate Innov ative Science measure under the PSP is now c alled ‘ Innovative Science: Fir st app rovals a nd NME volu me over thr ee yea rs’ . The re is no c hange to t he unde rlyi ng per formance metrics, t his name change is for clariﬁcation only . Great Place t o Work Ens uring t hat As tra Zene ca is a gre at pla ce to work c ontin ued to be a to p prio rit y durin g 2021 . A stra Zene ca foc used o n prote cting s taf f in the f ace of th e conti nuing gl obal p ande mic, 99 As tr aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Dire ctors’ Remuneration Report EBITD A TSR implementing principl es to suppor t the health and s afet y of emp loyees u pon the r etur n to the wo rkpl ace; and e nsur ing the s afet y of our pati ents , and the ir con tinue d acce ss to ca re and m edic ines . The Co mpany ma de no st aff re dunda nt as a co nseq uenc e of the pa ndem ic and d id not ta ke advant age of fu rlou gh arrangements or gov e rnment support in any country . As tra Zene ca has c ontinu ed to co ntribu te to so ciet y . We con tinue to ma ke good p rogre ss on our sustainability strat egy and hav e es tabli shed a B oard C ommi ttee to m onitor t he execu tion of th at stra tegy . Th e launc h of the Sustainabil ity Committee w as an important nex t step in a dvanci ng and d eliver ing ou r sustainability goals and underlines our com mitme nt to cha nge. I lo ok for ward to working wit h the Su stainabi lity Committee in fu ture wh en review ing the p er form ance against the existing Ambition Z ero Carbon me asure w ithin th e 2021 PSP and w hen considering potent ial further ESG measures. We also d rove chan ge beyon d our Co mpany by play ing a ce ntral r ole at CO P26, to add ress the c limate cr isis a nd pro mote a gre en re cover y dur ing an d post th e pand emic. O ur ef for ts were re cogni sed, w ith HRH T he Prin ce of Wales nam ing our C ompa ny as one of t he ﬁrs t hol der s of his T er ra Ca rt a Seal. Despite these challenging times, employ e e en gage ment c ontinu ed to be hi gh with 8 5 % of em ployee s beli eving As tra Zene ca is a gre at pla ce to work . Employe es als o beli eve As tra Zene ca’ s re spon se to the COVI D- 19 pan demi c has be en ver y po sitive, r eﬂec ting our c olle ctive pr ide in ef for ts to c hang e the cou rse o f the pan demic a nd prov ide sup por t and information t o employ ees as we na vigate this period. In particular , employees recognise As tra Zene ca’ s co ntrib ution to s ocie ty wit h our wo rk on Va x ze vr i a and w ith the la unch of Evus he ld . D urin g 2021 , 2.5 billi on dos es of the vac cine we re rel ease d for sup ply to over 1 8 0 coun trie s, appr oximate ly two th irds of whi ch went to low- a nd lower-mi ddle -inc ome cou ntrie s. Mor e than 30 0 milli on dos es were del ivere d to 1 30 c ountr ies thr ough th e COV A X Facili ty. Until Oc tober 20 2 1, Astr aZe neca supplied Va xz ev ri a on a n ot -for-proﬁ t basi s. From th e four th qua rte r of 2021 , we have mov ed to an affordable pricing model under whi ch Ast raZe nec a rema ins co mmit ted to providing broad and equitable global access to the vac cine. T his in clude s a tiere d pri cing approach aligned to Gross National I ncome per capita, which is a widely recognised and imp leme nted mo del us ed by devel oper s of me dicin es and va ccine s. We rema in com mit ted to sup plyin g the vacc ine at no p roﬁt to low-i ncom e count ries , in line wi th our agr eeme nt with t he Unive rsi ty of Ox ford. Ou r Execu tive Dir ector s’ role s in lead ing our r espo nse to the p ande mic ha s bee n con side red by th e Commi tte e when rev iewing their per formance against their individual goa ls, as h ighlig hted fr om page 109. For m ore i nfor ma tion o n our a cti ons i n rel atio n to CO VI D - 1 9, see p age 2 9. Improvi ng our d iversity and inclusion remains par amou nt and we h av e co ntinue d to drive change within the o rganisation b y hosting ed ucati onal eve nts suc h as the Powe r of Dive rsi ty Wee k and ce lebr ating t he power and p otenti al of gir ls as sh owcase d in our #GirlsBelongHere campaign. Signiﬁcant pro gres s towards m eeti ng our a mbitio n of havi ng women r epre sent 5 0 % of our s enio r rol es by 2025 was ma de over the l ast yea r – 48. 1 % as at ye ar end 20 2 1. 2 021 remu nerat ion outco me Th e Commi ttee a lways se eks to en sure th at the remuneration of our E x e cutiv e Direc t ors and o ur wid er work for ce reﬂe cts th e underlying performanc e of the business. Whe n app roving ou tcome s, we the refore con side red th e Grou p score car d alon g with wider business and ind ividual performance over 2 021 , includin g othe r achievements acr oss th e enter pris e, such a s the co mplet ion of the acquisition of Ale xion, adv ancing our Gre at Plac e to W ork p rior itie s and ESG go als. In tha t contex t, we bel ieve that th e payme nts out lined b elow fa irly re ﬂec t per for manc e. Achi eved Innovat ive Science: Annual pipeline progression 73% De liver G row th and T her apy Ar ea Le ader ship 10 0% Achiev e Group Financial T argets 79% A chieved Achi eved Inn ovative S cien ce: Fir st ap prova ls and N ME volu me over three years 10 0% De liver G row th and T her apy Ar ea Le ader ship 10 0% Ach ieve Gr oup Fin anci al T a rget s – Cash ﬂ ow 10 0% EBI TDA 75% Relative TSR 10 0% A chieved 2 021 A nnua l bonu s scor eca rd p erfo rm anc e 1 2 0 19 P SP p erfo rm anc e Annual bonus Whe n dete rmini ng bonu s out turn s, the Committee considered the formulaic out come fro m the Gro up sco rec ard alo ng with w ider business and individ ual impact and pe rfo rma nce in 2021 , i nclud ing ESG achiev ements. The Committee determined to award a n annu al bon us equ ivalen t to 95 % of ma xim um (237 .5 % of ba se pay) to Pas cal So riot. T his is in l ine with t he app roac h to dif feren tiate bo nus award s for ind ividu als in the w ider wo rk force t hat have mad e an except ional c ontr ibuti on in 2021 . Th e Commi ttee d eter mined to awa rd ann ual bon use s equiva lent to 8 4 % of ma xim um (1 68% of ba se pay) to D r Sari n and Mr Du noyer re spe ctivel y . Bon uses awa rde d to Dr S arin a nd Mr Du noyer were p ro- rated in re latio n to their s er vice s provid ed as CFO dur ing the ye ar . D etail s of the fac tors con side red to de termi ne the bo nuse s are prov ided f rom pag es 1 07 to 1 1 1 . On e half of e ach Exe cutive D irec tor’s bonus for 20 2 1 w ill be def erre d into As tra Zene ca sha res fo r three ye ars to e nsur e fur the r alignment with shareholder interests. Long-term incentives (L TI) 201 9 PS P – 95 % of m axi mum Our approac h aims to rew ard sustainable out per for manc e and he nce ou r 20 19 award will ve st at the u pper e nd of the p oss ible ra nge. Th e three -yea r per for manc e peri od for Pe rfo rma nce Sh are Plan ( PSP) awar ds gra nted to E xecuti ve Dire ctor s in 201 9 end ed on 31 Dec emb er 2021 . Award s will ves t at 95% of ma ximum, a s shown o n page 1 1 2 a nd reﬂ ect over achi evemen t in each a nd ever y three-y ear target, as well as deliv ering a thre e-ye ar TSR of 5 9 %. 1 W hen d eter mi ni ng bo nus out tu r ns, t he Com mi tte e con sider ed t he for mul aic out come f rom t he Gro up scor eca rd a long w ith w ider b usi ness a nd i ndiv idu al i mpac t an d per for ma nce in 2 021, i nclu di ng ES G ach ieve ment s. 10 0 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Corp ora te Governa nce Di r ec tor s’ Remu ner at ion Repor t c ont inue d Res pons e to voti ng at the 2 021 AGM At As tra Zene ca’ s 2021 AGM, th e share hold er vote s to app rove the D ire ctor s’ Remu ner atio n Polic y and to am end the r ules o f the 2020 PSP were p ass ed with m ajor ities o f 60. 1 9% and 61 .7 2% resp ecti vely . S ince th e AGM, on be half of th e Comm itte e, I have met wi th 1 6 of the Company’ s largest shareholde rs, represe nting approximat ely 40% of the share re gister, as well a s three p roxy ad viso rs, to und ers tand t heir c once rns in re latio n to the se two r esolu tion s and to dis cuss future remuneration. I spo ke with the m ajor ity of A stra Zen eca’ s larges t investors, who rema in ov er whelmingly sup por tive of ou r Exec utive Dir ecto rs an d the Company’ s strategic ambition. Shareholders also recognise that our Remuneration P olicy app ropr iatel y align s ex e cuti ve pay with per formance, and highlighted the impor tance of the Commit t e e ’s ongoing commitment to str etchin g per for manc e targ ets. T hey als o em phasi sed th e nee d to rema in comp etiti v e in the gl obal t alen t market , and exp ect th e Boar d to take th e nece ss ar y meas ures to p ositi on As tra Zene ca acc ordin gly . H owever , a com mon co nce rn rai sed by th ose who vo ted aga inst th e reso lutio ns was tha t we had sought approval for a ne w Remune ration Polic y at two c onse cutive AGM s, and in a cha llen ging pe rio d beca use of th e pande mic. A min orit y als o expre ssed c onc ern ar ound the scale of the CEO ’s total remuneration opp or tunit y in the U K contex t, alb eit recogni sing t he global dimension of the CEO’s role. T here wa s also s atisfa ctio n that the p ensi on cont ribu tions of t he Exec utive Dir ecto rs have be en ali gned w ith the wi der UK workforce, thereby resulting in a lower ﬁxed compensation and higher lev er age of the pa y-for -per formance c om ponent. In re spon se to con cern s rais ed by so me sha reho lder s, we are c ommi tted to a p erio d of st abili ty in ou r appr oach to exec utive remuneration, and conﬁrm our int ention that the 20 2 1 Po licy will r emai n in ef fect u ntil 2024. We have not ma de any ma teria l chan ges to the s truc ture of exec utive rewa rd in 2022, wit h the o nly adju stme nt bei ng an inc rea se in the Exe cutive D irec tors’ ba se pay , i n line wit h bas e pay inc reas es for wi der UK wo rk force. Market positioning of Executive Directors’ on-target remuneration for 2021 Global pharma peers ¹ European pharma peers ² C EO Lower quartile to median Median to upper quartile Current position £7.98m £8.15m £6.74m £13.62m Global pharma peers ¹ European pharma peers ² C FO Lower quartile to median Median to upper quartile Current position £3.77m £3.92m £3.86m £4.82m 1 Gl oba l pha rm a pee r gro up con sist s of: A bbVie , Al ler gan , Am gen, B MS , El i Li lly, Gi lead , GSK , J& J, Me rck , Nova rt is , Nov o N ord isk , P zer, Ro che an d S an o. 2 E uro pea n ph ar ma pee r grou p c ons ist s of: B ayer, GS K, Me rck KGa A , N ova rt is , N ovo Nord is k, Roc he and S ano . Re mune rati on inc ludes b ase p ay , ta rge t an nua l bonu s and t he ex pe cte d val ue of Lon g-te rm I ncen tiv e (LTI ) awa rds . Be nch ma rki ng da ta ha s bee n prov ide d by the C omm it tee’s i ndepe ndent a dvi ser. We rema in com mit ted to our pay-f or - per f ormance philosoph y and market - competitive remuneration, as demonstrated by the a rran geme nts fo r Arad hana S arin o n he r appo intme nt as an E xecuti ve Dire ctor an d CFO. Addi tiona lly , we wil l conti nue to focu s on setting stretching pe rforman ce targets and have inc lude d deta il on pag e 1 04 a roun d how fur th er stre tch has b een b uilt into o ur tar gets foll owing the a cqui sitio n of Alexi on. We will con tinue to im prove the tr ans pare ncy and qua lit y of discl osur es in our D ire ctors’ Remuneration Repor t. The Committee wil l continue to engage regularly with shareholders and other stakeholders. Non- Exec utive D ire ctor s’ fees Wit h effe ct fr om Janu ar y 2022, four e leme nts of the N on-E xecu tive Dire ctor s’ fee str uctu re have inc rea sed. T hese c hang es reﬂe ct the stea dy inc reas e in work load an d responsibilities o f the Non-Executive Dire ct or s sin ce the la st fee i ncre ases a t Astr aZe neca took e ffe ct fou r year s ago in Ja nuar y 201 8, as we ll as the in crea se in siz e and co mplexi ty of the G roup fo llowing t he acqu isiti on of Alexion. No Boa rd me mber participated in any de cisi on rel ating to th eir own fe es. Fur ther d etail i s provi ded on p age 1 1 6. Next steps I hope that you ﬁnd this Remuneration Repor t clear in explaining the implementation of our Rem uner ation Po licy dur ing 2021 , a nd the me aning ful and t horou gh res pons e we have made to address inv estor feedback follo wing the 20 2 1 AGM . W e t rust t hat we have prov ided the in form ation you n eed to b e able to su ppor t this Remuneration Repor t at the Company’ s AGM in A pril 202 2 . Our ongoing d ialogue with shareholde rs and othe r sta k eho lder s is valu ed gre atly a nd, as alway s, we welc ome your fe edb ack on thi s Directors’ Remuneration Repor t. Michel Demaré Ch ai r of the R emun erati on Com mit tee 101 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report Dire ctors’ Remuneration Report CEO CFO £ 3,013 £ 13,858 £5,000 £10,000 £15,000 £0 £’000 Share price appr eciation on long-t erm incentive a war ds PSP Annual bonus Other Fixed P ay 2 019 P SP perf orman ce Ac hie ved 95% La pse d 5% Group scorecard perf orman ce Ac hie ved 8 4% La pse d 16 % E xecut ive D ire ctor s’ rea li sed pa y 2021 ou tcome s F o rmu laic o utcome of 2 021 Grou p score ca rd an d 2019 PS P E xecut ive D ire ctor s’ remu nerat ion for 2 02 2 Fixed r emuneration Annual bonus Long-term incentiv es Shareholding guideline Post-cessation guideline Pas cal Soriot (CEO) Ba se pay: £ 1 , 3 6 7, 0 0 2 Beneﬁts fund Pension: £1 50,37 0 (equivalent to 1 1 % of base pay) Ma x: 250% base pay T arget: 1 25 % base pay De ferr ed: 50% for three years Ma x: 65 0 % bas e pay Performance period : three years Holding period: two y ears Holding requirement: 650% b ase pa y Holding requirement: sh ares u p to 650% ba se pay fo r two years post - ces sation Aradhana Sarin (CFO) Ba se pay: £875 ,50 0 Beneﬁts fund Pension: £9 6 ,305 (equivalent to 1 1 % of base pay) Ma x: 200% base pay T arget: 1 00% base pay De ferr ed: 50% for three years Ma x: 450% base pay Performance period : three years Holding period: two y ears Holding requirement: 450% b ase pay Holding requirement: sh ares u p to 4 50% base pay for t wo yea rs post -cessation CEO x ed vs perf ormance-linked (%) 36 % Short-t erm 64 % Long-term Fixed 12 % Perf ormance-linked 88 % Base salary Benets fund Pension Annual bonus – cash Annual bonus – shar es PSP Annual Bonus PSP ’22 Executive Directors’ pay at risk Perf ormance period Deferr al period Holding period ’23 ’24 ’25 ’26 Se e fr om page 10 5 for f ur the r det ai ls on pl an de sign . Ba sed o n ma xi mum pa yout sc ena ri os for t he CE O ass um ing m ax imu m of 25 0% a nd 65 0% of ba se pa y for an nua l bonu s and P SP r esp ect ive ly . CFO xed vs performance-linked (%) 41 % Short-t erm 59 % Long-term Fixed 15 % Perf ormance-linked 85 % Base salary Benets fund Pension Annual bonus – cash Annual bonus – shar es PSP Ba sed o n ma xi mum pa yout sc ena ri os for t he CF O ass um ing m ax imu m of 2 00 % and 4 50% f or an nua l bonu s and P SP re spe ct ivel y . W hat ou r Exec utive D ire ctor s ear ned Lo oki ng ahead Fi xed p ay con sis ts of ba se pay, be net s fu nd and pe nsio n. Fu r the r in for mat ion on Ex ecu tiv e Dir ect ors’ r eal ise d pay for 2 021 is o n page 105 . Se e fr om page 10 5 for fu r the r in for mat ion on t he an nua l bonu s a nd PS P outco me. W hen de ter mi ni ng bonu s out tu rn s, t he Com mit tee c ons idere d t he for mula ic out come f rom t he Gro up scor eca rd a long w ith w ider bu sin ess a nd in div idua l im pac t and p erf orm anc e in 20 21, inc lud ing E SG ac hie veme nts. Fo r the C EO t his r esu lte d in a b onus o utt ur n of 95 % of ma xi mum . 10 2 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Corp ora te Governa nce Re mun erat ion at a g la n ce St rategic pil lar St rategic pil lar Financ ial ta r gets Accelera te In novative Science De live r Gro wt h an d T herap y Ar ea Le ade rsh ip Ac hie ve Gro up Financia l Targets Remuner ation perfor mance measu res Remu neration perfor mance mea sure Remuner ation perfor mance measu res Sc ience i nd ices Ou r sc ience m eas ure s inc ent ivi se t he development of new molecu lar entit ies ( NM Es) a nd t he ma xi mi sat ion of t he pot ent ial of exi sting me dicine s. Bon us pe rformance is assessed on pipeline pro gr ess ions t hr ough Ph ase I I an d Pha se II I cl in ica l tr ia ls. T he se re ec t the o utcom e of neare r -ter m strateg i c invest ment de cisions, whe rea s in co ntra st P SP pe rfo rm anc e is as ses sed o n the v olume o f NM Es i n Ph ase I II a nd the r eg ist rat ion st age , whic h re ec ts t he outcome of l onger-term strate gic investment decision s. Addit ionally, we measure reg ulator y subm issions and approvals for bonus, and re gu lato ry ap prova ls fo r PS P to dr ive t he co nvers ion of sc ient i c prog res s int o co mme rcia l rev enue ove r th e shor t ter m ( bonu s) and t he long er ter m ( PSP ). Together, the se science measu res ince ntivis e in novation and sus tai nable succ ess along t he leng th and breadt h of the pipeli ne, leadi ng to com mercial g rowt h. Tota l Reve nue Ou r Tota l Rev enue me asu re is i nclu ded i n the bo nus an d the P SP , re e ct ing t he im por ta nce of i ncent iv isi ng su sta in abl e gro wt h in b ot h t he shor t a nd long er ter m. Ca sh ow En su res t hat w e can s ust ai n inv est ment i n ou r pipel in e and t her apy ar eas w hi le at th e sa me t ime me et ing ou r capi ta l al loca tion pr ior itie s. Ca sh ow i s inc lude d in bo th t he bo nus an d the P SP , so a s to mot ivat e a focu s on t he im por ta nce of b ot h shor t a nd longe r ter m ca sh o w gener atio n and b ala nc e sheet s treng th. Core E PS I ncent iv ise s oper atio nal e ci enc y and co st di scip li ne, re mai ns a k ey mea sur e of ou r pro ta bil it y and i s a key fo cus fo r our investor s. Tota l sha reh older re tu rn ( TS R) A sse sse d rel ativ e to our p eer g roup o f co mpan ies , th e meas ure r ewa rds p osit ive pe rfo rm anc e th at our s ha rehol ders a ls o di re ct ly ben et f rom . Th is me asu re in cent iv ise s outp er for man ce ver sus o ur pe er group, and promotes the deliver y of long-ter m su sta in ab le ret ur ns fo r our s har ehold ers . St rategic pil lar Be a G reat P lace t o Work Be ing a G reat Pl ace to Work i s cr itic al to del ive ri ng our a mb itio n. A sse ssme nt of pe rfo rm anc e agai ns t th is pi ll ar is c apt ure d t hrou gh a hol ist ic rev iew of e ach E xec uti ve Director’ s indi vidual performance as part of t he n al d eter mi nat ion of a nnu al b onus , in clud ing c ons iderat ion of o ur pr ogr ess aga in st ou r ES G asp irat ion s th rough : > Cont r ibut ion to t he en ter pri se – t heir ac hiev ement o f emb edd ing a c ul tu re ofl ife -lon g lea rn ing a nd dev elopm ent, a nd per for mi ng as a n ente rp ris e tea m, as w ell a s adva nce ment of ou r in clus ion a nd div ersit y st rat eg y . > Cont r ibut ion to s oci ety – t hei r del iver y acros s a cce ss to healthc are, env ironme ntal pro tec tion , et hic s an d tra nsp ar ency t o lead in s ustainabili t y . A mbi tion Z ero Ca rbon T his m eas ure i nce ntiv is es th e el im in atio n of our S cop e 1 and S cop e 2 g reen hou se ga s (GHG) em is sion s by 20 25 w ith t ar gets v er ie d in l ine w it h the sc ienc e of cli mat e cha nge , where w e wi ll in nov ate to avoi d, re duce a nd su bs tit ute to b ecom e zer o car bon. As tra Zene ca aims to c ontin ue to deli ver gre at medicine s to patients while maintaining cost dis ciplin e and a ﬂex ible co st bas e, driv ing ope rati ng lever age and i ncre ase d cash ge nera tion. T o in centi vise a nd rewar d delive ry of gre at pe rfo rma nce over th e shor t an d longer term, the Committee carefully consider s the balance of science, ﬁnancial and ES G meas ures b etwe en the a nnual bon us and P SP . Our focus on incentivising innov ative science ali gns wit h our pati ent-c entr ic cultu re, as we str ive to push t he boun dar ies of sc ienc e to deliver li fe-changing medicines to patients. Th e 2022 per fo rman ce mea sure s are cl osel y aligned with our strat e gic priorities, as sh own bel ow . For more infor mation about our strateg i c prioritie s, se e page 1 2. Fo r more i nfo rm atio n abo ut th e 20 22 pe rfo rm anc e mea sur es, s ee pa ges 111 to 115 . 10 3 Addit i onal In formation Financi al S tat eme nts Corporate Gover nance Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Di rec tor s’ Re mune rat ion Re por t / H ow our p er for ma nce me asu res f or 20 22 s uppor t t he del ive ry of o ur st rat eg y Key A nnua l bo nus PSP KPI Ho w our p erfo rm ance me asures for 202 2 su ppor t the deliv er y of o u r strategy We set st retchi ng tar gets th at ince ntivi se our le ade rs to del iver excep tiona l per for manc e, to drive su stai nabl e resul ts for ou r patie nts, ou r em ployee s and ou r share hold ers . Followin g the acq uisit ion of Al exion, th e Comm itte e reviewe d the suit abili ty of exi sting p er form anc e targe ts for o ur in-ﬂi ght ann ual bo nus an d long -term in centi ve (L TI) pl ans in li ght of the e nlar ged G roup. Th e Commi ttee r eviewed p er form ance t arge ts in Se ptemb er 2021 and a pproved i ncre ases to t arge ts to ens ure they r emai ned str etchin g and con tinue d to ince ntivi se stro ng per fo rman ce. Se e page 108 for de tail s on the 2021 sc orec ard ta rget s, and pa ge 1 12 for the 2019 PSP . We take the f ollowin g robu st proc ess to s ett ing ann ual bo nus an d PSP tar gets: St age 1 – Target sett ing Science targets are based on a c ohort of scientiﬁc opportunities sp eciﬁ ed at th e sta rt of t he pe rfo rma nce pe rio d. Opp or tuni ties re pres ent p otenti al ach ievem ents t hrou gh the p ipel ine, fr om an early stage where our scientists work t o discover new mole cules, through t o ulti mately ob taining appro vals and get ting new me dici nes to pa tien ts. Rewa rdin g suc ces s at eac h sta ge recognises t he i mportance of cr eating and maintaining a long-term sustainable pipeline. Stretch of proposed targets is rev iewed by th e Sci ence C ommi tte e tak ing into a cco unt fac tor s su ch as th e expe cted N et Pres ent Val ue of the p ipel ine an d the anticipated ﬁnancial contribution it will mak e, past pe rformance, the e xternal regulatory environment, and int e rnal resourcing and efﬁciencies. T argets for re al isation of these oppor tunit ies are ambitious. Proposed targets f or the Ambition Zero Car bon me asure are review e d by the Sustainability Committee. De liver G row th and T her apy Ar ea Le ader ship a nd Ac hieve Group Financial T a rgets metrics align with t he Compan y’ s Mid Term Pl an (MT P), whic h sets o ut the ﬁ nanc ial fr amew ork for d elive rin g our am biti ous st rateg y over th e shor t- and medium-term. The MTP process incl udes detailed business rev iews, du rin g whic h plan s and ef ﬁc ienc ies of e ach u nit ar e ch alle nged , lead ing to a pr opos ed MT P for the B oar d to review and challenge. The Committee sets t argets base d on the Board-approved MTP , considering consensus expectations, independent analytics and anticipat ed challenges and opp or tuni ties . This r ang e of dat a is use d by the Co mmit tee to ensure the stretching nature of performance targets is robustly tested. Additionally , the PSP TSR measure is designed t o rewa rd str ong pe r form ance r elat ive to our p eer s. St age 2 – Commit tee review a nd approva l of ta rgets The Committee thoroughly reviews and challenges targets proposed by management. The Committee is provided wit h considerable supporting material for each metric. For scie nce me asures, the Committee rev iews an d appr oves th e full co hor t of op por tun itie s and receives brieﬁngs from senior science leaders within the business. These targets are s et with oversight of the Scienc e Committee, with a focus on ensuring that the targets will result in long-t e rm su stainable value creation underlying the deli very of th e LRP . The t arge t in rel atio n to our ESG m etri c in the PS P is det ermined with t he input of our Sust ainabi lity Committee. Committee members participate in t he full Board discussions on th e stra tegy, MTP a nd bud get, w hich f orm th e basi s for the targets. The Committee considers how proposed ﬁ nancial targets align with the MTP and budget; prior years’ outcomes (i n abso lute te rms an d aga inst t arge t); how the a mbit ion ha s changed from the prior MTP and budget; external guidance the b usin ess h as pr ovide d or pla ns to give; c ons ensu s fro m ex terna l ﬁna ncia l anal ysts a nd fa ctor s it may b e impac ted by; and the underlying assumptions. Statistical analysis conducted by the C ommi tte e’ s in dep ende nt adv ise r is als o use d to ass ess the p ropo sal s. Thi s incl ude s an as ses smen t of his toric al leve ls of performance v olatility . St age 3 – P erf orma n ce assessmen t At the e nd of th e per iod, ﬁn al pe rf orma nce a gain st eac h metr ic is a sse sse d. Outc ome s are ca lcul ated b ase d on per fo rma nce aga ins t each we ighte d met ric. E ach pe rf orma nce m easu re is assess ed on a standalone basis, so that unde rperformance aga ins t one me asur e can not be c ompe nsa ted for by ov erperformance against another . The Science Committee independently c onsiders and informs the Committee whe ther science achie vements r epresent a fair and balanced outcome , reﬂecting genuine achie vements and pip elin e pro gres sion . Apa rt f rom Ca sh ﬂow, whic h is set a t actual rates of exchange , ﬁnancial metrics are set at budget ra tes of exch ange a nd eval uated a t thos e rate s at yea r end, whi ch me ans th ey are no t dire ctly c ompa rab le yea r - on-ye ar . Th e Comm itte e is, h owever , prov ide d with da ta to all ow it to conduct year -on-year analyses. St age 4 – Deter min ation of Exec utive Dire ctors’ bo nuse s For a nnua l bonu s, the f airn ess o f the for mula ic Gr oup sc ore card ou tcome i s con side red in t he con text of ove ral l busi nes s pe rfo rma nce a nd the ex per ienc e of sha reho lde rs. S uch considerations include TSR performance and each Executiv e Di recto r’s per sona l impa ct on th e deli ver y of the s trate gy , wid er ESG per f ormance and other organisational achie vements, such as inclusion and div ersity targets and the realisation of technology-based milestones. Each year there are important individual deli verables bey ond the sc orecard metrics which are taken int o account when determining individual bonuses. Havi ng co nsid ere d the Gr oup sc orec ard o utco me, over all business per formance, t he e xperience of shareholders and individual performance, the Committee carefully d etermines a ﬁna l bon us outc ome fo r eac h Exec utive D irec tor tha t is co nsid ere d fair a nd app rop riate fo r the ye ar’s per for man ce an d is in the b est i ntere sts of s har ehol der s. “ W e set st retchi ng ta rgets t hat incen tiv ise o u r l eaders to d el i ver exce ptio na l perf ormance, t o d ri ve susta ina b le r esults fo r our patie n ts, ou r employe es a nd our sh ar eholders . ” 2 022 t ar gets > Fi na nci al pe rfor ma nce go al s unde r the 2 02 2 Group sc orec ard a nd PS P wou ld req ui re g row th i n exc ess of t he averag e ex pec ted of t he i ndust r y , a nd ab ove pri or year ou tturns. > T he Com mit tee h as rev iewe d th e propo sed t ar gets aga in st int ern al a nd ex ter na l fore cas ts, i nclud ing ma rket c onse nsu s, an d is com for ta ble t hat t he level of stret ch promotes exceptiona l perfor manc e. 10 4 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Corp ora te Governa nce How t he Remu nerat ion Com m it tee ensu res t ar g ets a re st retch ing Audited Exe cut ive D ire ctor s’ re al ised pay for 2 021 (si ngle tot al gu re of re m une ration) Th e table b elow se ts out a ll ele ment s of take -home p ay rece ivabl e by the Exe cutive D irec tors in r espe ct of the ye ar en ded 31 Dec embe r 2021 , alo ngsi de com para tor ﬁgur es for 2020. Dr S arin j oined t he Boa rd of Ast raZe nec a PLC as CFO on 1 Au gust 2021 . I n line wit h repo rti ng reg ulatio ns, the r eali sed pay fo r Dr Sa rin reﬂ ect s the re mune rati on rec eived in r espe ct of s er vice s rend ered a s an Exe cutive D irec tor dur ing the ye ar end ed 31 Dece mbe r 2021 ( 1 Au gust 20 2 1 – 31 Dece mbe r 2021 ). Mr Du noyer ste ppe d down as CFO a nd Exe cutive D irec tor of Ast raZ enec a PLC on 1 Augu st 2021 . In lin e with th e repo rti ng reg ulatio ns, the rea lise d pay for Mr D unoyer r eﬂec ts rem uner ation re cei ved in re spec t of ser vi ces re nder ed as a n Execu tive Dir ector d urin g the year e nde d 3 1 De cemb er 2021 (1 Janua r y 202 1 – 1 Aug ust 2021 ). Mr D unoyer d id not re ceive a ny payme nts in re spe ct of his s teppin g down fr om the Boa rd. Mr So riot ’ s an d Mr Dun oyer’s reali sed pay fo r 2021 inclu des th e v es ting of PSP awa rds fr om 201 9 fol lowing th e three -yea r per for manc e peri od. Th ese sh ares a re subj ect to a fu rt her t wo-yea r holdin g per iod. Th e signi ﬁcan t incre ase in A stra Zen eca’s share p ric e o ver th e peri od of gr ant to vest has p rovid ed a sig niﬁca nt inc reas e in value of t he equi ty co mpon ents of t heir rewa rd. £ 2 , 3 70,9 23 of Mr Sor iot’s and £1 , 1 26,51 2 of Mr Du noyer’s 2021 rea lise d pay is at trib utab le to shar e pric e incre ase s. The b eneﬁ t of the inc rea sed sh are pr ice ha s also b een exp eri ence d by sha rehol der s. Th e Commi ttee d id not exerc ise any d iscre tion in r elati on to the Lon g-ter m ince ntive outc ome s or the for mula ic outc ome of the G roup s core card . £’ 000 Base pay Ta x a b l e beneﬁts Pension T otal ﬁx ed Annua l bonus Long-term incentives 1 To t a l variable Other 2 Single to tal ﬁgure Share price appreciation as % o f single ﬁgure total Pascal Sorio t 2 021 1, 3 27 12 3 14 6 1, 5 9 6 3 ,1 5 2 9 ,11 0 12 , 26 2 – 13 , 85 8 17 % 2020 1, 2 8 9 12 1 258 1,6 6 8 2, 319 11 , 9 4 7 14 , 26 6 – 15 , 93 4 3 1% Aradhana Sarin 3,4 20 21 354 6 39 399 595 – 595 2, 019 3 , 013 – 2020 – – – – – – – – – – Marc Dunoy er 2 021 5 460 53 51 564 772 4,328 5 ,1 0 1 – 5,66 5 20% 2020 76 5 79 18 4 1, 02 8 1, 24 0 5, 676 6 ,9 16 – 7, 9 4 4 29% 1 Lo ng-t erm i nce ntiv e val ues di scl ose d in 20 20 h ave be en rec alc ul ated u si ng the a verag e clos ing s ha re pr ice for t he t hre e mont hs en ded 31 Dec em ber 2 021. S ee page 11 2. 2 I n acco rda nce w ith t he reg ul ation s gover n ing t he si ngle g ure t able , di vide nd eq uiv alen ts acc rue d du ri ng defer ra l or holdi ng per iod s have not be en inc lude d wi th in ‘O the r item s o f re mune rati on’ . W here sh ar e a war ds hav e v est ed and be en rel ease d to Exe cut ive Di rec tors du ri ng 20 21, th e d iv idend e qu iva lent s a ccr ued du ri ng the de fer ral or hol di ng pe rio d o f t hes e awar ds, wh ich wer e rein vest ed as sh are s, ar e s how n in t he foot note s to t he Ex ecu tive D ire cto rs’ sha re pl an int eres ts on pag es 1 18 –119. 3 Dr S ar in’s 20 21 rea li sed p ay is for t he pe rio d fol lowi ng her a ppoi ntm ent to t he Boa rd of A st ra Ze neca P LC f rom 1 Aug us t 2021 t o 3 1 De cem ber 2 021. D r Sa ri n was no t an E xec uti ve Di rec tor of A str aZ ene ca PL C in 2 020 . 4 D ur ing 2 021, Dr Sa ri n’s s al ar y was pa id in US D($ ) vi a US pay roll a s she wa s sti ll lo cate d i n the US . Dr Sa ri n’s U K tot al s w ere con ver ted to US D usi ng the ex cha nge rate of 1. 3615U SD:1GBP, wh ich wa s ag ree d on appoi nt ment . 5 M r Du noyer ’s 2 021 rea li sed pa y is for t he per iod be twe en 1 Janu ar y 2021 a nd 1 A ugu st 20 21, pr ior to hi m s tepp ing dow n fro m t he Bo ard of A str aZ ene ca PLC . Th e followin g sec tions p rovide f ur ther d etail o n the ﬁgu res in th e above ta ble, inc ludin g the und erly ing ca lcula tions a nd as sumpti ons an d the Com mit tee’ s p er form ance a sse ssme nts for va riab le rem uner ation. M r Dunoye r stepp ed down f rom the B oard o n 1 Augus t 2021 and the info rmat ion be low reﬂe cts the p eri od for wh ich he wa s an Exec utive Di rec tor ( 1 Jan uar y 2021 – 1 Augu st 2021 ). Th e infor matio n below fo r Dr Sa rin reﬂ ects t he remu nera tion paya ble to he r in res pect o f the pe riod fo r which s he has b een C FO and E x e cuti ve Dire ctor of As tra Zene ca PLC (1 Augu st 2021 – 3 1 D ece mber 20 2 1). Th e Annu al bonu s sec tion is s et out f rom pag e 1 07 and t he Long -term i ncen tives se ctio n from pa ge 1 12. Inform ation a bout t he Exec utive Dir ecto rs’ remu ner ation a rran geme nts fo r the com ing yea r , endi ng 3 1 De cemb er 2022, is h ighlig hted in g rey boxes. Thi s sec tion of th e Remu nera tion Re por t set s out the E xecut ive Dire ctor s’ remun erat ion for th e year e nded 31 De cemb er 2021 , al ongs ide the rem uner ation t hat will b e paid to E xecut ive Dire ctor s durin g 2022. Th e elem ent s withi n the E x ec utive D irec tor s ’ re alis ed pay a re col our co ded: > Fixed Remuneration has a light blue border and is found on page 1 06 > O ther i tems i n the nat ure of re mun erat ion have a p urpl e bor der an d can b e foun d on pag e 1 07 > A nnua l bonu s has a ye llow bo rde r and ca n be fou nd on pa ges 107 to 1 1 1 > Lo ng-te rm in cent ives ha s a mag enta b orde r and c an be fo und on p age s 1 12 to 1 1 5 Key: Audited i nformation Content contained within the Audit ed panel ind icate s that a ll the i nfor matio n with in has be en sub jec t to audi t. Audited Exec utive Di rectors’ remuneration Planned implementation for 2022 Content contained within a grey b o x indicates planned implementation for 2 022. 10 5 A st ra Ze neca A nn ual Re por t & For m 2 0- F I nfor mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t A n nu a l Re po r t on Remu ne rat ion Audited 20 21 2022 £’ 000 T otal taxable beneﬁts Ta x a b l e beneﬁts Pascal Sorio t 12 3 In line with 20 21 Ar adha na Sa rin – app ointe d to the Bo ard on 1 Aug ust 20 21 6 In line with 20 21 Ma rc Dun oyer – ste ppe d down f rom the B oard o n 1 Augus t 2021 53 n /a Audited T axable beneﬁts Th e Execu tive Dir ector s may se lec t bene ﬁts within AstraZeneca’ s UK Flexible Beneﬁts Pro gram me and m ay choos e to take the ir all owance, o r any pro por tion r emai ning af ter the s elec tion of b eneﬁ ts, in ca sh. 20 21 2022 £’ 000 Change from 20 20 Base pay Change fr om 20 21 Base pay Pascal Sorio t 3% 1, 3 27 3% 1, 3 67 Ar adha na Sa rin – app ointe d to the Bo ard on 1 Aug ust 20 21 n /a 354 3% 876 Marc Dunoyer – ste ppe d down f rom the B oard o n 1 Augus t 2021 3% 460 n /a n /a Fixed remuneration Bas e pay Whe n awardi ng bas e pay incr ease s, the Committee considers, among other factors, bas e pay inc reas es app lied a cros s the UK employee population. T he current Executive Dir ecto rs’ bas e pay for 2022 w ill inc reas e in line w ith the UK a ll- empl oy ee b ase pay increase budget at 3% . 20 21 2022 £’ 000 Pensionable ba se pay Pension allow ance Ca sh in lieu of pension Pension allow ance Pascal Sorio t 1, 3 27 11% o f base pay 14 6 11% o f base pay Ar adha na Sa rin – ap pointe d to the Bo ard on 1 Au gust 2 021 354 11% o f base pay 39 11% o f base pay Marc Dunoyer – ste ppe d down f rom the B oard o n 1 Augus t 2021 460 11% o f base pay 51 n/a Audited Pension Th e Execu tive Dir ector s rec eive a pe nsio n all owance of 1 1 % of ba se pay , in l ine with the wi der UK wo rk force. D urin g 2021 , the Exe cutive D irec tors to ok thei r pens ion all owance a s a cash a lter native to pa rt icipa tion in a deﬁned contribution pension scheme. Non e of the E x e cuti ve Dire ctor s who se rve d dur ing 2021 has a p rosp ecti ve entit leme nt to a deﬁ ned be neﬁt p ensi on by rea son of qualifying ser vice . 10 6 A st raZ ene ca A nnua l Rep or t & For m 20 -F I nfo rma tio n 2 021 Corporate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d Audited Annual bonus Audited Annual bo nus in respect of per f ormance during 2021 Bonus po tential as % o f base p ay Bonus paya ble i n cash Bonus deferred into shares T otal bonus award ed £’ 000 Ta r g e t Maximum Pascal Sorio t 125 % 25 0% 1, 5 76 1, 5 76 3 ,1 5 2 9 5% m a x Aradhana Sarin – app ointe d to the Bo ard on 1 Aug ust 20 21 10 0% 20 0% 298 1 298 1 595 8 4% ma x Marc Dunoy er – ste ppe d down f rom the B oard o n 1 Augus t 2021 10 0% 20 0% 386 386 772 8 4% ma x 2021 Ann ual bo nus An nual b onuse s ear ned in r espe ct of pe rfo rma nce dur ing 2021 are i nclu ded in th e rea lise d pay tab le. Th e annua l bonu ses sh own for Mr D unoyer and D r Sar in are in r espe ct of th e time du ring whi ch eac h ser ved as a n Exec utive Di recto r of As tra Zene ca PLC duri ng 2021 . Det aile d infor matio n on the Co mmit tee’ s app roac h to targ et set ting a nd ass ess ment of pe rf orma nce is s et out o n page 104. Hal f of the E x e cuti ve Dire ctor’s pre -ta x bonu s is compulsor i ly deferred into Ordinar y Shares whi ch are re lea sed th ree yea rs fr om the date of def err al, ordi naril y subje ct to co ntinue d employment. Bonuses are not pensionable. 1 Numbers have been round ed. Other remuneration Other items in the nature of re muneration Dr Sarin’ s previous employme nt contract wit h Alexio n inclu des a n entitl eme nt to cash severance arrangements, which wou ld hav e be en tri gger ed at the d ate of clo sing of th e acq uisit ion of Al exion. In o rde r t o se cure D r Sa rin’ s s er vice s and co mpen sate he r for the for f eiture of these contractual entitle ments, an awa rd of £2,01 5,5 40 was ma de to Dr Sa rin in Au gust 2021 an d is incl uded i n the Ot her col umn. Th is award wa s made 50% in c ash an d 50% in re stric ted sh ares . The ca sh ele ment is su bjec t to repay ment in t he cas e of her voluntar y cessation of employment within 1 8 mon ths of ap point ment. T he 50% mad e by way of re stric ted sh ares wa s gran ted to Dr S arin o n 1 3 A ugus t 202 1 , a s a one- of f rest ricte d shar e award ove r 1 2,276 Ordi nar y Sha res. T he fac e valu e of the awar d was £1 ,007 , 73 6, calc ulated usi ng a gra nt pri ce of 8, 209 pen ce pe r shar e, be ing the ave rage cl osin g share p rice ove r the thre e dea ling day s prec edin g grant . The awar d will ve st 1 8 m onths a fter h er ap pointm ent an d will l apse i n the cas e of her vo lunta ry c ess ation of em ployme nt pr ior to vest ing. For fu rt her info rmat ion on thi s shar e award, pl ease s ee p a g e 123 . Dr S arin wa s provid ed wit h assi stan ce with he r reloc ation f rom the U S to the UK . The be neﬁts o ffe red wer e in line wi th the Gr oup’ s standard relocation policy wh ich is o ffered to the wi der wor kfo rce, c ompr ising s ix mont hs’ temporar y accommodation in the UK, remov als and storage c osts , and r eimbursement of exp ense s ass ocia t ed w ith hom e sale a nd pur chas e (stam p dut y , leg al fee s and su rvey co sts). The tot al as sist ance p rovide d duri ng 2021 was £3,4 30. £’ 000 20 21 Relocation assistance On e- off aw ard T o tal O the r item s in th e natu re of remuneration Pascal Sorio t n/a n /a – Ar adha na Sa rin – app ointe d to the Bo ard on 1 Aug ust 20 21 3 2, 016 2, 019 Ma rc Dun oyer – ste ppe d down f rom the B oard o n 1 August 2 021 n /a n/a – 10 7 A st ra Zen eca A nnu al Re por t & Fo rm 20 - F In for mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t 2021 Gro up sco reca rd as ses sment Per for manc e agai nst the 20 2 1 G roup s core card i s set ou t below. Th e Group s core car d is use d in the de termi nation o f bonu s payouts fo r all As tra Zene ca emp loyee s. Each m etri c within th e scor eca rd is as ses sed on a st anda lone b asis a nd has a d eﬁned p ayout ra nge. A s noted on p age 99, th e 202 1 sc orec ard ta rget s were revi ewed in lig ht of the e nlarg ed Group followi ng the acquisition of Alexion . Accelerate Inno vativ e Science (no w rename d Innov ative S cience: A nnual pipeline p rogression) , T otal Reven ue, Cas h ﬂow and Co re EPS ta rgets we re all a djuste d upward i n line wit h the Com mit tee’ s ap proa ch of ens urin g per for manc e targ ets sho uld not b e made m ateri ally mo re or le ss stre tching a s a res ult of the tr ans actio n and to co ntinue to i ncen tivis e stron g delive ry. Per for manc e below t he spe ciﬁe d thres hold l evel for a me tric wi ll resu lt in 0% payout fo r that me tric. 100% of ta rget b onus wi ll pay out fo r on-t arge t per for manc e, and 20 0% of targ et bon us will pay o ut for p er form ance at o r above ma xim um. Ma ximu m bonus p ayouts fo r the cur rent CEO an d CFO for 2021 wer e capp ed at 250% and 20 0% of base p ay resp ecti vely . Mr Du noyer’s ma ximum p ayout for t he per iod dur ing wh ich he was C FO and an E xecu tive Dire ctor wa s capp ed at 20 0 % of his b ase pay f or the pe riod f or whic h he ser ved a s CFO and a n Exec utive Di recto r of As tra Zene ca. T he payout r ange f or eac h metri c is cap ped in l ine with e ach E xecuti ve Dire ctor’s ma ximum b onus o ppor tuni ty to en sure und erp er form ance a gains t one me tric ca nnot b e comp ensa ted for by over achi evemen t again st ano ther . T he ta ble be low shows th e scor eca rd for mulai c outco mes fo r the CEO an d CFO as a pe rcen tage of t arge t bonu s. Annual bonus cont inued Audited 2 021 Gr oup sc orec ar d per for ma nce me asu re s and me tr ics 1 Weighting Th reshold for payout Ta rget Maximum Outcome For mul aic ou tcom e (% of t ar get bo nus) Sc ienc e mea sur es I nno vat ive Sci ence : A n nua l p ipel ine pr ogr ess ion Pipel ine progression events 15% 11 22 33 26 20% Reg ulatory events 15% 22 31 41 37 2 4% Su bto ta l – Sc ienc e m eas ure s 30% 4 4% Fi na nci al me asu re s D eliv er Gr owt h a nd Th erapy A re a Le ader shi p Tota l R eve nue ($b n) 30% 32 .1 33 .1 3 4.1 3 4.7 60% A chi eve Gr oup F ina nci al Ta rge ts Cas h  ow ($b n) 20% 4.8 5.6 6.5 6.3 34% Core EP S ($) 20% 5.04 5. 25 5.46 5.3 4 29% Su bto ta l – Fi na nci al mea sur es 70% 63% Tot a l 2 10 0% 16 8% Key: Ba r cha r ts ar e i nd icat ive of 20 21 per for ma nce; sc al es do not st ar t fro m z ero . 1 T he Com mit te e r ev iewed t he 2021 Gr oup scor eca rd ta rge ts fol lowi ng the ac qu isi tion of A lex ion to ree ct t he impa ct of the ac qu isit ion on t he Comp any ’s r esu lts . T he Com mit te e is con d ent th at t he in crea ses ap plie d t o t he ta rge ts dur in g t hat rev iew en su red th at the y re mai ned a mbit iou s an d s tr etc hin g. The Comp any do es not int end to di sclo se the or igi na l per for ma nce ta rget s, se t p rior to t he acq ui sit ion, a s t he adju st ment to th e t ar get s r elat es to a si ngle di sea se are a (R are Di sea se), wh ich is th eref ore com merc ia lly se nsit ive . 2 D ue to roun di ng, the to ta l f ormu la ic outco me di ers f rom th e a r ith met ic tota l of the i ndiv idu al met ri c o utcom es dis clo sed ab ove. Pipe line pr ogre ssio n events i nclud e Phase II s tar ts a nd pro gres sion s, and NM E and life -c ycle man agem ent po sitive Ph ase III inve stme nt dec ision s. Regulatory events include NME a nd m ajor life-cycle management regional submissions and approvals. F ur ther detail on our Acc elerate Innov ative Sci enc e strate gic pr iori ty an d thes e events is i nclud ed fro m page 13 of this A nnua l Repo rt. A num ber of f ur ther sc ienti ﬁc ach ieveme nts dur ing 2021 have not b een t aken into ac coun t in the for mula ic Gro up sco reca rd outc ome, as t hey were add ition al to the co hor t set at t he sta rt of t he year. Thes e have inste ad bee n con side red an d reﬂe cted in th e Comm itte e ’ s ﬁna l bonu s deter minati on. 10 8 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Cor porate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d Annual bonus cont inued In 2021 , D eliver G row th and T hera py Are a Leade rsh ip mea sure d T o tal Reve nue, exclud ing reven ue from Va x ze vr ia until O ctobe r 2021 , whe n it was sup plie d on a not-for-proﬁ t basi s. This t arge t was set a nd evalu ated at bu dget exch ange r ates at th e begi nning o f the year a nd evalu ated at th ose rate s at the e nd of the p er form ance p erio d, so that a ny ben eﬁcia l or adve rse m ov eme nts in c urre ncy , wh ich ar e outsi de the Co mpany ’ s co ntrol, do no t impac t reward o utcom es. Th e Cash ﬂow m easu re is se t and evalu ated at t he actu al exchan ge rate a nd is evalu ated by ref eren ce to net ca sh ﬂow fro m oper ating a ctivi ties l ess c apita l expe nditur e addin g back pr oce eds fr om disp osa l of inta ngible a sse ts, to be fu lly tra nspa rent wi th all e leme nts ea sily d erive d from th e Grou p IFRS cas h ﬂow sta temen t. The C ore EPS an d T o tal Reve nue me asure s are eva luated by r efere nce to bud get excha nge ra tes, so th at any be neﬁc ial or ad vers e moveme nts in cu rren cy , whi ch are o utsid e the Co mpany’s cont rol, do no t impac t rewar d outco mes. Overall assessment Du ring 2021 , t he Exec utive Di recto rs’ indi vidua l per for manc e was as ses sed in t he follow ing key are as whi ch alig n with the C ompa ny’ s ob ject ives. Pascal Sori ot 2021 was a noth er tr uly exce ption al yea r for As tra Zen eca un der M r Sori ot’s lea der ship. A long w ith th e deli ver y of the ﬁn anci al an d scie ntiﬁ c per for man ce in an othe r unp rec ede nted ye ar , t he Com mit tee co nsid ere d Mr Sor iot’s st rong l eade rsh ip and r esp onse t hrou gh the c ontin ued COV ID-1 9 pa nde mic in a dditi on to his exc elle nt performance against his per sonal objectives. COV I D-19 re spon se I n 2021 , Mr S ori ot cont inue d to work t irel ess ly with m ulti ple Gove rnm ent po licy m aker s, Mini ster s of He alth a nd Hea ds of St ate aro und the wo rld i n orde r to sec ure pr oduc tion a nd de liver y of A stra Zen eca’s COVID - 19 vacc ine, Va x zev ri a . Imp or tan tly , M r Sor iot en sure d Ast raZ enec a was th e ﬁrs t phar mac euti cal c ompa ny to sign u p to COVAX , and w ithin a ye ar of th e ﬁrs t do se of the va ccin e rolli ng of f the pr oduc tio n line, to gethe r wit h our pa rtn er s we rele ase d over 2.5 bi llion d ose s of Va xz evr ia to more tha n 1 8 0 coun trie s acro ss se ven con tine nts. C halle nge s were f aced e arl y on due to t he com plexi ties i nvolve d in man ufac turi ng vac cine s whic h led to d elays i n the num ber o f dose s availa ble fo r deli ver y to EU mem ber s tate s agai nst or igin al es timate s. Howeve r , a se ttle men t was re ache d, und er whi ch As tra Zene ca co mmit ted to de live r 200 mi llion d ose s on an ag ree d sche dule ove r the s econ d hal f of 2021 a nd ﬁr st qua rte r of 2022. T o d ate, As tra Zene ca’s vacc ine is e stim ated to have h elp ed prev ent 50 mi llion C OVID - 1 9 ca ses, ﬁ ve mil lion ho spi tali sati ons, a nd hel ped s ave more t han on e milli on live s. Mr S orio t has al so rei nfor ced th e Grou p’ s c ommi tmen t to cont inuin g the ﬁg ht aga inst C OVID - 1 9 w ith th e laun ch of a new Vac cine s & Imm une T hera pie s Unit. W ith co ntin ued st rong d ema nd for A stra Zen eca’s vacc ine s, as wel l as Evus hel d , the only long-acti ng antibody wit h Phas e III dat a dem onst ratin g ben eﬁt in b oth the p reven tion a nd tre atme nt of COVI D- 19, and w ith a foc us on h elpin g the mo st vul ner able p eop le, Mr So riot h as ce ment ed As tra Zene ca’ s po sitio n as an i ndus tr y lead er in th e pand emi c resp onse . Demon strat ing lea ders hip t o suppo rt dev elopm ents i n globa l li fe scienc es Th roug hout 20 21 , Mr S orio t demo nstr ated h is inﬂu enc e and re spe cted p osi tion a s a world l ead er on key is sue s in hea lthc are th rou gh his multi ple engagements wit h senior e x t ernal stakeholders. Highlights included par t icipation in the World E conomic Forum Da vos Dialogues, the W o rld Health Assembly and notably also the G7 Lea der s’ Summ it whe re Mr So riot wa s the on ly bu sine ss le ader a nd onl y hea lthc are exec utive to b e invite d to at tend. Lea ding in Env i ron ment al, S oc ial & Go ver na nce ( ES G) performance Und er Mr S orio t’s lead ers hip, As tra Zene ca ha s cont inue d to dem onst rate co mmit ment to i ts ESG p ract ice, a nd to mai ntai n a lead er ship po sitio n exte rna lly ac ross t he ind ustr y wit h its su sta inab ilit y str ategy d elive r y . In 20 2 1, Mr So riot l aunc hed th e cro ss-h eal thca re se ctor SMI H eal th Syst ems ta sk for ce wit h HRH Th e Prin ce of Wal es and g loba l hea lth le ader s to acc ele rate th e deli ver y of net-zero pat ient- cen tric h ealt hca re. Mr So riot i s the Ch air for t his ta sk for ce. In re cog nitio n of the C ompa ny’s effo rt s, As tra Zene ca was aw arde d the T e rra C ar ta se al at CO P26 by HRH T he Pri nce of Wa les as p ar t of th e Sust aina ble Ma rket s Initi ative (S MI). As tra Zene ca is a lso on e of onl y seven c ompa nies wo rld wide (a nd the on ly pha rma ceu tica l) to have its climate targets veriﬁed b y the Science Based T a rgets initiative (SBTi). As tra Zene ca was d oubl e A liste d on CD P for the s ixt h year r unni ng, an d sinc e laun chin g Heal thy Hea rt A fri ca we have now c ond ucte d ov er 22 million bl ood pressure screenings. Ma k ing A st ra Zen eca a Gr eat Pla ce to Work Mr S orio t conti nue s to overs ee an d drive a cco unta bilit y for A str aZe nec a ’s I&D st rateg y thro ugho ut the o rgan isa tion a s Chair o f AstraZene ca ’s g lobal I&D council . Th e Grou p’ s p rogr ess wa s rec ogni sed ex tern ally i n 2021 , wi th As tra Zene ca’ s inc lusi on on th e 2021 Blo ombe rg Ge nde r - Equal ity I ndex, Di vers ity I nc’ s 2021 T o p 50 com pani es for d iver sit y and T o p 50 com pani es for LG BT emp loyee s, the F inan cial T ime s 2021 Lead ers i n Di vers ity, Forb es 2021 Wor ld’s T op Fem ale -Fri endl y Comp anie s and t he Tim e T op 50 e mploye rs fo r wome n. For th e sec ond ye ar ru nning , Astr aZe nec a ear ned th e ma ximu m scor e of one h undr ed on th e Huma n Righ ts Cam paig n Index , resu lting in a de sig natio n as on e of the 2021 Be st Pla ces to Wo rk for LGB TQIA+ Equ alit y . Th e Grou p also l aunc hed p ilots o f the Cli nica l T ri al Di vers ity I ndex. T his In dex will h elp A stra Zen eca to m ake dat a drive n dec isio ns tha t impr ove tria l diver sit y whi le prov iding d ata we n eed to sho w the beneﬁt of our me dicines in diverse patient populations. We con tinue d to acc ele rate ou r Gre at Plac e to Work a mbiti on of bu ildin g a cult ure of li felo ng lea rnin g, thr ough d evelop men t programmes aimed at rising leaders from t he Emerging Mark ets, women leaders, senior leaders and the launch of functional learning academies. Fifteen thousand line managers participated in training to develop their coaching capabilities, underpinning a successful tra nsi tion to o ur new pe rf orm ance d evelo pmen t app roac h, with th e rem oval of pe rf orma nce r atin gs for th e ﬁrs t time in 2 021 . Th e impa ct of the se deve lop ment i nter vent ions a nd our c onti nued f ocus o n buil ding a l ear ning cu ltur e was reﬂ ecte d in the N ovemb er Pul se sur vey, with 9 0 % of em ploye es ta king t ime to co mple te the su rvey. 85% of emp loyee s beli eve that A str aZe nec a is a Gre at Plac e to Work a nd 88% be lieve th ey had a n oppo rtu nit y to impr ove thei r exis ting sk ills a nd lea rn new s kill s. 10 9 As tra Ze nec a A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 Di rec tor s’ Remu ner atio n Re por t / An nua l Repo rt on Re mune rat ion Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t Annual bonus cont inued Aradhana Sarin Lea ding in Env i ron ment al, S oc ial a nd Gov ern anc e (E SG ) performance Sin ce be ing ap poin ted as C FO , Dr S arin h as be com e a memb er of th e Amb ition Z ero Ca rbo n Gover nanc e Gro up. Thi s grou p hold s responsibility for mon itoring t he progress on Ambition Zero Car bon – Astra Z eneca’ s commitment to be come zero carbon by 2 025 ac ross o per atio ns (site s and ﬂ eet) wi thou t car bon cr edit s, an d carb on ne gati ve in the A stra Zen eca va lue ch ain by 20 30. As a l eade r on thi s comm itte e and i n clos e par tne rsh ip wit h Corp ora te Aff air s and Gl obal G over nmen t Aff air s and Pol icy tea ms, D r Sar in has h elpe d the Gov e rnance Group e stablish a leade rship position for AstraZeneca externally . A lexion i nteg ration In he r sho rt ti me as CFO, D r Sar in has d emon str ated st rong l eade rs hip alo ng wit h the ab ilit y to quic kly i dent ify e fﬁ cien cies a nd imp rovem ents . The se qua litie s have be en in tegr al to the p rogr amm e of work to i ntegr ate Al exion a nd se cure t he anti cipa ted syn erg ies arising from t he acquisition . Cr eat ing a n ente rpr is e- w ide imp act t h rough Glob al Bu si ness Se rv ic es (GB S) Und er Dr S ari n ’s lead ers hip fo r the se cond h alf of t he year, in 2021 a tot al of over 2 00,0 00 ho urs we re fre ed up, a nd GBS d elive red m ore tha n $1 6 0 milli on in be neﬁt s with ove r $20 mil lion s aved thr ough p roc ess o ptimi sati on and i nnovat ion. In th e sec ond ha lf of the ye ar GB S expan ded t he sco pe of it s ser vic es in p rocu reme nt, t ax, l ear ning a nd digi tal s olut ions , expan ding aut omati on, pr oce ss min ing an d anal yt ics a nd AI. Si gniﬁ can t chan ges we re mad e in the op era ting m odel to f ur the r unlo ck the po tenti al of the func tion an d reinforce process standardis at ion. Marc Dunoyer Mr D unoyer h eld th e role o f CFO and E xecu tive Di rec tor of As tra Zene ca in 20 21 until h e stepp ed dow n from t he Boa rd wit h eff ect f rom 1 Aug ust 20 2 1 to ta ke on his new role as CEO , Alexion and Chief Strategy Ofﬁcer, A straZeneca. As CFO , his ex ceptional global ﬁnancial leadership enabled AstraZene ca to have another succes sful year in unprecedented times. A lexion ac qu isitio n Mr Dunoyer’ s leadership in the ﬁrst half of 2021 delivered the successful completion of the Alexion tra nsaction in July 2021 . This mil esto ne ach ieveme nt ac cele rate d Ast raZ ene ca’ s s trate gic a nd ﬁna ncia l jour ney, addin g Rare D ise ase a s a third g row th eng ine alongside Oncology and BioPharmaceuticals. Lea ding in Env i ron ment al, S oc ial a nd Gov ern anc e (E SG ) performance In 202 1 , Mr Dunoyer continued as Executiv e Sponsor of AstraZenec a ’s award-w inning, global philanthropy initiativ e: the Y oun g Hea lt h Pro gra mme ( YHP). L ed by Mr D unoyer, YHP ex pand ed into s even ne w coun trie s in 2021 . I t reac hed m ore th an four m illio n youn g peop le and trained more t han 60,000 healthcare practitioners. Through its par t nership with UNICE F , YHP dev elop ed ﬁve global learning mo dule s and a Y o uth Ad vocac y Guid e to incr eas e youth i nvolvem ent. Japa n In 2021, Mr Dun oyer pl ayed a cr itic al rol e in lea ding A str aZe nec a Japa n throu gh an othe r year of s tron g per for man ce and g row th, be comi ng the l arge st ph arm aceu tica l com pany in J apan i n 2021 , up f rom 5th i n 2020. Signiﬁcant approvals obtaine d dur ing the year included Calquence for chronic lymphocytic leuk e mi a, For xiga i n chro nic he ar t fail ure and chronic kidney disease and Saphnelo for s ystem ic lup us er y them atosu s. Th roug hout t he year A str aZe nec a Japa n succ es sfull y launched Breztri and wa s the ma rket le ade r in T agrisso (whi ch in 2021 ac hieve d more t han 100 bi llion Y EN in an nual s ale s) , Imﬁnzi , L ynparza , Nexium , Fasenra , For xiga a nd Lok elma . Under Mr Dunoy e r’ s leadership, and one y e ar after launch, AstraZeneca has the largest open innova tion ecosystem in Japan. O v e r the yea r , 15 innova tion p roje cts we re init iated to d evelo p hea lthc are so lutio ns tha t have the p otent ial to tr ans form di sea se ma nage ment a nd patient outcomes. Cr eat ing a n ente rpr is e- w ide imp act t h rough Glob al Bu si ness Se rv ic es (GB S) In th e ﬁrs t half of 2 021 , un der Mr D unoye r’s lead ers hip, GBS c ontr ibu ted suc ces sfu lly to tr ansf ormi ng inte rac tions w ith he alth car e practitioners through support to vir tual and hybrid meetings, fost e ring a culture of lifelong learning by supporting the deliv e ry and t he management of d igital learning, and standardising and automating adv erse events reporting, product quality complaints a nd me d ical information requests. Fina l deter mina tion of E x ec utive Di recto rs’ bon uses In de termi ning the a nnua l bonus o utt urn for E xecu tive Dire ctor s, the R emune rati on Comm itte e cons ider s the fo rmula ic Gro up sco rec ard outc ome, as we ll as the ove rall bu sine ss pe rfo rma nce, sh areh older ex per ienc e and the p er sonal c ontr ibuti on of the in dividu al Exe cutive. A d escr iptio n of the Ex e c utiv e Direct ors’ personal achie vements is d etailed abo ve. In co nsid erati on of his exce ption al lea der ship an d per sona l contr ibut ion – par ti cular ly in re latio n t o As tra Zene ca’ s COVI D- 19 resp onse a nd the suc ces sful i ntegr ation of A lexio n – the Com mitte e dete rmine d the bo nus out tur n for Mr So riot s hould b e 1 9 0 % o f targ et (or 95 % of ma ximu m) . Thi s amou nted to 237 .5% of bas e pay . Th is is in li ne with th e appr oach to dif fer entia te bonu s awards fo r indiv idual s in the wi der wor kfo rce tha t have ma de an excep tiona l contr ibuti on in 2021 . Th e Commi ttee d eter mined t he bonu s out turn fo r Dr Sa rin sh ould be 168% of targ et (or 84% of ma ximum, 168% of bas e pay) and, fo r the pe riod whi ch he se rve d as an E xecuti ve Dire ctor , t he bonu s out turn fo r Mr Dun oyer shou ld be 168 % of ta rget (or 8 4 % of ma xim um, 1 6 8 % of b ase pay ) . 110 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Cor porate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d Def erre d Bonu s Plan A pro por tion o f each E xecut ive Dire ctor’s pre -ta x annu al bonu s is com puls orily d efer red un der the D efer red Bo nus Pla n (DBP). In re spe ct of the bon us defe rre d, the Exe cutive D irec tor is gr anted a c ondit ional awa rd over sh ares . No fur the r per for man ce con dition s appl y to DBP sha res, b ut rel eas e at the en d of the thr ee-ye ar defe rra l per iod is or dinar ily su bjec t to contin ued e mploym ent. O ne half o f the bon us ear ned i n resp ect of pe rfo rma nce dur ing 2020 wa s defer red a nd det ails of th e cons eque nt DBP awa rds gra nted in 20 2 1 a re show n below. One ha lf of the E xecut ive Dir ecto rs’ bonu s ear ned in r espe ct of pe r forma nce du ring 20 2 1 h as be en defe rre d and the c onse quen t DBP awar ds are exp ecte d to be gra nted in Ma rch 2022. Audited 2021 Grant 2022 Grant Ordinar y Shares gra nted Grant date Grant price (p enc e per s hare ) 1 Fac e value £’ 000 2021 B onus d efer red £’ 000 Pascal Sorio t 16, 9 44 5 Marc h 2021 6844 1,1 6 0 1, 5 76 Aradhana Sarin 2 n /a n /a n /a n /a 298 Marc Dunoy er 9,0 57 5 M arch 2 021 6844 620 386 1 T he gra nt pr ice i s the av erag e clos ing s har e pri ce ove r the t hr ee dea li ng day s pre ced ing g ra nt. 2 D r Sa ri n w as app ointe d in Aug ust 2 021, fol lowi ng th e 2 021 DBP Gr ant (wh ich re late d to per for ma nce dur in g t he 20 20 n anc ia l y ear ). 5 0% of Dr S ar in’s pro- rate d bon us in res pec t of the 20 21 n anci al ye ar, wi ll be de fer red to sh are s ex pe cte d to be g rant ed in Ma rc h 2 02 2. 2 022 G ro up sc or eca rd p er for ma nce m ea sur es a nd me tr ics Measure weighting Underlying metrics (if applicable ) Metric weighting 2022 target Innovat ive Science: Annual pipeline progression 30% Pipeline progression ev ents 15% C Regulator y events 15% C De liver G row th and T her apy Ar ea Le ader ship 30% To t a l R e v e n u e 30% C Achiev e Group Financial T argets 40% Cas h ﬂow 20% C Core E PS 20% C Ke y Ta rget i ncr eas ed vs 2 02 1 ta rget Ta rget d ecr eas ed vs 2 021 t ar get Target const ant C Com mer cia ll y se nsit ive We inten d to discl ose the 20 22 Grou p scor eca rd outc ome, an d detai ls of the p er form ance hu rdle s and ta rget s, in the 202 2 Dire ctor s ’ Rem uner ation R epor t fol lowing th e end of th e per for manc e per iod. Th e per for manc e targ ets ar e curr ently c onsi dere d to be com merc ially se nsiti ve as pros pec tive dis closu re may pre judi ce the Co mpany’s com merc ial inte rest s. Exec utive Di recto rs’ ind ividu al cont ribu tion wil l be as ses sed by re feren ce to indi vidua l goal s in line wi th the Co mpany’s obje ctive s for the ye ar . Annual bonus cont inued 111 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t Long-term incentives Lon g-ter m ince ntives in clud ed in the E xecut ive Dire ctor s’ reali sed pay f or 2021 ﬁgur e : 201 9 PSP Mr So riot ’ s an d Mr Dun oyer’s reali sed pay fo r 2021 inclu des th e value of PS P awards wi th per for man ce per iod e nded 31 De cemb er 2021 . Th ese sh ares a nd divi dend e quiva lents w ill not be r elea sed to th e Dire ctor s until th e awards ve st at the e nd of the ir res pect ive holdi ng per iods . Th e values o f the sha res du e to vest have be en ca lcula ted usi ng the aver age cl osing s hare p rice ove r the thr ee- month p eri od end ed 31 Dece mbe r 2021 (8722 pen ce). The ta ble be low provi des a b reakdown s howing t he face va lue of th ese sh ares a t the time t hey were gr ante d, the valu e that is at tribu tab le to shar e pric e appr ecia tion sin ce gr ant and t he value o f divide nd eq uivale nts ac crue d on the se sha res over th e releva nt per for man ce pe riod. Fur the r infor mati on abo ut the in dividu al award s and pe rf orma nce as ses sme nts foll ows the ta ble. Dr S arin wa s appo inted to th e Board i n Augus t 2021 and the refo re doe s not have a 201 9 PSP awa rd. Audited Lo ng- ter m inc en tiv e awa rds w it h pe rf orm anc e pe rio ds e nde d 31 De ce mbe r 20 21 Valu e of sha res d ue to ves t Ordinar y Shares gra nted Perfo rmance outc ome Fac e value at ti me of gr ant 1 £’ 000 Valu e due to share pri ce appreciation 2 £’ 000 Dividend equivalent ac cru ed over performance period £’ 000 Long-term incentives total £’ 000 Pascal Sorio t 2 019 PS P 10 2,47 5 9 5% 6 ,1 2 0 2, 371 619 9 ,110 Marc Dunoy er 2 019 P SP 48,6 90 9 5% 2,9 08 1,1 2 7 294 4,3 28 1 C alc ul ated us ing t he gra nt pric e of 62 87 pen ce for 2019 PSP aw ard s. 2 C alc ul ated us ing t he di ere nce bet we en the g ran t p ric e a nd th e a vera ge clos ing sh are pr ice ove r the t hre e-m onth pe rio d ended 31 Dec em ber 20 21. Th e 20 19 PSP awar ds gra nted on 8 Ma rch 201 9 a re due to ve st and b e rele ased o n 8 Marc h 202 4 on co mple tion of a fu rt her t wo-year h oldin g pe riod. Pe rfo rma nce over th e per iod fro m 1 Janu ar y 20 19 to 3 1 D ece mbe r 202 1 will r esul t in 95 % of t he award ve sting, b ase d on the fol lowing as ses smen t of per for manc e. As note d on pag e 99, the 201 9 PS P targ ets wer e reviewed i n light of t he enla rge d Group f ollowin g the acq uisit ion of Al exion. T he Innovat ive Scie nce, De liver G rowt h and Th era py Area L eade rsh ip and EBI TDA targ ets wer e all inc reas ed in lin e with th e Commi ttee’s app roac h of ensu ring p er form ance t arge ts are n ot mater ially m ore or l ess s tretchi ng as a re sult of t he tran sact ion an d to contin ue to ince ntivi se str ong de liver y . No a men dment s were ma de to the TSR o r Cash ﬂ ow per for manc e meas ures . 2 0 19 P SP pe rfo rm anc e meas ur es an d met ric s 1 Weighting Th reshold (20 % ve sti ng) Maximum (10 0% ve sti ng) Ou tcome Payout I nn ovat ive Sc ienc e: F ir st appr ova ls and N ME volu me ove r t hr ee yea rs N ME Ph ase II I /re gi str atio na l v olum e 8% 7 13 15 10 0 % Reg ulatory events 12% 10 19 26 10 0% Su bto ta l – In nov ativ e S cie nce 2 20% 10 0% D eliv er Gr owt h a nd Th erapy A re a Le ade rsh ip ($ bn) 20% 2 5.0 3 0.0 31. 0 100 % C ash ow ($ bn) 20% 10.0 14. 0 15.5 10 0 % EB IT DA ($b n) 20% 19. 0 2 4.0 22 .0 75% Total sha reholder retu rn 20% Me dian UQ 3 UQ 10 0% Tot a l 2 10 0% 95% Key: Ba r cha r ts ar e i nd icat ive of 2019 P SP per for ma nce ; s ca les do not st ar t fr om zer o. 1 T he Com mit te e r ev iewed t he 2019 PS P t ar get s f ollow i ng t he acq ui sit ion of Ale xio n to re ec t t he im pact of t he acq uis itio n on t he Comp any ’s r esu lts . The Com mit te e is con de nt th at the in crea ses ap plie d t o t he ta rge ts dur in g th at rev iew en su red th at t hey rem ai ned am bit ious a nd str etc hi ng. The Com pan y d oes not in tend to di scl ose th e o rig in al De live r Grow th a nd The rapy A rea Le ader shi p t ar get , s et pri or to t he acq ui sit ion, a s t he adju st ment to th e t ar get rel ates to a si ngle di sea se are a (R a re Di sea se), whi ch is the refo re com merc ial ly se nsit ive. T he oth er orig in al ta rge ts wer e di scl osed i n t he Comp any ’s A n nua l Rep or t f or the yea r ende d 3 1 De cem be r 2019. 2 T he su btot al an d tot al re ec t the wei ghti ngs of th e i nd ivid ual me tr ics. 3 UQ = Up per Q uar t ile. Th e Delive r Grow th and T her apy Are a Leadership target ( measuring aggregate Pro duct S ales of t he Onc olog y , New CVR M, Re spira tor y , Japa n and Em ergin g Marke ts sales platfor ms, p re viou sly referred to as grow th pl atfo rms) an d EBITDA ta rget a re set at bu dget exch ange r ates at th e begi nning of the p er form ance p eri od and eva luated a t tho se rate s at the en d of the pe rf orma nce period, so that an y beneﬁcial or adverse mov ements in currency , which are outside the C ompany ’ s co ntrol, d o not imp act rewar d outco mes. Th e EBITDA me asure i s ass ess ed usi ng cumulative Repor t ed EBITDA, ex cluding non -ca sh movem ents o n fair val ue of contingent consideration on business combinations and gains on disposals of intangible assets. Th e Cash ﬂow m easu re is as ses sed u sing cum ulative n et cas h ﬂow from o per ating activities less capital expenditure adding back pro cee ds fro m dispo sal of i ntan gible a sset s and mov e ment in proﬁt par t icipation li ability . As tra Zene ca ran k ed ﬁ fth wi thin the T SR pe er gro up, in the up per qu ar tile. Fo r mo re in for mat ion abo ut t he TS R pe rfo rm anc e o f t he Com pany a nd t he TS R co mpar ator gr oup, se e p age 12 2. 11 2 A st raZ ene ca A nnu al Rep or t & For m 20 -F I nfo rm atio n 2 021 Corporate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d PSP awa rds gr anted du ring 20 2 1 Du ring 2021 , c ondi tiona l awards of s hare s were gr anted to th e Exec utive Dir ecto rs with f ace val ues eq uivale nt to 650% of ba se pay for Pa sca l So riot an d 450% of bas e pay for D r Sari n unde r the PSP . D r Sar in ’ s award wa s pro -rate d to reﬂe ct that s he took u p her rol e as CFO pa rt way thr ough th e year . Fac e value is c alcu lated u sing th e gran t pric e, bein g the avera ge clo sing sh are pr ice over t he thre e deali ng days p rece ding gr ant. Th e 1 4 May 2021 gra nt, foll owing the a pprova l of the pol icy at the 20 2 1 AGM, was m ade at th e same s hare p rice a s the 5 Mar ch 2021 gra nt. Mr Du noyer re ceive d a con dition al award w hilst h e was CFO and E xecu tive Dire ctor w ith a fac e value e quivale nt to 450% of hi s base p ay . Mr Du noyer ste ppe d down fro m the Boa rd on 1 Aug ust 2021 bu t rema ins an e mploye e of Astr aZe neca a nd the refore h is in-ﬂi ght inc enti v e award s will co ntinue to r un the ir cou rse. Per for manc e will be a sse sse d over the pe rio d from 1 Ja nuar y 2021 to 31 Dece mbe r 2023 aga inst the m eas ures ou tline d below to d eterm ine the p ropo rti on of the awar d that ves ts. A fu rth er two -year h oldin g per iod will t hen ap ply bef ore ves ting, whi ch is sc hedu led to oc cur on th e ﬁf th annivers ary of grant. Ordina ry Shares gra nted Grant date Grant price (pence per sha re) Fac e value £’ 000 End of performance period End of holding period Pascal Sorio t 10 6 ,6 5 5 5 Ma rch 2021 6844 7, 2 9 9 3 1 December 2 023 5 Mar ch 2026 Pascal Sorio t 1 19, 3 91 1 4 M ay 2021 6844 1, 32 7 3 1 December 202 3 14 May 2026 Marc Dunoy er 51, 8 28 5 Ma rch 20 2 1 6844 3 , 547 31 December 2023 5 Mar ch 2026 Aradhana Sarin 1 9, 414 1 3 A ugus t 2021 8 209 1, 5 9 4 3 1 December 2023 13 Augus t 2026 1 T hi s awa rd form s par t of the P SP awa rd gr ante d to M r S or iot on 5 M ar ch 2021 a nd was ma de to ta ke accou nt of the re vis ed li mit s for the P SP appr oved by sh are holde rs at the Com pan y’s 20 21 AGM. Th e 202 1 PSP p er form ance m easu res foc us on sc ienti ﬁc, ESG, c omme rcial a nd ﬁna ncia l per for manc e over the th ree -year pe rf orma nce pe rio d. Th e 202 1 PSP p er form ance m easu re tar gets wer e reviewe d in light o f the enl arge d Grou p followi ng the ac quisi tion of A lexion a nd adju stme nts were m ade in li ne with th e Comm itte e ’ s a ppro ach of en suri ng per fo rman ce tar gets s hould n ot be mad e mater ially m ore or l ess s tretchi ng as a res ult of th e trans acti on and to c ontinu e to ince ntivis e stro ng deli ver y . Th e ﬁve per for manc e metr ics at tac hed to the 20 2 1 P SP awards a re det aile d below wi th tar gets s hown as ad juste d by the Com mit t ee fo llowin g its revi ew on com pleti on of the A lexion a cquis ition, a s des crib ed on pa ge 99. T went y pe rcent o f the award w ill vest i f the thre shol d level of per form ance is a chieved; th e ma ximum l evel of pe rfo rman ce mus t be ach ieved un der ea ch mea sure fo r 1 0 0 % o f the award to ve st. Rel ative tota l shar ehol der ret urn ( TSR) ( 20 % o f award) TSR p er form ance i s ass ess ed aga inst a p redete rmin ed pe er gro up of glob al pha rmac euti cal co mpan ies an d cons ists of A bbVie, A mgen, A stell as, BMS, D aiic hi Sank yo, Gil ead, GSK , Joh nson & Jo hnso n, Lilly, MSD, Novar tis, N ovo Nordi sk, P ﬁzer , Ro che, Sa noﬁ an d T a keda. T he ra nk whic h the Com pany’s TSR ac hieves over t he per for man ce per iod wi ll deter mine how m any sha res wil l vest un der thi s meas ure. TS R rank ing of t he Com pany % of awar d that ve sts Median 20 % (threshold for pay out) Between median and upper qua rtile Pro rata Upper quartile 10 0% Audited Long-term incentives continued 113 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t Long-term incentives continued Net C ash ﬂow (20% of awar d) Th e Cash ﬂow m easu re is as ses sed u sing cu mulati ve net ca sh ﬂow fro m oper ating a ctivi ties l ess ca pita l expen ditur e addin g back pr oce eds fro m disp osal of i ntan gible a sset s. The l evel of vest ing und er this m easu re is ba sed on a s cale b etwe en a thr esho ld tar get an d an uppe r tar get. Ca sh ﬂow % of awa rd tha t vest s $19 .0 b n 20 % (threshold for pay out) Bet wee n $1 9.0 bn and $ 23.0b n Pro rata $23.0 bn 75% Bet wee n $23.0 bn and $ 27 .0 bn Pro rat a $27 .0b n and ab ove 10 0% De liver Gr owth a nd The rapy A rea Le ader ship (20% of awa rd) For PS P awards gr ante d in 2021 , the De liver G rowt h and Th era py Area L eade rsh ip metr ic is T ota l Revenu e. Disc losin g the thr esho ld and ma ximu m hurdl es for th is mea sure c ould be c onst rued to c onst itute ﬁna ncia l guida nce, w hich is n ot the Co mpany’s inten tion. Th e Deli ver Grow th and T her apy Are a Lead ers hip ( T ota l Revenue) m easu re is thu s cons ider ed to be co mmer ciall y sens itive an d will be di sclo sed fo llowing t he end of the p er form ance p erio d, in the 2023 D ire ctors’ R emune rati on Rep or t. This m easu re is eval uated by re feren ce to bud get excha nge ra tes. Inn ov ative S cien ce: Fir st app rovals an d NME volum e over thre e year s (30% of award ) Per for manc e is as ses sed us ing dua l indic es whi ch mea sure r egula tor y and pip elin e prog ress ion event s, allow ing dis clos ure of ta rgets a t the be ginnin g of the pe rf orma nce pe rio d. NME Phase III/ registrational volume (1 2% of awa rd) % of awa rd tha t vest s Re gul ator y even ts (1 8% of awa rd) % of awa rd th at ves ts 9 20 % (threshold for pay out) 13 20 % (threshold for pay out) Bet wee n 9 and 14 Pro rata Bet wee n 1 3 a nd 20 P ro rata 14 75% 20 75% Bet wee n 1 4 an d 1 8 Pro rata Bet wee n 20 and 26 Pro rata 18 10 0% 26 10 0% Am bitio n Zero Ca rbon (10 % of awa rd) Thi s mea sure re ﬂect s the imp or tanc e of elim inatin g gree nhou se gas (GH G) emis sion s from o ur Sco pe 1 and S cope 2 o pera tions by 20 2 5. Re ducti ons ar e meas ured a gains t our 201 5 b aseli ne, and c alcu lated in l ine with t he World Re sou rces In stitu te/ World Bu sine ss Cou ncil fo r Sus tain able D evelop ment GH G Protoc ol meth odolo gy for ac coun ting an d repo rti ng of our e mis sions f ootpr int. As p ar t of the adj ustm ent of 2021 ta rgets to r eﬂec t the imp act of the A lexio n acqui sitio n, des crib ed on pa ge 99, the A mbiti on Zero C arbo n targ et has b een ex pres sed in k tC O 2 e (k ilotonn es of ca rbon d ioxide e quival ent) ra ther th an as a pe rce ntage c hang e from ou r 201 5 bas eline. E xpr ess ing the t arge t and our p er form anc e in k tCO 2 e is in tende d to be more t rans pare nt and u nder sta ndab le, ther eby more c lea rly reﬂ ecti ng the imp act we wan t to have on soc iet y . Emissions (ktCO 2 e) % of awa rd tha t vest s 272 k tC O 2 e 20 % (threshold for pay out) Between 27 2 ktCO 2 e an d 2 4 6k tCO 2 e Pro rata 2 46 ktCO 2 e 75% Between 2 46 k tCO 2 e an d 220 kt CO 2 e Pro rata 220 k tCO 2 e an d below 10 0% Audited 114 A st raZ ene ca A nnu al Rep or t & For m 20 -F I nfo rm atio n 2 021 Corporate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d Long-term incentives continued PSP p er form ance m easu res for 20 22 gra nt Th e 2022 PSP me asur es rem ain un chan ged fr om the 2021 PSP awa rd. PSP performance measure Measure weighting Underlying metrics (if applicable ) Metric weighting Threshold (20% ves ting) Maximum (10 0% ves ting) Innovat ive Science: First ap proval s and NM E volum e over three years 30% NME Phase III/registrational v olume 12 % 7 14 Regulator y events 18 % 14 28 De liver G row th and Therapy Area Leadership 20% To t a l R e v e n u e Commercially sensitive unt il end o f performance period Cas h ﬂow 20% $20.0b n $28.5bn Relative TSR 20% Median Upper Quar tile Ambition Zero Carbon 10% 207 k tC O 2 e 1 55 ktCO 2 e Re gulator y eve nts mea sure N ME and ma jor life -c ycle man agem ent ap provals ( taki ng into ac count t he ﬁrs t appr oval over the p er form ance pe riod ). NME Phas e III/re gistr ation al volum e meas ures th e total NM E pipe line volu me at the e nd of the p er form ance p erio d. The se two i tems en sure tha t mana geme nt are a sse sse d on both R& D late -sta ge deli ver y (appr ov als) a nd als o futur e pipe line su stain abili ty (volu me). The na me of the I nnovative S cien ce mea sure ha s bee n upda ted, however t he unde rlyi ng metr ics re main u ncha nged. Di sclos ing the t hres hold an d ma ximum hu rdle s for the D eliver G row th and T hera py Are a Leade rsh ip ( T o tal Reve nue) mea sure c ould be con stru ed to co nstitu te ﬁnan cial gu idan ce, whic h is not th e Compa ny’ s i ntenti on. The T o tal Reve nue mea sure i s thus co nsid ered to b e com merc iall y sens itive an d will be di sclo sed fol lowing th e end of th e per for manc e per iod. Th e T o tal Reve nue mea sure i s evaluate d by refer ence to b udge t ex c hang e rates s uch tha t bene ﬁcia l or adve rse move ment s in cur rency, which are o utsi de the Co mpany’s con trol, do n ot impac t reward o utcom es. Th e Cash ﬂ ow meas ure is eval uated u sing ne t cumul ative ca sh ﬂow fr om ope rati ng acti vitie s les s capi tal exp endit ure addi ng bac k proc eeds f rom di spos al of int angib le ass ets. T he com panie s in the TS R comp arato r gro up are s hown on pa ge 1 22. As 20 2 1 s aw Astr aZe nec a enter a n ew chapte r in its G rowt h Throu gh Inn o vatio n Stra tegy , w ith the ac quis ition of Al exion an d the em erge nce of th e V ac cine s & Immun e The rapi es Unit , the Com mit tee reviewe d the co mpos ition of t he TSR pe er gr oup. Thi s revie w considered siz e ( revenue and mark et capitalisation) , por tfolio comparison and geographic presence, with th e Committee det e rmin ing tha t Merck KGa A an d Mode rna be a dded to th e pee r group f or the 2022 P SP award. Ou r Ambi tion Ze ro Carb on mea sure i s base d on our S cope 1 a nd Sco pe 2 emi ssio ns red ucti ons. Fur the r deta il on our c ommi tment c an be foun d from p age 45. As d escr ibed o n page 104, the C ommit tee ta kes into ac coun t a wide ra nge of d ata to ens ure tha t the str etchin g nature o f PSP hurd les is rob ustly te sted a nd that ﬁ nanci al ta rgets a re alig ned wi th the bu sine ss’ s Mi d T e rm Pla n. The C ommit tee wi ll take co nsen sus into a ccou nt when dete rmin ing the a pprop riate l evel of stre tch. PSP awa rds are ex pec ted to be gr anted to t he Exec utive Di recto rs in Ma rch 2022. T he PSP awar d to be gra nted to Dr S arin w ill be eq uivale nt to 450% of ba se pay . The P SP award to b e grante d to Mr Sor iot wil l be equi valen t to 650% of bas e pay . 115 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t Non- Exec utive Di rec tors’ real ise d p a y for 2 021 (tot al single gu re of re m u nerat ion) Th e table s ets ou t all el emen ts of rem uner ation re cei vable by th e Non- Execu tive Dir ecto rs in re spec t of the yea r end ed 31 Dece mbe r 202 1 , alo ngsi de com para tive ﬁgur es for th e prio r year . 20 21 Fees £’000 2020 Fee s £’ 000 20 21 Other £’000 2020 Other £’ 000 20 21 To t a l £’000 2020 T otal £’ 000 Leif Johansson 625 625 74 73 699 698 Eua n Ashl ey – appo in ted 1 Octobe r 2020 103 26 – – 10 3 26 Philip B road ley 17 3 14 8 – – 17 3 14 8 Michel Demaré 14 8 12 5 – – 14 8 12 5 Deborah DiSanz o 10 8 10 8 – – 10 8 10 8 Di ana L ayﬁ eld – app ointe d 1 Nove mber 2 020 92 15 – – 92 15 Sheri McCoy 12 7 12 3 – – 12 7 123 To n y M o k 10 3 10 3 – – 10 3 10 3 Nazneen Rahman 131 11 8 – – 131 118 Andreas Rummelt – app ointe d 1 August 2 021 40 – – – 40 – Marcus Wallenberg 10 7 10 3 – – 107 103 Former Non-Executive Directors Ge neviè ve Berg er – retired 11 May 2 021 37 11 0 – – 37 11 0 Graham Chi pchase – retired 11 May 2 021 37 141 – – 37 141 To t a l 1, 8 31 1, 74 5 74 73 1, 9 05 1, 818 Th e Chair ’ s sin gle tota l ﬁgur e inclu des of ﬁce c osts ( invoice d in Swed ish kr ona) of £7 4,00 0 for 2021 an d £73,00 0 for 2020. Paym ent s to form er Di rec tor s Du ring 2021 , n o payme nts were m ade to for mer D irec tors. Paym ent s for los s of of ﬁce Du ring 2021 , n o payme nts were m ade to Di recto rs for l oss of of ﬁc e. Marc D unoyer s teppe d down fr om the Bo ard in Au gust 2021 , h owever has rem aine d an em ployee of A stra Zen eca an d there fore hi s in-ﬂig ht ince ntive awar ds will c ontinu e to run the ir cou rse. Non- Exec utive Di rec tors’ fee st ru ct ure Th e Non- Execu tive Dir ector s’ fee st ruc ture for 20 22 is set o ut in the t able b elow , alo ngsi de the st ruct ure in pl ace dur ing 2021 . Fe es for th e Non -E x e cuti ve Dire ctor s ( o ther th an the Ch air of the B oard ) are de termi ned by the C hair a nd the E x ec utive Dir ecto rs. Th e fee st ruct ure is revi ewed, but n ot nec ess aril y incre ase d ever y two yea rs. N on-E xecut ive Dire ctor s’ fees we re las t chan ged in Ja nuar y 201 8, w ith inc reas es to the Ch air’s fee, the b asic B oard fe e for oth er Non -E x e cuti ve Dire ctors a nd Sci enc e Commi ttee f ees. Wit h effe ct fr om Janu ar y 2022, the ba sic Bo ard fee f or Non -Exe cutive D irec tors, t he seni or ind epen dent N on-E xecu tive Dire ctor’s fee, a nd fee s for m embe rsh ip of the Aud it Com mitte e and th e Remu nera tion Co mmit tee have be en inc rea sed as s hown in th e tabl e below. No Boa rd mem ber par ti cipate d in any de cisi on rela ting to the ir own fee s. As p ar t of the late st revi ew , the i ncre ased s ize and c omplex ity o f the Ast raZe nec a Grou p followin g the Al exion ac quis ition wa s taken in to acco unt toge ther w ith the in crea se in the B oard’s and it s key Commi tte es’ work loads a nd res pons ibilit ies sin ce 201 8. Ma rket da ta on F TSE 10 compa nies’ non -execu tive dire ctor s fee s were als o con side red, in ad ditio n to data fr om F TSE 30 co mpan ies, to e nsure t hat the leve l of fee s do not hin der th e re cruit ment of D irec tors o f the rig ht expe rien ce and c alibr e for a Gro up of our s cale i n a globa l marke t. Fur ther i nform ation o n the Non -Exe cutive D irec tors’ fe e stru cture c an be fo und wit hin the Re mune ratio n Policy on t he Comp any’s website, ww w .astrazeneca. com. Non-Ex ecutive Director fees 20 21 £’000 2022 £’ 000 Chair of the Board 1 625 625 Basic Non-Executive Direc t or 88 95 Senior independent Non-Executiv e Director 30 40 Me mber o f the Au dit Co mmit tee 20 25 Cha ir of th e Audit C ommi tte e 2 45 45 Member of the Re muneration Committee 15 20 Chair of the Remuneration Committee 2 40 40 Member of t he Sustainability Committee 3 15 15 Chair of the Sustainability Committee 2,3 30 30 Member of t he Science Committee 15 15 Chair of the Science Committee 2 30 30 Non-Executive Dir ector responsible for o verseeing sustainability matters on behalf of the Board 3 7. 5 N /A 1 T he Ch air of t he Boa rd doe s n ot rece ive any ad dit iona l fee s f or cha ir ing , o r be ing a mem ber of , a c omm itt ee. 2 T he com mit tee C ha ir s do not re ceiv e addi tion al fe es for b ei ng a mem ber o f the c omm itt ee. 3 I n Oct ober 2 021, the B oar d es ta bli shed t he Sus ta in abi lit y Com mit tee , w hic h sup ers ede d t he pre viou s gover na nce a rra nge ment. Audited Non-Exec u tive Dire ctors’ remuneration 116 As tr aZ enec a An nua l Repo rt & For m 2 0 -F In for mat ion 2 021 Cor porate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d Dire ctors’ sha reho ldi n gs Audited Posi tion ag ains t minimu m shar ehold ing re quire ment (M SR) as a p erce ntag e of base p ay Beneﬁcially owned sh ares a nd sh are s in a ho ldin g per iod 1 Shares in deferral period 2 Shares subject to perfo rmance conditions Valu e of sha res cou nted toward s MS R as a % of ba se pay 3 Pascal Sorio t 293,4 39 35 ,527 3 2 4,6 0 1 1, 0 76 % Aradhana Sarin 27 ,957 16 0 ,3 8 5 19 , 414 1,1 0 4 % 1 H oldi ng per iod sh ar es inc luded a re tho se whi ch are no t s ubj ect to co nti nued empl oym ent. 2 S ha res in de fer ral p erio ds wh ich ar e su bjec t to cont inue d employ men t. 3 H oldi ng as at 31 D ece mb er 2021. S ha res su bjec t to defer ra l and hold in g p er iods ca lc ula ted net of a the oret ica l 50% t ax rat e. Sh ar es sub jec t t o pe rfor ma nce co ndit ion s a re not i nclude d in th e v alue of sh ar es cou nted tow ard s MS R. Minim um shar eh ol ding r equirem ent s Th e CEO and CFO a re eac h requi red to bu ild a sha reho lding to s atisf y the ir res pect ive minim um sha rehol ding re quire ment s (MSR), ea ch with in ﬁve yea rs of th eir date s of app ointme nt. Th e minim um sha rehol ding re quire ment s for 2021 are s et out b elow . Sha res th at coun t towards th ese mini mum sh areh olding r equi reme nts are s hare s bene ﬁcia lly hel d by the Exe cutive D irec tor and th eir co nnec ted pe rso ns and s hare awa rds tha t are n ot subj ect to fu rth er pe rfo rma nce co nditi ons. Sh are awar ds incl uded a re DBP s hare s in defe rral p eri ods, a nd PSP an d Astr aZe neca Inves tment Pl an (A ZIP) sh ares i n holdi ng per iods , on a net of t ax ba sis. D r Sar in’ s one -o ff re stri cted sh are awar d and the awa rds ma de to repl ace he r in-ﬂig ht Alexi on inc entive awa rds are a lso in clude d on a net- of-tax b asis . A fur th er pos t - emp loyme nt sha rehol ding re quire ment a ppli es to Exec utive Di recto rs. Fo r two yea rs foll owing ce ssa tion of e mploym ent, E xecut ive Dir ecto rs are r equir ed to hol d shar es to the val ue of the sh areh oldin g guide line th at appl ied at th e ces satio n of thei r empl oymen t ; or , in ca ses whe re the in divid ual ha s not had s ufﬁ cien t time to bui ld up sha res to me et the ir guid eline, t he actu al level of s hare holdi ng at ce ssat ion. Th e po st -c ess ation r equir eme nt will be m aint aine d throu gh self- cer tiﬁ catio n, with th e Comm itte e k ee ping th is app roach u nder r eview . Non -E x e cuti ve Dire ctor s are en cour aged to bu ild up, over a p erio d of thre e year s, a sha rehol ding in th e Comp any with a va lue app roxima tely eq uivale nt to the ba sic an nual fe e for a Non -E x e cuti ve Dire ctor (£88 ,000 d uring 20 2 1 ) o r , in the c ase of th e Chair, appr o xim ately e quival ent to his bas ic ann ual fe e (£625,00 0 durin g 2021 ). All N on-E xecu tive Dire ctor s who ha d ser ved fo r a peri od of thr ee year s or mo re as at 31 De cemb er 2021 sub stan tiall y met this ex pec tatio n, base d on the t hree -mo nth avera ge clos ing sh are pr ice for t he per iod en ded 31 Dec emb er 2021 . Di rec tors’ intere sts as at 31 D ecem be r 2 021 Th e followin g tabl e shows th e bene ﬁcial i ntere sts of th e Dire ctors ( incl uding th e intere sts of t heir co nne cted pe rso ns) in Or dinar y Sh ares a s at 31 Dece mbe r 2021 . Executive Directors Beneﬁcial int erest in Ordinar y Shares at 31 De ce mbe r 20 21 1 Beneﬁcial interest in Ordinary Shares at 31 Dec emb er 202 0 1 Pascal Sorio t 293,4 39 3 58, 272 Aradhana Sarin 2 2 7, 9 5 7 – Marc Dunoy er 3 36 3,688 29 4 ,87 5 Non-Executive Directors Leif Johansson 39,0 09 3 9,00 9 Eua n Ashl ey 4 1 ,15 0 1 ,15 0 Philip B road ley 7, 0 4 5 7, 0 4 5 Michel Demaré 2,000 2 ,000 Deborah DiSanz o 1 ,000 1 ,000 Diana Layﬁeld 5 1, 40 0 1, 4 0 0 Sheri McCoy 1,7 36 1,7 3 6 To n y M o k 2,000 1 ,000 Nazneen Rahman 1, 0 17 1, 0 17 Andreas Rummelt 6 3 4,79 0 – Marcus Wallenberg 60,02 8 6 0,028 1 For t he Exe cut ive Di rec tor s, bene ci al in tere sts i nclud e s ha res in hol di ng per iod s w hic h ar e not su bje ct to per for ma nce mea su res or cont inue d employ me nt. 2 A rad ha na S ar in wa s app ointe d on 1 Aug us t 2021. 3 M arc D uno yer’s 20 21 be nec ia l i nte rest s are sh own a s a t 1 Au gu st 2021 whe n he ste ppe d d own a s C FO an d Di rec tor of As tr aZ enec a PLC . 4 E ua n A sh ley wa s app oint ed on 1 O cto ber 20 20. 5 D ia na Lay e ld wa s app ointe d on 1 N ovem be r 2 02 0. 6 A nd rea s Ru mme lt was app oint ed on 1 Aug us t 2 021. Key: 2 021 M SR Sh ar es cou nte d towa rd s MS R 1,076% 1,104% 650% CEO 450% CFO 117 A st raZ ene ca A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 Di rec tor s’ Remu ner atio n Rep or t / An nua l Repo rt on Re mune rat ion Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t Dire ctors’ sha reho ldi n gs co ntinu ed Execut iv e Di rectors ’ share p lan i nterests Th e followin g tabl es set o ut the E xecuti ve Dire ctor s ’ inte rest s in Ordi nar y Sha res un der the C ompa ny’ s s hare pl ans. Pascal Soriot Shares o utstanding at 31De ce mbe r20 21 Share scheme interests G rant date Share s outstanding at 1 Ja nuar y 2021 Grant price (p ence) Shares gra nted in y ear Shares released in y ear Share s lapsed in y ear Share s subject to performance Share s in deferral/ holding period Perfo rmance period end Vesti ng and release date DBP 23/03/201 8 1 3 ,15 7 4853 – 1 3 ,1 5 7 – n /a – n /a 23/03/2021 1, 2 08/03 /20 1 9 9,8 49 6 287 – – – n /a 9,8 49 n /a 08/03/2022 06 /03/2020 8 ,73 4 7376 – – – n /a 8 ,73 4 n /a 06/03 /2023 05 /0 3/2 021 – 6844 16 ,9 4 4 – – n /a 16 ,9 44 n /a 05 /0 3/ 20 24 3 PSP 2 4/03/201 6 10 2 ,473 3923 – 102 ,47 3 – – – 31/ 12 / 20 18 24/03/202 1 4,5 2 4/03/20 1 7 12 1, 2 58 488 0 – – – – 121, 2 5 8 3 1/12 / 2 019 2 4/03/2022 23/03/20 18 1 28,889 4853 – – 1, 2 8 9 – 1 2 7, 6 0 0 31 /12/2020 23/0 3/2023 6 08/03 /20 1 9 10 2, 475 6287 – – – 102 , 475 – 31/ 12 /2 0 21 08/03/202 4 06 /03/2020 8 7, 3 4 6 7376 – – – 8 7, 3 4 6 – 3 1/12 / 2 0 22 0 6/03 /2025 21 /0 5/2020 8,7 34 7376 – – – 8 ,73 4 – 31/ 12 /2 0 2 2 2 1/0 5/ 20 25 05 /0 3/2 021 – 6844 10 6 ,6 5 5 – – 106 ,6 55 – 31/ 12 / 20 2 3 05/03/20 26 7 14 / 0 5 /2 0 2 1 – 6844 19 ,3 91 – – 19 ,3 91 – 31/ 12 /2 0 2 3 14/05/2026 7 AZIP 11/ 0 6 / 2 0 1 3 89, 960 3297 – 89, 960 – – – 31/ 12 / 20 16 01/ 01/ 20 21 8,9 2 8 /0 3 / 2 0 14 20,677 3904 – – – – 20,677 3 1/ 12 / 2 0 17 01/ 01/ 20 2 2 27 / 03/ 201 5 13 ,0 9 5 47 62 – – – – 13 ,0 9 5 3 1/12 / 2 018 01/ 01/2 0 23 2 4/03/20 1 6 10 ,8 0 9 3923 – – – – 10, 8 09 31 /12 / 20 19 01/ 01/2 0 24 To t a l 7 17, 4 5 6 14 2 , 9 9 0 205,59 0 1 , 289 324,60 1 328 ,966 1 M ar ket pri ce on 23 Ma rch 20 21, the ac tu al dat e o f r elea se, wa s 734 4 penc e. 2 A n add itio na l 1, 1 71 O rdi na ry S har es wer e r elea sed a s a re su lt of t he rei nve stm ent of div iden d eq uiv ale nts acc ru ed dur in g t he defe rr al pe rio d. 3 Awa rd g rant ed fol lowi ng defe rr al of one ha lf of the a nnu al bonu s ear ned i n re spec t of per for ma nce dur in g 20 20, f ur t her det ai l o n p age 111. 4 M ar ket pri ce on 24 Ma rch 20 21, the ac tu al dat e o f r elea se, wa s 7215 penc e. 5 A n add itio na l 16 ,782 Or di nar y Sh are s were re leas ed as a res ult of th e r ein vest men t o f d iv idend e qu iva lents ac cr ued du ri ng the pe rfo rma nce a nd holdi ng pe rio d. 6 9 9% of th e s ha res ent ere d t he hold ing pe rio d, fol low ing as ses sment of pe rfo rm anc e o ver th e p er iod to 31 D ece mb er 202 0. Th e r ema in in g s ha res lap sed . 7 D eta il s of PS P awa rds g ra nted du ri ng 2 021 ar e show n fr om page 11 3. 8 A n add itio na l 2 7 ,9 45 Ord in ar y Sh are s w ere re leas ed as res ult of t he rei nves tme nt of div ide nd equ iva lent s accr ue d d ur ing t he per for man ce and hol din g pe rio d. 9 M ar ket pri ce on 1 1 Fe bru ar y 2021, t he act ua l date of rele ase , wa s 72 47 pe nce. Aradhana Sarin Shares o utstanding at 31De ce mbe r20 21 Share scheme interests Grant / conversion date Share s outstanding at 1 Aug ust 20 21 Grant price (p ence) Shares gra nted in period Shares released in period Share s lapsed in period Share s subject to performance Share s in deferral/ holding period Perfo rmance period end Vesti ng and release date Alexion incentive shares 1 21/07 /2 021 4,589.5 1 – 4,589.5 – n /a – n /a 1 2 / 11 / 2 0 2 1 2 21/07 /2 021 1, 3 31. 5 1 – – – n /a 1, 33 1.5 n /a 28/ 02 /2 022 21/07 /2 021 3, 252 1 – – – n /a 3, 252 n /a 2 1/ 0 7/ 2 0 2 2 21/07 /2 021 3, 252 1 – – – n /a 3, 252 n /a 28/02/2 022 21/07 /2 021 42, 284 1 – – – n /a 42, 284 n /a 28/02/2022 21/07 /2 021 4, 289.5 1 – – – n /a 4,289.5 n /a 01 /02/2023 21/07 /2 021 4, 289.5 1 – – – n /a 4,289.5 n /a 21 / 0 7/ 2 0 2 2 21/07 /2 021 46 ,525 1 – – – n /a 4 6,525 n /a 2 1/ 0 7/ 2 0 2 2 21/07 /2 021 4, 290 1 – – – n /a 4, 290 n /a 2 8/02/2022 21/07 /2 021 9,6 48. 5 1 – – – n /a 9 ,648.5 n /a 01 /02/2023 21/07 /2 021 9,64 9 1 – – – n /a 9, 649 n /a 01 /02/2023 21/07 /2 021 9,64 9 1 – – – n /a 9, 649 n /a 2 1 / 07/ 2 0 2 2 21/07 /2 021 9,64 9 1 – – – n /a 9, 649 n /a 2 8/02/2022 RS U awa rd 1 3/08/202 1 – 8209 12 , 276 – – n /a 12 , 2 76 n /a 01 /02/2023 3 PSP 1 3/08/2021 – 820 9 1 9, 414 – – 19,41 4 – 31/ 12 /2 0 23 1 3 /08/2026 To t a l 15 2, 6 69 31, 69 0 4 ,58 9.5 0 19 , 414 1 60,385 1 Awa rd s ma de to rep lace Dr S ar in’s Ale xio n in cent ive sh are aw ard s whic h were out st and ing at t he tim e of th e A le xion ac qu isit ion , o n t he sa me bas is as ot her pa rt icip ant s. Th ese out sta nd ing in - ight awa rds we re conve rt ed to awa rds ove r Ast ra Ze neca A DR s in acco rda nce w ith t he ter ms of the Me rger Ag ree ment , usi ng the ave rage of th e v olum e-we ighte d a vera ges of the t rad ing pr ice of As tra Z enec a A DRs on t he Nasd aq fr om 13 July to 19 Jul y 20 21 incl usiv e ($ 58. 26 22). T he face va lue of the c onver te d a war ds was $17 . 8m. T he num ber sh own is t he num ber of Or di na ry Sh ar es unde rly ing t he A DR s. 2 M ark et pric e of A str aZ ene ca AD Rs on 12 Nove mb er 202 1, t he ac tua l date of re leas e, was $ 62. 92. 3 O ne- o res tr ic ted sh are awa rd g rant ed to Dr Sa ri n to compe ns ate her for th e f orf eit ure of her pr evio us cont rac tu al sev era nce r ight ent itle ment s, as out li ned on pag e 10 7 . Audited 118 As tr aZ enec a An nua l Repo rt & For m 2 0 -F In for mat ion 2 021 Cor porate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d Dire ctors’ sha reho ldi n gs co ntinu ed Marc Dun oyer Shares o utstanding at 1 Au gus t20 21 Share scheme interests G rant date Share s outstanding at 1 Ja nuar y 2021 Grant price (p ence) Shares gra nted in period Shares released in period Share s lapsed in period Share s subject to performance Share s in deferral/ holding period Perfo rmance period end Vesti ng and release date DBP 23/03/201 8 7, 0 3 7 4853 – 7, 0 3 7 – n /a – n /a 23/03/2021 1, 2 08/03 /20 1 9 4 , 8 74 62 87 – – – n /a 4 , 8 74 n /a 08/03/2 022 06/0 3/2020 4,3 23 7376 – – – n /a 4,323 n /a 0 6/03/ 2023 0 5/ 03/ 20 21 – 6844 9,0 57 – – n /a 9, 057 n /a 05 /0 3/ 20 24 3 PSP 24/03/20 1 6 42 ,73 9 3923 – 4 2,73 9 – – – 3 1/12 / 2 018 24/03/202 1 4,5 24/03/20 1 7 5 7, 6 5 5 4880 – – – – 5 7, 6 5 5 31/ 12 / 20 19 2 4/03/2022 23/03/201 8 61, 24 0 4853 – – 613 – 60,627 3 1/1 2 /2020 23/03/ 2023 6 08/03 /20 1 9 4 8,690 6 287 – – – 48 ,690 – 31/ 12 /2 0 21 08/03/202 4 06/0 3/2020 41, 5 01 7376 – – – 41 ,5 0 1 – 31/ 12 /2 0 2 2 0 6/0 3/20 25 0 5/ 03/ 20 21 – 6844 5 1,8 2 8 – – 51, 8 2 8 – 31/12 / 20 2 3 05/03/20 26 7 AZIP 01/0 8/2013 8 ,17 6 3302 – 8 ,1 7 6 – – – 3 1/12 / 2 016 0 1/0 1/2 02 1 8,9 28 / 0 3 / 2 014 8 ,70 9 39 04 – – – – 8 ,70 9 3 1/ 12 / 2 0 17 01/ 01/ 20 2 2 27 / 03/ 201 5 5,73 4 47 62 – – – – 5 ,73 4 31/ 12 / 20 18 01/0 1/2 02 3 2 4/0 3/ 201 6 4,508 3923 – – – – 4,508 3 1/12 / 2 019 01/ 01/ 20 24 To t a l 295, 1 86 60, 885 5 7, 9 5 2 6 13 14 2 , 0 19 15 5 ,4 8 7 1 M ark et pric e on 23 M arc h 2021, t he act ua l d ate of rele ase , wa s 73 44 pe nce. 2 A n add itio nal 6 26 Ord in ar y Sha re s w ere rel eas ed as a resu lt of the re inv est ment of di vide nd eq uiv alen ts acc rue d du ri ng the def err al pe rio d of th e 2 018 D BP . 3 Awa rd g rant ed foll owi ng defe rra l of one ha lf of the a nnu al bonu s ear ned i n r esp ec t o f p er for man ce dur ing 2 020 , f ur the r deta il on pag e 111. 4 M ark et pric e on 24 M arc h 2021, t he act ua l d ate of rele ase , wa s 7215 pe nce. 5 A n add itio na l 6 ,9 98 Ord in ar y Sha re s w ere re leas ed as a resu lt of the re inv est ment of di vide nd eq uiv ale nts acc rue d dur ing t he per for ma nce and hol di ng pe rio d o f t he 2016 PS P . 6 9 9% of th e s ha res ent ered t he hold ing pe rio d, foll owi ng ass ess ment of pe rfor ma nce ov er the pe rio d to 31 De cem ber 2 020 . T he rem ai ni ng sha re s l apse d. 7 De ta ils o f PSP a war ds g rant ed du ri ng 20 21 are s how n fro m page 113. 8 A n add itio na l 2 ,5 39 Ord in ar y Sha re s w ere rel eas ed as a resu lt of the re inv est ment of di vide nd eq uiv alen ts acc rue d du ri ng the pe rfo rm ance a nd hold ing pe rio d o f t he 2013 A ZI P . 9 M ark et pric e on 11 Febr ua ry 20 21, the ac tu al dat e o f r elea se, wa s 72 47 penc e. No D irec tor or se nior exec utive be neﬁci ally own s, or ha s optio ns over , 1 % or m ore of the i ssue d sha re capi tal of th e Comp any , no r do they have dif fer ent votin g right s from ot her sh areh olde rs. No ne of the D irec tors ha s a ben eﬁcia l intere st in th e shar es of any of th e Comp any’ s s ubsi diar ies. Bet wee n 3 1 D ecem ber 20 2 1 a nd 1 0 Fe brua ry 20 22, there wa s no cha nge in th e intere sts in O rdina r y Share s for cu rren t Dire ctor s shown in th e ta bles o n pages 1 1 7 to 1 1 9. Remuneration i n t he wider con tex t In ou r Corp orate G overna nce Re por t on pa ge 84, we expl ain in de tail h ow the Boa rd has c hose n to engag e with A stra Zene ca’ s wo rk force, a nd how im por tan t engag eme nt with ou r empl oyees i s if we are to be a g reat pl ace to wor k and co ntinu e to delive r outst andi ng per fo rman ce. The Dir ecto rs be lieve that th e Boar d as a who le shou ld cont inue to ta ke respo nsib ilit y for gath erin g the view s of the wor kfor ce. Co nseq uentl y , ins tead of imp leme nting o ne of the th ree me thods f or work forc e eng ageme nt pre scr ibed i n the 201 8 UK Co rpo rate Gove rnan ce Cod e, the Boa rd cho se to enh ance a nd devel op the lo ng-s tand ing cha nnel s of enga geme nt whi ch alre ady exi st in the o rgani satio n to ensu re that th e Boar d conti nues to und ers tand t he glob al work forc e’ s vie ws on a wid e variet y of topi cs, in cludi ng mat ter s relati ng to remu ner ation. In lig ht of the c halle nging c ondi tions in a C OVID- 1 9 ye ar , D irec tors’ (in clud ing mem ber s of the Re mune ratio n Commi tte e ) in- per son e ngage ment was re plac ed wit h vir tual in terac tions . The Co mmit tee co mmuni cates w ith, an d rece ives fe edbac k from, e mploye es thr ough a var iet y of cha nnels , inc ludin g vir tual me etin gs with h igh pote ntial e mploye es in the b usin ess an d atte nding v ir tual si te visit s. Thi s allows th e Commi tte e to communicate with emplo yees on remuneration matters where appropriate. Remuneration Committee member s review wide-ranging data on rewar d acro ss our g lobal wo rk force, a s well as b roade r infor mati on on wor kfo rce tre nds an d cultu re, whic h is als o provid ed to the fu ll Boar d. Th e Commi ttee r ece ives in- dep th repo rt s throu ghou t the year o n colle ague p ay , ben eﬁts , ince ntives, p er form ance m anag emen t appr oach a nd bro ader t alen t polic ies at A stra Zen eca to e nsure th at the Co mmit tee is i nform ed of wid er wor kfor ce rem uner ation w hen ma king exec utive pay de cisio ns. De cisi ons of the R emun erati on Com mit tee af fect ing emp loyee s, such a s the an nual G roup sc orec ard ou tcome s, are c ommu nicate d to employees through int e rnal communications as w ell as through the Remuneration Report. In the ev e nt that more signiﬁcant changes to workforce rem uner ation a re pro pose d, acti ve engag eme nt with e mployee r epre sent ative gr oups p rovide s feed back to he lp the Co mmit tee und ers tand t he impact upon the broader w or kforce. Whe n con side ring exec utive re muner ation , the Com mitte e take s into con side ratio n our glo bal wor kfo rce, lo oking to e nsur e the glob al tota l rewar d off erin g is comp etiti ve, comp elling a nd ali gned to o ur busi nes s per for manc e, while s uppor ti ng a cultu re whe re ever yone fe els val ued an d inc lude d, as out lined i n the tab le on pag e 1 20. Be ing a gre at pla ce to work is o ne of our t hree s trate gic pri orit ies. We expl ain in ou r Busi ness Revi ew from pa ge 40 the r ole tha t reward p lays in deve lopin g a diver se cult ure that e ncou rage s and rewa rds in novation , entre pren eur ship an d high performance. 119 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t In ca rr ying o ut its r espo nsibi litie s, the Co mmit tee has t aken in to accou nt the pr incip les ou tline d in the UK C orpo rate Gove rnan ce Cod e. The Com mit tee bel ieves tha t the rem uner ation s truc ture s in plac e are ali gned to t he Comp any’ s cul ture an d value s and en sure th e succ ess ful del iver y of ou r strate gy , a s set out o n page 103. Th e Comm itte e beli ev es th e remu nera tion st ruct ures un der th e Dire ctor s ’ Rem uner ation Po licy , a nd thos e for th e wide r work forc e as set o ut bel ow , ar e simpl e, clea rly un der stood a nd prop or tion ate. The C ommit tee al so reg ular ly eng ages w ith sha reho lder s, as s et from p age 98, a nd co nside rs th eir fee dbac k when re viewin g the Dire ctor s’ Remu nera tion Poli cy and im plem enta tion. For exam ple, as o utline d on pag e 99, the Co mmit tee am ende d the nam es of the I nnovative S cien ce mea sure s in res pons e to investor fe edba ck, to prov ide add ition al cla rit y and en sure th at the me asur es are e asil y unde rstoo d. Employe es ar e also p rovide d with up dates . Su mm ar y of remu neration st ru ct ure for e mployees below the Boa rd Element Po lic y fea tu res f or t he wi de r wor kf orc e Comparison with Executive Director and Seni or Ex ecutive T eam (SET) rem uneration Base pa y Our base pay is the basis for a competitive total r eward package for a ll emp loyee s, an d we review b ase p ay annu ally. Thi s revie w takes account o f country budget, relev ant market c omparat ors, the skills, c apabilit ies, knowledge and experience of each individual, relative t o pee rs within the Company and individual contribution. In setting t he budget each year , w e consider affordability as well as a sse ssin g how em ploye e base p ay is cu rren tly po siti oned re lative to m arke t rates , fore cas ts of any f ur ther m arke t incr ease s a n d tu r n o v e r. Th e base p ay of our E xecu tive Di rec tors a nd SE T form t he bas is of th eir tot al rem une ratio n, and we r eview t heir b ase pay a nnu ally. Th e prim ar y pur pose o f the rev iew is to e nsur e base p ay rem ains co mpet itive an d reﬂe cts t he valu e of the in divi dual to t he organisation. Pensions and beneﬁts We o ffer market-aligned wellbeing beneﬁt packages reﬂe cting ma rket pr acti ce in e ach co untr y in wh ich we op era te. Where appropriate, w e offer elements of personal beneﬁt choice to our e mploye es. The beneﬁt packages of our Executive Directors and SET are br oadly a lign ed wi th the wi der wo rkf orce o f the co untr y in wh ich the y are em ploye d. Pens ion al lowanc es fo r curr ent UK E xecu tive Di recto rs a re in lin e with th e wide r UK wor kfo rce. Annual b onus W ith the exc epti on of ou r sale s rep rese nta tives re cei ving sales-related incentives, our global workforce participates in the sa me ann ual c ash bo nus pl an as t he Exe cutive D ire ctor s and SE T , wit h the sa me Gr oup sc orec ard p er form anc e mea sure s ou tline d on pag es 108 and 1 1 1 . A chieve men t agai nst th e sc orec ard c reate s a bon us poo l from w hich a ll awar ds are m ade. For emplo yees within our commercial organisation, the country-level share of the global bonus pool also t ak e s into account country per formance against KP Is. Individual out come s a re base d on manager assessme nt of contribution against individual objectives and pe ers. A wards are ba sed on a 0 -20 0 % ta rget r ange . Th e rang es fo r Exec utive D irec tors a nd the S ET a lign wi th the wid er wor kfo rce a t 0-20 0 % of ta rge t. Hal f of any awar d to an Exe cuti ve Dire ctor u nde r the pl an is su bjec t to defe rra l into sh are s sub jec t to a thre e-ye ar hol ding p eri od. On e six th of any awa rd to SE T und er the p lan is d efer red in to sha res su bjec t to a thre e-ye ar holding period. Long-term incentives Th e PSP is op era ted wi th a thre e-ye ar pe rfo rma nce p erio d for employees at Vic e-President and Se nior Vic e-President le vel, with the same per formance measures tha t apply t o Executive Di recto r and S ET PS P awards (o utlin ed on p ages 1 12 to 1 1 5). A pr opor tio n of our wo rk forc e belo w Vice -Pr esi dent l evel is eli gibl e to be co nsid ere d for oth er lon g-ter m inc enti ve awards , su ch as re stri cte d stock awa rds . PSP awa rds to E xecu tive Di rec tors a nd SE T are gr ante d unde r the s ame p lan as P SP awar ds gra nted to V ice -Pre sid ents . PSP awar ds to Exe cuti ve Dire ctor s and S ET a re subj ect to a t wo-ye ar holding period follo wing the three-year performance perio d . Remuneration i n t he wider con tex t cont inue d 120 A st raZ ene ca A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 Corporate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d Ch ange in Dir ector remu neratio n comp are d to othe r employe es In the table below , as per the requirements of t he Companies (Directors’ Remuneration Pol icy and Directors’ Remuneration Report) Regulations 201 9, ch ange s to the bas e pay (or fee s) , t axa ble be neﬁt s and an nual b onus of D irec tors a re comp are d to employe es for t he previ ous ﬁna ncia l yea r . The r egula tions r equir e comp aris on bet ween t he remu nera tion of e ach Di recto r and tha t of all em ployee s of the pa rent c ompa ny on a ful l-time e quival ent ba sis. A s Astr aZen eca PLC ha s no dire ct em ployee s, and i n line wit h our dis closu re app roach i n prio r year s to chan ges in em ployee re mune ratio n, the se lec t ed c ompa rator gr oup is c ompr ised of e mploye es in th e UK, US a nd Swed en who re pre sent a pproxim ately 30% of ou r total em ployee p opula tion. We co nside r that th is grou p is rep rese ntati ve of the Gro up’ s ma jor sc ienc e, busin ess a nd ena bling u nits. Th ese em ployee p opula tions a re als o well bal ance d in ter ms of se niori ty an d demo gra phics . Ch an ge in 2 021 a ga ins t 20 20 (%) Cha nge i n 2020 ag ains t 2019 ( %) Base pay /fees Beneﬁt s Annual bonus B ase p ay/f ees Beneﬁts Annual bonus Executive Directors Pascal Sorio t 3. 0% 1 .1% 3 5. 9% 0.0% -2 .7% 20.0% Aradhana Sarin 1 – – – – – – Marc Dunoy er 2 -39.9 % - 3 2. 5% - 3 7. 7 % 0.0% 25.0% 29. 6% Non-Executive Directors Leif Johansson 3 0.0% 1. 4% – 0.0% 1. 4% – Eua n Ashl ey 4 30 0.0% – – – – – Gen eviève Berg er 5 -66.2 % – – 0.0% – – Philip B road ley 1 6.9% – – 2.8% – – Graham Chi pchase 6 -7 3 .9 % – – -10 . 8 % – – Michel Demaré 1 8 .7% – – 2 4 7. 2 % – – Deborah DiSanz o 0.0% – – 0.0% – – Diana Layﬁeld 7 52 5.6% – – 0.0% – – Sheri McCoy 3. 0% – – – – – To n y M o k 0 .0% – – 0.0% – – Nazneen Rahman 11 . 0 % – – 0.0% – – Andreas Rummelt 8 – – – – – – Marcus Wallenberg 3 .6% – – 0.0% – – Empl oyees 4.9% 4.9% 4 4 .4% 4 .1% 4 .1% -11 . 6 % 1 A ra dha na S ar in joi ned th e B oa rd of Ast ra Ze neca P LC on 1 A ugu st 20 21. 2 Ma rc D unoy er st eppe d dow n from t he Bo ar d of As tra Z enec a PLC o n 1 Aug ust 2 021. 3 B ene ts for Le if Joh an sson a re oce co sts . 4 E ua n A sh ley wa s app oint ed on 1 O cto ber 20 20. 5 G ene vièv e Be rger re ti red f rom the Bo ar d o n 11 M ay 20 21. 6 G rah am Ch ipc ha se ret ire d f rom the Bo ar d o n 11 M ay 20 21. 7 D ia na Lay e ld wa s app ointe d on 1 N ovem be r 2 02 0. 8 A nd rea s Ru mme lt was app oint ed on 1 Aug us t 2 021. CE O a nd employ ee p ay rat ios Th e table b elow se ts out t he ratio s of the CEO’s real ised p ay to the equ ivale nt pay for th e lower qua r tile, me dian an d uppe r quar til e UK emp loyees (cal culate d on a full -time e quivale nt bas is). The ra tios have b een c alcul ated in a ccor danc e with the C ompa nies (M isce llan eous R epor tin g) Requireme nts 2 01 8 (the Regulations). Y ear 1 Method 25th p erce ntil e pay ra tio 50th percentile pay ratio 7 5th percentile pay rat io 20 21 Option A 24 0 :1 162 :1 10 6 :1 2020 Opt ion A 28 4:1 197:1 13 0:1 2 019 Opti on A 280 :1 19 0 :1 12 3: 1 2 018 Opt ion A 230: 1 16 0 :1 10 3:1 1 P ri or yea r’s g ure s have not be en res tate d for sub seq uen t s ha re pric e cha nges (a s s how n in t he CEO re al ise d pay for 2 021 ta ble on page 105). Th e compa ris on with UK e mploye es is sp eci ﬁed by the R egula tions . This g roup re pres ents a pproxi mately 10% of our tot al emp loyee pop ulati on. Th e Regul ation s provid e ﬂexibi lity to a dopt on e of three m etho ds of cal culat ion; we cont inue to us e Optio n A which i s a calc ulatio n base d on all UK em ployee s on a full -time e quival ent ba sis as we c onsid er thi s to be the mo st app ropr iate meth od of co mpar ison a nd in line w ith the c alcul ation of CEO’s reali sed pay (s hown on pa ge 1 0 5 for 2021 ). T he rati os are ba sed o n total pay, which i nclud es bas e pay , b eneﬁt s, bon us and l ong-te rm inc entive s (L TI) w ith all e leme nts adj usted o n a full-t ime equ ivale nt basi s if req uired . Our ca lcula tions a re in lin e with the s ingle ﬁ gure me thodo logy for U K employe es wh ere po ssibl e, with qu ar tile da ta as de termin ed as a t 3 1 D ece mber 20 2 1. Calcu lation s for UK e mployee s are ba sed o n actua l bas e pay and b eneﬁ ts dat a for the ye ar , wit h estim ates on ly use d for an nual bo nus ou tcome s and L TI d ivide nd eq uivale nt payme nts. T hes e es timate s are ba sed on t he 2021 bonu s budg et and p rojec ted payou ts, an d antic ipated d ivide nd equ ivale nt payme nts on L T I awards , resp ecti vely . No e leme nts of pay have b een excl uded f rom the c alcul ation, w hich h as bee n dete rmine d follow ing the a pproa ch of prev ious ye ars. Remuneration i n t he wider con tex t cont inue d 121 As tr aZ ene ca An nua l Repo rt & For m 2 0 -F In for mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t CE O a nd employ ee p ay rat ios co ntinue d CEO UK emplo yees 25th p erc enti le 50th perce ntile 75th percentile Pay data 1 (£’00 0) Ba se pay T otal pa y Ba se pay T otal pay B ase p ay T otal pa y Ba se pay T otal pa y 20 21 1, 3 27 1 3,858 43 58 61 86 86 13 0 2020 1, 28 9 15 ,4 47 41 54 60 78 82 119 2 019 1, 2 8 9 14 , 3 3 0 38 51 53 75 71 11 7 2 018 1, 2 51 1 1 ,356 36 49 50 71 70 110 1 P ri or yea r’s g ure s have not be en res tate d for sub seq uen t s ha re pric e cha nges (a s s how n in t he CEO re al ise d pay for 2 021 ta ble on page 105). Th e 202 1 CEO pay r atios we re lower a cros s all qua rt iles wh en com pare d to 2020, pri mari ly due to a lowe r L T I per for manc e outco mes a nd sha re pr ice ap prec iation . Additi onall y , 2021 saw a fa ll in ﬁxed pay a s pen sion c ontrib utio ns for the C EO were re duce d to align w ith the wi der UK workforce. Give n the Com mit tee’ s fo cus on e nsur ing CEO pay i s per for manc e drive n, the ma jorit y of the s ingle ﬁ gure is c ompr ise d of varia ble pay a nd the refor e may var y sign iﬁca ntly yea r - on-yea r due to an nual bo nus an d PSP outc omes , as well a s shar e pric e moveme nts. T he Comm itte e the refor e also c onsid ers t he CEO pay ra tio with out the L TI im pact. W hen exclu ding th e L T I, the pay r atio of the C EO comp ared to th e medi an UK em ployee i s 5 7 :1 , an i ncrea se on 5 3 :1 in 2020, a nd 5 1 :1 in bo th 20 1 8 a nd 201 9. Th is chan ge is du e to a highe r annu al bonu s award in 20 2 1 for th e CEO, in line wi th the app roac h to dif feren tiate awar ds for in dividu als in th e wide r work forc e that have ma de an excep tiona l contr ibuti on dur ing the ye ar . Th e Commi ttee r emai ns mind ful of the d ebate o n ex e cuti ve pay and se eks to e nsure t hat whe n deter minin g the rem uner ation of t he CEO it ﬁn ds the r ight ba lanc e when r ewardin g per for manc e in a high ly com petiti ve globa l ex e cuti ve tale nt mar k et. It b elieve s the me dian ra tio is co nsis tent wit h the pay an d prog ress ion po licie s for UK em ployee s, whi ch ens ures ou r total re ward of feri ng is co mpeti tive and c ompe lling, a nd alig ned to ind ividu al and b usine ss pe rf orma nce as s et out o n page 120. Rel ative impor t anc e of spend on p a y Th e table b elow sh ows the re mune ratio n paid to al l empl oyees in th e Grou p , inc luding t he Exec utive Di rec t or s, and ex pend iture on s hare hold er dis tribu tions t hroug h divid ends . The ﬁg ures have b een c alcu lated in a ccor danc e with the G roup Ac coun ting Poli cies a nd draw n from e ither t he Com pany’s Cons olida ted Sta teme nt of Comp rehe nsive In come o n page 134, or it s Cons olidate d Sta t em ent of Ca sh Flows on p age 1 37 . Fur ther i nform ation o n the Gro up’ s Ac count ing Polic ies c an be fou nd from p age 1 38. 20 21 $m 2020 $m Dif ference in spend bet ween years $m Dif ference in spend bet ween years % T otal employee remuneration 10, 27 6 8 , 247 2,029 24.60 Distributions to shareholders: dividends paid 3,856 3 ,572 28 4 7. 9 5 Tota l sh are holder r etu r n ( TSR ) Th e grap h below c ompa res the T SR per for man ce of the C ompany ove r the pas t 1 0 yea rs wi th the TSR o f the F TSE 1 0 0 Index . This g raph i s re -bas ed to 1 0 0 at the s tar t of the r elevan t peri od. As a c onsti tuent o f the F TSE 1 0 0, this i ndex rep rese nts an a ppro pria te refere nce p oint for t he Com pany . T o prov ide sha reho lder s with a dditio nal co ntext we have a lso inc lude d a ‘Phar mace utic al pee rs aver age’ , reﬂ ecti ng the TSR o f our com para tor gro up whic h is use d to ass ess re lative TS R per for manc e for PSP awa rds gr anted i n 20 19. It con siste d of AbbVie, A mge n, Aste llas, BMS, C elge ne, Da iichi S ank yo, Gilea d, GSK, J ohns on & John son, Eli L illy , M SD, Novar tis, N ov o Nor disk, P ﬁzer, Roche , Sanoﬁ, S hire an d T akeda . Whe re a com para tor com pany de listed d urin g the 201 9 pe rf orma nce pe rio d as a res ult of an a cquis ition, T SR per fo rman ce has b een a sse sse d up un to the poin t of de- listi ng. The T SR com para tor grou p for PSP awar ds to be gr anted i n 2022 con sist s of AbbVie, A mge n, Aste llas, B MS, Dai ichi Sa nk yo , Eli Li lly , Gi lead, G SK, Jo hnso n & Johns on, Mer ck K Ga A , Mode rna , MSD, Novar tis, N ovo Nordi sk, Pﬁ zer , Ro che, Sa noﬁ an d T ake da. CEO re mune ratio n over the s ame 1 0 -y ea r peri od is sh own af ter the TS R grap h. TS R over a 10-ye ar pe rio d AstraZeneca Pharmaceutical peers a verag e FTSE 100 Dec 11 10 0 150 200 250 300 350 400 450 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 122 A st raZ ene ca A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 Corporate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d CE O tot al remune ration ta ble Y ear CEO CEO realised pay £’ 000 Annual bonus payout against maximum oppor tunity % LT I ve s t i n g rates against maximum oppor tunity % 20 21 Pascal Sorio t 13 ,8 5 8 1 95 95 2020 Pascal Sorio t 15, 9 3 4 2 90 99 2 019 Pascal Soriot 15 ,3 0 7 83 90 2 018 Pascal Sori ot 12, 8 6 8 83 79 2 0 17 Pascal Soriot 10, 4 29 87 81 2 016 Pascal Soriot 14 , 3 42 3 54 95 2 015 Pascal Sorio t 7, 9 6 3 97 78 2 014 Pascal Soriot 3, 507 94 – 2 013 Pascal Soriot 3,344 94 – 2 012 Pas cal S orio t – app ointe d with e ec t f rom 1 Oc tobe r 2012 3,69 3 4 68 – 2 012 Si mon Low th – ac ted as in teri m CEO f rom Jun e to Sep tembe r 2012 incl usive 3, 289 86 38 5 2 012 Dav id Bre nnan – c eas ed to b e a Dire ctor on 1 J une 2012 4 ,14 7 6 – 7 38 1 T he 20 21 r eal is ed pay is sho wn on page 10 5. 2 T hi s gu re ha s be en rev ise d usi ng the ave rage clo sin g sh are pr ice ove r the t hre e-m onth p erio d to 3 1 De cem be r 20 21, as ex pla ine d o n p age 112. 3 T hi s gu re inc lude s s ha res awa rde d to M r S or iot in 2013 u nder t he A ZI P to comp ens ate hi m for LTI s f rom pr evi ous empl oyme nt forf eite d on hi s re cr uit ment as t he Comp any ’ s C EO. 4 T hi s gu re in clude s £9 9 1,0 0 0 p aid to co mpen sate M r Sor iot in re spec t of his fo rfe ited bo nus oppo rt un it y f or 2012 and a n awa rd of £2 ,0 00 ,0 00 to co mpen sate h im for h is loss of LTI awa rd s, bot h i n resp ec t of hi s prev ious e mploy men t. 5 M r Low t h ’s LTI awa rd s w hic h v est ed dur in g 2 012 were not aw ard ed or rec eive d i n resp ec t of hi s pe rfo rma nce a s I nte ri m C EO. 6 T hi s gu re inc lude s M r Bre nna n’s pay i n l ieu of not ice of £914,0 0 0. 7 M r Bren na n in for med the Co mm itt ee th at he di d n ot wis h to be cons ider ed for a bonus i n re spec t of th at pa rt of 2 0 1 2 in whi ch he was CE O. The Com mi tte e deter mi ned t hat no suc h bonus wou ld be aw ar ded a nd al so th at t here s hould b e no bonu s awa rd re lat ing to h is c ontr act ua l not ice pe rio d. Gra nt of Res tr icte d Stoc k Units u nder L ist ing Ru le 9.4 .2 Th e Dire ctor s ’ R emun erat ion Polic y (the Poli cy) spe ciﬁc ally pe rmi ts the Co mpany to int rodu ce a one -of f sha re award u nder L istin g Rule 9.4.2 (LR 9.4.2) as pa rt of r ecr uitme nt arr ange ment s for Exe cutive D irec tors. T he Co mmit tee was s atisﬁ ed that t he circ umst ance s of Dr Sa rin’ s re cruit ment a nd, in pa rti cula r , the for fe iture of c ontra ctua l severa nce a rran geme nts tha t she woul d other wi se have be en enti tled to wi th Alex ion, were s uf ﬁcie ntly unu sual s uch tha t a one -of f sha re award wou ld mee t the req uirem ents of L R9.4.2. Det ails of t he award (as r equir ed by the te rms of LR 9.4.2) are a s follows: Ordina ry Shares gra nted Grant date Grant price (pence per sha re) V esting date Aradhana Sarin 12, 2 76 1 3 A ugus t 2021 8 209 1 Feb rua ry 20 23 Th e award will n orma lly onl y vest to the ex tent t hat Dr S arin re main s empl oyed by Ast raZ enec a throu gh to the ves ting da te. If Dr Sa rin le aves em ployme nt befo re that d ate and is n ot a goo d leaver , the awa rd will la pse. If s he is a goo d leave r , her awa rd will ve st on the d ate she ce ase s em ployme nt, pro -r ated for t he per iod tha t she was i n employ ment . The ci rcums tanc es in wh ich Dr S arin wo uld be a g ood le aver incl ude if s he leave s by reas on of de ath, ill he alth, i njur y or at th e disc retion o f the Rem uner ation C ommit tee. T he award w ill vest o n a chan ge of con trol of As tra Zene ca subj ect to pr o-r ating fo r the pe riod t hroug h to the cha nge of co ntrol. Th e numbe r of sha res un der the awa rd, the ba sis fo r deter minin g Dr Sar in’ s e ntitle ment to s hare s, the ter ms of the awa rd rel ating to ad justm ent on any c apit alis ation i ssue, r ight s issu e or ope n offe r , sub divis ion or c onso lidati on or re ducti on of ca pita l or any othe r vari ation of c apit al ca nnot be a ltere d to the advan tage of D r Sar in with out the p rior a pprova l of shar ehold ers i n a gene ral me etin g ( except f or mino r amen dmen ts to ben eﬁt the a dminis trati on of the awa rd, to take ac count o f a chan ge in le gisla tion or to ob tain o r maint ain favou rabl e ta x, ex cha nge co ntrol o r regu lator y tre atmen t for Dr S arin o r Astr aZe neca ) . Th e award is no t pens iona ble and m ay only b e satis ﬁed by sh ares p urch ased o n the ma rket. No s hare s may be is sue d or tran sfer red fr om tre asur y to sa tisf y the awar d. Remuneration i n t he wider con tex t cont inue d 123 A st ra Zen eca A nnu al Re por t & Fo rm 20 - F In for mat ion 2 021 D ire cto rs’ Re mune rat ion Rep or t / A nnu al Re por t on Remu ner atio n Addit i onal Infor mation Finan cial State ments Corporate Governa nce Strategic Repor t G over nanc e Com mit tee mem bers hip Du ring 2021 , t he Comm itte e memb ers we re Mic hel De maré (C hair of th e Comm itte e) , L eif Joh ans son, Sh eri Mc Coy and Ph ilip Bro adley. The De put y Compa ny Sec reta ry a cts as s ecre tar y to the Co mmit tee. T he Com mitte e met si x times i n 2021 and me mber s’ atte ndan ce rec ords a re set out o n page 73. D urin g the year, the Com mitte e was ma teria lly as siste d, except in r elati on to thei r own remu nera tion, by th e CEO; the CFO; the VP Fi nance G roup C ontro ller; t he SVP , Gl obal Por t folio/ Proje ct Ma nagem ent an d Stra tegic Pla nnin g ; the E VP , Hu man Re sour ces a nd Gen eral Cou nsel; th e SVP , Rewa rd and In clus ion; the Se nior D irec tor Exec utive Rewa rd; the Co mpany S ecre tar y; the D eput y Com pany Se cret ar y; EV P , Sus tain abili ty an d Chief C ompli ance O fﬁ cer; t he Non -Exe cutive D irec tor res ponsi ble for ove rse eing s usta inab ilit y matte rs on b ehal f of the Bo ard; and t he Non -Exe cutive D irec tors fo rming t he Scie nce a nd Sus taina bilit y Com mit tees. T he Com mit tee’ s in depe nde nt advi ser at tend ed all Committee meetings. I ndepende nt adv iser to t he Com mit tee Th e Commi ttee r eapp ointe d Willis T owe rs Wats on ( WT W ) as it s indep ende nt adv iser. WT W were ﬁ rst a ppoi nted in Se ptemb er 201 8, fo llowing a tend er pr oces s unde rt aken in 201 8. Th e tende r proc ess i nv olve d submi ssio n of wri tten p ropo sals , followed by s hor tlis ted can didate s bein g inte rv iewed by bot h Commi tte e memb ers a nd mem ber s of the Co mpany’s man ageme nt. W T W’ s se rvi ce to the Co mmit tee du ring 2021 was prov ided o n a time sp ent ba sis at a c ost to the C ompany o f £ 1 6 9,950, exclud ing V A T . Du ring 20 2 1, WT W al so provi ded pe nsio ns adv ice an d adm inist ratio n, and adv ice an d supp or t to manag eme nt incl uding m arket da ta to as sist in t he annu al emp loyee pay rev iew and g lobal p ay sur vey dat a. W T W have no othe r conn ecti on with th e Comp any or ind ividu al Dire ctor s. Th e Commi ttee r eviewed t he poten tial fo r conﬂi cts of in teres t rel ated to W T W and ju dged th at the re were no c onﬂic ts. W T W is a mem ber of th e Remu nera tion Co nsult ants’ G roup, whi ch is re spons ible fo r the s tewards hip and d evelop ment of th e volunt ar y code o f condu ct in re latio n to ex e cuti ve remun erati on con sulti ng in the UK . The p rinc iple s on wh ich the c ode is b ased a re tra nspa rency, integ rit y , obje ctivi ty , com peten ce, due c are an d conﬁ denti alit y . W T W adher es to the c ode. Ma lus a nd clawbac k Th e Remun erat ion Com mit tee reg ular ly review s the Com pany’s appr oach to ma lus an d clawba ck and m arket p racti ce in thi s area , and ou r Dir ecto rs’ Rem uner ation Pol icy outl ines th e trig ger even ts and th e time pe riod s thes e provis ions m ay appl y to . As a c onditi on of ann ual bo nus and Pe rf orma nce Sh are Pla n awards , the Com mitte e see ks acti ve acce ptan ce of the m alus an d clawba ck ter ms app licab le eac h year be fore any paym ent or g rant i s made to an i ndivi dual. Ad ditio nally, the Com mitte e’ s pr acti ce is to ful ly docu ment a nd evid ence a ny appli catio n of malu s or clawback t o show that it has not acted arbitrarily , cap riciously or irrationally in making any deter minat ion. This allo ws the Committee to : > red uce the a moun t of bonu s or PSP paya ble, or c law-bac k some o r all of any awa rd in the c ircum stan ces a nd per iods a s set ou t withi n our Polic y > cance l bonus eligib ility > preve nt vesti ng of the PSP a nd/or DB P awards by h olding t he sha res in A stra Zene ca’ s L TI no minee p lat form to pr event tra nsa ction s. Sha reholder vot ing at t he AGM At the C ompany ’ s AGM on 1 1 May 20 2 1, shar ehold ers vo ted in favou r of a reso lutio n to approve th e Dire ctor s’ Remun erat ion Polic y and An nual Re por t on Re mune ratio n for the ye ar en ded 31 Dec embe r 2020. The Po licy ca n be foun d on the Co mpany ’ s web site, www .as traz ene ca . com/ a nn ual rep ort2 02 1 . Resolution Vot es f or % for Vot e s against % against Total vo tes ca st % of Is sue d Share Capital v oted Withheld votes Or dina ry R esol utio n to appr ove the A nnua l Repo rt o n Re mune rati on for th e year e nde d 3 1 D ece mbe r 2020 9 1 5,909 , 1 89 95.42 43,95 7 , 696 4.58 959,866,88 5 7 3 .1 2 1 ,6 62,608 Or dina ry R esol utio n to appr ove the Di rec tors’ Remuneration Policy 5 64 ,9 35 ,78 9 6 0 .1 9 373,7 08 , 277 3 9. 81 938 ,644,0 66 71. 5 0 21 ,41 5,0 88 Th e resp onse to th e share hold er vote to app rove the Di recto rs’ Rem uner ation Po licy at th e 202 1 AGM is ou tline d in the Re mune ratio n Comm itte e Cha ir’ s let ter on p age 1 01 . Di rec tors’ ser vic e c ontrac ts and lett ers o f appoi ntme n t Th e notice p eri ods an d unexpi red ter ms of E x ec utive Dir ecto rs’ ser vi ce con tract s at 3 1 De cemb er 2021 are s hown in th e table b elow. Executive Director Ef fec tive da te of se rvi ce co ntra ct U nexp ired te rm at 31 D ece mbe r 2021 Notice period Pascal Sorio t 1 5 December 20 1 6 1 2 months 1 2 mont hs Aradhana Sarin 1 Aug ust 20 2 1 12 months 1 2 months Non e of the No n-E x ec utive Di recto rs ha s a ser vice c ontr act bu t each h as a let ter of ap poin tment . In acco rdan ce with t he Comp any’ s Ar ti cles, foll owing the ir app ointm ent, a ll Dire ctor s must r etire at e ach AGM an d may pre sent t hems elves fo r re- ele ctio n. The Ch air of the B oard m ay ter minate hi s appo intme nt at any ti me, on thr ee mon ths’ notic e. None o f the othe r Non- Exec utive Di recto rs ha s a notic e peri od or any p rovisi on in the ir let ter s of appo intme nt givi ng them a r ight to c ompe nsati on upo n earl y termi natio n of appo intme nt. Ba sis of p repa ration of t hi s Di rec tors’ Remu neratio n Rep or t Thi s Dire ctor s’ Remun erat ion Rep or t has b een pr epar ed in ac cord ance w ith the L arge a nd Me dium- sized C ompa nies a nd Grou ps (Ac count s and Rep or ts) (A mend ment) Re gulat ions 201 3 (a s amen ded ) (the 201 3 Re gula tions). As r equir ed by the 201 3 Reg ulati ons, a re solu tion to ap prove the An nual Re por t on Re mune ratio n will be p ropo sed at t he AGM on 29 A pril 202 2 . On b ehal f of the Boa rd A C N K emp Comp any Se cret ar y 10 Febr uar y 2 02 2 124 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Cor porate Gover nance A n nu a l Re po r t on Remu ne rat ion c ont inue d F i n a nc i a l S t a t em en t s P repa ration of t he Fi na ncia l St atements a nd Dire ctor s’ Resp onsi bil itie s 126 Aud itors’ Rep or t 127 Consol i dated S tatements 134 Group A ccou nti ng Polic ies 138 Notes t o the Gr oup Fi na ncia l St atements 14 5 Group S ubs idia rie s and Hold ings 19 7 Compa ny St atements 202 Compa ny Acc ount ing Pol icies 20 4 Notes t o the Compa ny Fi na ncia l Statements 20 6 Group F in anci al Re cord 209 Key KJ Ke y Judge ment SE Sign i ca nt Est im ates 125 Corporate Gover nance Addit i onal In formation Financi al S tat eme nts Strate gic Report A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financi al S tat eme nts Th e Dire ctor s are r espo nsib le for p rep arin g this A nnua l Re por t and Fo rm 20 -F Inf orma tion a nd the G roup a nd Parent Company Financial Statements in accordance with applicable law and regulations. Co mpany l aw requ ires t he Dir ecto rs to pr epa re Financ ial State men ts for e ach ﬁn anci al yea r . Und er tha t law the D irec tor s have pre pare d the G roup Financial Statements in acc ordance with UK -adopted International Accounting St andards and with the re quire men ts of the C ompa nie s Act 20 06 as a ppli cab le to companies r epor ting unde r those standards and Parent Company Financial Statements in accordance with Unit e d Kingdom Genera l ly Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 1 01 “Re duced Disclosure F ramework” , and applicable la w). In p reparing the Group Financial St ateme nts, t he Dir ecto rs have a lso e lec ted to co mply with Int e rnational Financial Reporting Standards issued by t he Int ernational Accounting Standards Board (IASB) and International Accounting Standards as adopted b y the European Union. Und er co mpany l aw , t he Dir ecto rs mu st not a pprove the Financial Statements unless they are satisﬁed that the y give a tru e and f air vi ew of the st ate of af fa irs of the G roup a nd Par ent Co mpa ny and of th eir p roﬁt o r lo ss for th at pe riod . In pre pari ng ea ch of the G roup a nd Par ent Co mpan y Finan cial S tate ment s, the D ire ctor s are required to: > select suitable accounting policies and then apply t hem consistently > ma ke judg eme nts an d esti mate s that a re reasonable and prudent > fo r the Gr oup Fin anci al St ateme nts, st ate whe ther t hey have be en p repa red in accordance with UK -adopted International Accounting Standards > fo r the Par ent Co mpany F inan cial S tate ment s, st ate whe ther FR S 1 01 ha s bee n foll owed, su bjec t to an y mat erial depar tures disc losed and explained in th e Pare nt Com pany Fin anc ial St atem ents > prepare the F inancial Statements on the going concern basis unless it is inappropriate to pres ume tha t the Gr oup an d the Par ent C ompa ny will continue in business. The Directors are responsible for keeping a dequate ac coun ting re cor ds tha t are su fﬁ cien t to show an d explain the Parent Company’ s transactions and dis clo se with r eas onab le acc ura cy at any ti me the ﬁnancial position of the Parent Company and e nable them to ensure that its F inancial Statements comply wit h the Co mpan ies Ac t 200 6. The y have gen era l responsibility for taking such steps as are reasonably op en to the m to safe gua rd the a sset s of the G roup a nd to pr event an d dete ct fr aud an d othe r irre gula rit ies. Under applicable law an d regulations, the Directors ar e also r espo nsib le for p repa rin g a Dire ctor s’ Rep or t, Strategic Report, Direc t o rs ’ Remuneration Repor t, Corporate Gov e rnance Report and Audit Committee Re por t that c omp ly with t hat law a nd tho se re gulat ions . Th e Dire ctor s are r espo nsib le for t he mai ntena nce an d integ rit y of the c orp orate a nd ﬁna ncia l info rmat ion inc lude d on ou r webs ite. Le gisl ation i n the UK governing the preparation and dissemination of Financial Stat ements may dif fer from legislation in otherj urisdictions. Di rec tors’ re spon sibi lit y st atement pu rsua nt to DT R 4 Th e Dire ctor s con ﬁrm th at to the b est ofou rknow ledg e: > the Financial Stat ements, prepared in accordance with the applicable set of account ing standards, give a t rue a nd fai rview of th e ass ets, l iabi litie s, ﬁna nci al pos itio n and pr oﬁt or l oss of t he Com pany and the undertakings included in the c onsolidation ta ken as a wh ole > th e Dire ctor s’ Rep or t inclu des a f air rev iew of th e deve lopm ent a nd per fo rma nce of th e busi nes s and the position of the issuer and the undertak ings included in the con solidat ion taken a s a whole, tog ethe r with a d escr ipti on of the p rinc ipal r isks an dunce rt aint ies th at they f ace. On b eha lf of the B oard o f Dire ctor s on 10Febr uar y 2022 Pas cal So riot Direct or The Directors are responsible for establishing and maintaining adequate internal control ov er ﬁnancial re por ting . Astr aZe nec a’ s in tern al co ntrol ove r ﬁnancial reporting is designed to provide reasonable assurance over the reli ability of ﬁ nancial reporting and the preparation of consolidated ﬁna ncial statements in acc ordance with generally accepted accounting principles. Du e to its in here nt lim itati ons, i nter nal c ontro l over ﬁna nci al rep or ting m ay not pr event or d etec t mis sta teme nts. Pr ojec tion s of any eva luat ion of ef fec tiven ess to f utur e per iods a re sub jec t to the ri sks tha t cont rols m ay bec ome in ade quate b ecau se of changes in condit ions or t hat the degre e of compliance wit h the po lici es or pr oce dure s may de teri orate. As d iscl ose d in Note 27 , the C ompa ny comp lete d its acquisition of Alexion Pharmaceuticals, Inc . during 2021 . In ac cor danc e with S EC Staf f Gu idan ce pe rmit tin g a comp any to exclu de an a cqui red bu sine ss fro m man agem ent ’ s a sse ssm ent of th e ef fect ivene ss of in tern al con trol ove r ﬁnan cia l repo rt ing for t he yea r in which the acquisition is completed, the Compa n y has exclu ded th is bu sine ss fro m its a sse ssme nt of th e ef fec tiven ess o f inter nal c ontro l over ﬁn anci al rep or ting as a t 3 1 D ece mbe r 2021 . T his en tit y is inc lude d withi n our 202 1 Consolidated F inancial Statements and constituted appro ximately 9% of T otal assets (e xcludi ng goodwill and intangible assets resulting fro m the ac quis itio n) as at 31 Dec emb er 2021 an d ap proxim atel y 8 % o f T ota l Reven ue for th e year en ded 31 De cem ber 2021. The Direct ors assessed the effect iv eness of As tra Zene ca’s inter nal c ontro l over ﬁn anci al rep or ting as a t 3 1D ece mbe r 2021 bas ed on th e cri teria s et for th by the C ommi tte e of Spo nsor ing O rgan izat ions o f the T readway Commission in Internal Control-Integrated Fram ework ( 201 3). Ba sed o n this a sse ssm ent, in tern al co ntrol ove r ﬁna ncia l rep or ting is e ffe ctive . Pricewat erhouseCo opers LLP , an independent registered public accounting ﬁr m , has audit e d the ef fec tiven ess o f inter nal c ontro l over ﬁn anci al rep or ting as a t 3 1 D ece mbe r 2021 and h as is sued a n unqu aliﬁ ed repor t thereon. Direc t ors ’ A nnual Repor t o n I n ter nal Co n t ro ls ov er Fin ancial Repor ting 126 A st raZ ene ca A nnu al R epor t & For m 20 - F In for mat ion 20 21 Financi al S tat eme nts P r epa r ati on o f t he Fin ancial St a temen ts andDirec to rs’ Responsibilit i es Addit i onal In formation Strate gic Report Rep ort o n the aud it of the  nan cia l state ments Opinion In our opinion: > As tra Zen eca PLC’s Gro up Fina nci al Sta teme nts and Parent C ompan y Financial Statements (the “ﬁ nanc ial st atem ents” ) give a tr ue an d fair v iew of th e state o f the Gr oup’ s an d of the Pa rent Co mpany ’ s af fa irs a s at 31 Dec embe r 2021 and o f the G roup’s pro ﬁt and t he Gro up’ s c ash ﬂ ows for the ye ar th en end ed; > th e Grou p Finan cia l State men ts have be en pr ope rly prepared in accordance with U K -adopted international accounting standards; > the Parent Company Financial Statements hav e be en pr oper ly pr epar ed in ac cor danc e with U nited Kingdom Generally Accepted Accounting Practice (United Kingdom Accounti ng Standards, comprising FRS 1 01 “Re duced Disclosure Framew or k” , and applicable law ); and > th e ﬁnan cial s tate ment s have be en pre par ed in ac cord anc e with th e requ irem ents o f the Companies Act 2006. We have audit ed the ﬁnancial statements, included wit hin the A nnu al Rep or t and Fo rm 20 -F Inf orma tion 2021 (th e “ A nnua l Repo rt ”), whi ch co mpri se: the Consolidated Stat e ment of Financial Posit ion as at 31 Dec emb er 2021 ; t he Con soli date d State men t of Comprehensive Income , the Cons ol idated Stat e ment of Ch ange s in Equ ity, and th e Cons olid ated S tatem ent of Ca sh Flow s for the ye ar th en end ed; the G rou p Accounting P olicies; the Notes to t he Group F inancial St ateme nts; th e Pare nt Com pany Ba lan ce She et as a t 31 Dec emb er 2021 ; t he Pare nt Co mpany S tate ment o f Cha nge s in Equi ty fo r the yea r then e nde d; the Par ent Company Accounting Policies; and the Notes t o the Parent Compan y Financial Statements. Ou r opini on is c onsi stent w ith ou r repo rt ing to th e Audit Committee. Separate opinion in relation to international ﬁnancial repor tin g standards adopted pursuant to Regulation (EC ) No 1 60 6/2002 as i t appl ies in t he Eur opea n Uni on and i n re lati on to IFR Ss as is sue d by the IA SB As explained in the Group Accounting P olicies to the Group Financial Stat ements, the Group , in addition to applying UK -adopted international accounting standards, has also applied int e rnational ﬁnancial repor ti ng standards adopted pursuant to Regulation (EC) N o 1 6 06/20 02 a s it app lies i n the Eur opea n Unio n and international ﬁ nancial reporting standards (IFRSs) as issued by the Int e rnational Accounting Standards Board (IASB) . In our opinion, the G roup Financial Statements have b een p rope rly p repa red i n acco rdan ce wi th international ﬁnancial reporting standards adopted pu rsua nt to Re gula tion (E C) No 1 60 6/20 02 as it ap plie s in the Eu rope an Uni on and w ith IFR Ss as is sue d by the IAS B. Ba sis for opi nion We con duc ted our a udit i n acco rda nce wi th Inte rna tion al Sta nda rds on Au diti ng (UK ) (“ ISAs ( UK ) ”) and applicable la w. Our responsibilities unde r ISAs (UK ) a re fur the r des crib ed in t he Audi tors’ responsibilities f or the audit o f the ﬁnancia l statements se ctio n of our r epor t. We b elieve t hat the a udit evi denc e we have obt ain ed is su fﬁ cien t and appropriate to provide a basis for our opinion. Independence We re mained i ndependent of the Group in accordance wit h the eth ica l requ irem ents t hat ar e relev ant to ou r aud it of th e ﬁnan cial s tate ment s in the UK , whi ch includes the FRC’ s Et hical Standard, as applicable to lis ted pu blic i ntere st en titie s, an d we have ful ﬁlle d our other ethical responsibil ities in accordance with these requirements. T o th e bes t of our k nowle dge a nd bel ief, we de clar e that non-audit se rvices prohibited by the F RC’ s Ethical Standard were not provided. Ot her th an tho se dis clos ed in n ote 31 , we have pr ovide d no non -aud it se rvi ces to t he Gro up in th e period under audit. Ou r audit appr oach Ove r view Audit scope > We identiﬁed 1 4 reporting components which re quire d a full s cop e audi t of thei r com plete ﬁ nanc ial inf orma tion, e ithe r due to t heir s ize or ri sk characteristics. These components are the principal operating units in the US (two components wh ich includes the ne wly acquired Ale xion rare diseases component), UK (two components) , Sw eden, China (two components ), Japan , France, Germany , South Kore a, T u rkey as we ll as th e Pare nt Com pany an d Astra Zeneca T reasur y . > We al so ide ntiﬁ ed a fur th er 1 2 r epo rti ng components which ha d one or more i ndividual balances that were c onsidered signiﬁcant to t he Gr oup’ s Fin anci al St ateme nts. Fo r the se co mpon ents o ur wor k was so lely fo cus sed o n the aud it of on e or mor e of the fo llowi ng ﬁna ncia l st ateme nt lin e item s: revenu e, acc ount s rec eivab le, inventory , cash and cash equivalents, non- current interest-bearing loans and borrowings, research an d develo pme nt expe nse, t ax ation a nd/or proper ty , plant and equipment. > We al so ide ntiﬁ ed fou r shar ed se rv ice ce ntre s whe re au dit pr oce dure s were pe r form ed over ce rt ain sh are d ser vic e fun ctio ns for tr ans acti on processing. Audit procedures were pe rformed centrally in relation to various Group functions, including the ac counti ng for the acquisition of Alexion P harmaceuticals Inc. , goodwill, intangibl e assets (e xcluding software) , pensions, cer tain cash and borrowings, other investments and litiga tion mat ter s, as we ll as th e con soli datio n. > Th e above p roce dur es acc ount ed for 87% of th e Gr oup’ s reve nue an d 7 4 % of t he Gro up’ s a bso lute proﬁt before ta x. Key audi t mat ters > Recognition and measurement o f accruals for c er tai n reba tes in th e US exclu ding ra re dis eas es (Gr oup) > As ses sme nt of th e recove rab ilit y of the c arr yi ng value o f intangible as sets (excl uding goodwil l an d sof twar e devel opme nt co sts) (Gr oup) > Recognition and measurement o f legal pro visions an d cont inge nt lia bilit ies in b oth the G roup a nd the Par ent Co mpan y (Grou p and Pa rent C ompa ny) > Recognition and measurement o f uncertain tax positions ( Group) > Valuation of the Group ’ s deﬁned beneﬁt obligations ( Group) > Accounting for t he acquisition of Alexion Pha rma ceut ical s, Inc – va luat ion of th e acqu ired intangible assets, inventory and contingent liabilitie s (Group) > Ac coun ting fo r sal es, gr ant in com e and de ferr ed inc ome re lati ng to Vax zevr ia (Gro up). Materiality > Ove ral l Grou p mate rial ity: U S$250 m (2020: US $200 m) base d on 5% of pro ﬁt befo re ta x af ter adding back intangible asset impairment charges (N ote 1 0 ) , f air va lue move men ts and d isco unt unwind on contingent conside rati on (Not e 20 ), the discount unwind on the Acerta Pharma put option liability (Not e 3 ), material legal settlements (Note 2 1 ), the u nwind o f the fai r value a djus tme nt to Alex ion inve ntori es (N ote 2) and re str uctu ring c har ges relating t o the Post Ale xion Acquisition Group Rev iew (No te 2) . > Ove ral l Paren t Comp any ma teri alit y: US $ 1 00 m (2020 : US$100m) b ase d on app roxim ately 0 .5 % o f net a sse ts as c onst rain ed by th e allo catio n of over all Group materiality . > Per fo rma nce ma teri alit y: US $ 1 87 . 5m (Gro up) and US $75m (Pa ren t Com pany ). Th e scop e of our a udit As p ar t of des igni ng our a udit, w e deter mine d mat eria lit y and a sse sse d the ri sks of ma teri al misstatement in the ﬁnancial st at eme nts . In particular , we lo oked at w here t he dire cto rs mad e subj ect ive judgements, for example in respect of signiﬁcant accounting estimates that inv olved making assumptions and considering future e vents that are inherently uncer tain. Key aud it mat ter s Key au dit mat ter s are t hose m atte rs th at, in th e auditors’ professional judgement, were o f most sig niﬁc anc e in the au dit of t he ﬁna ncia l state men ts of the c urre nt pe rio d and in clud e the mo st sig niﬁc ant as ses sed r isks of m ater ial mi sst atem ent (wh ethe r or not d ue to fra ud) i dent iﬁed by t he aud itor s, inc ludin g tho se whi ch had t he gre ates t eff ect o n : the ove ral l aud it str ateg y; the a lloc ation o f reso urc es in th e audit ; an d dire ctin g the ef for ts of t he eng agem ent te am. Th ese m atte rs, a nd any c omme nts we ma ke on the re sult s of our p roce dure s the reon , were ad dres sed i n the c ontex t of our a udit o f the ﬁna ncia l sta teme nts as a who le, an d in for ming o ur opi nion th ere on, an d we do no t provi de a se para te opin ion on t hese m atte rs . This is not a complete list o f all risks identiﬁed b y our audit. The accounting for the acquisition of Ale xion Pha rma ceut ical s Inc is a n ew key aud it mat ter th is yea r . Th e impa ct of COV ID-1 9 key au dit ma tte r has been reﬁned to address the accounting for Vaxzevria, the CO VID- 1 9 vaccine . Otherwise, the k ey audit mat ter s bel ow are c onsi sten t with la st yea r . 127 Corporate Gover nance Financial Stat ements A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / In depe nden t audit ors ’ repo rt t o the m emb ers o f Ast ra Ze nec a PLC I ndependent aud i tor s’ repor t to t h e mem bers o f A stra Zeneca PLC I ndependent aud i tor s’ repor t to t h e mem bers o f A stra Zeneca PLC c ont inue d Ke y audit m at ter How ou r aud it add res sed t he ke y audit m at ter Re cog niti on an d mea sur eme nt of ac cru als f or cer t ain r eba tes in t he US (exclu din g rar e dis eas es) (Gr oup) Re fer to A udit C omm itt ee Re por t, Gr oup A cco unti ng Pol icie s and N otes 1 an d 20 in th e Gro up Fin anc ial S tate men ts In th e US the G roup s ells to c ustom er s unde r vari ous co mme rcia l and government mandated contracts and reimbursement arrangements that inc lude r ebate s, of wh ich th e most s igni ﬁca nt are M edic are Pa rt D, Managed Care and Medicaid. Re bates p rovid ed to cu stome rs u nder t hese a rra nge ment s are ac cou nted fo r as va ria ble co nsid era tion, a nd rec ogn ised a s a red ucti on in reve nue, fo r whi ch unsettled amounts are accrued. Management has det e rmined an ac crual o f $3, 172m to be nec es sar y at 31 De cemb er 2021 (20 20: $3, 126m) re lated to a ll US pr odu ct sal es re bates , cha rgeb acks, r etur ns an d othe r revenu e accr ual s for U S prod uct s ale s (whic h incl udes a n imma teri al am ount fo r rar e dise ase s) . There is signiﬁcant measurement uncertaint y involved in developing cer tain of th ese ac cru als, a s the re ser ves a re ba sed on a ssu mpti ons deve lope d usi ng contractual and mandat e d terms with customers, hist oric al experienc e , and ma rket re late d infor mati on in th e US. Cha nge s in the se est imate s (in divid uall y or in combinat ion) can hav e a signiﬁcant ﬁnancial impact. We evalu ated t he des ign an d teste d the op era ting e ffe ctive nes s of con trol s re latin g to the as sum ption s use d to esti mate th e accr ual s for the M edi care Par t D, Man age d Care a nd Med ica id reb ate ar rang eme nts. We de term ined tha t we coul d rely o n the se con trol s for the p urp oses o f our au dit. We: > obtaine d ma nagement’ s calculations for t he accruals for the Medicare P art D, Managed Care and Me d icaid rebate ar rangements; > d evelo ped a n inde pend ent ex pec tati on of the se ac crua ls us ing the t erm s of the s pec iﬁc re bate pr ogr amme s, thi rd par t y infor mati on on p rice s and m arket co nditi ons in t he US an d the his tori cal tr end of a ctua l reba te cla ims pa id; > compa red the independent estimate to management’s estimates recorded by the Group ; > c ons ider ed the h istor ica l accu racy o f the Gr oup’s estim ates i n previ ous ye ars an d the ef fec t of any ad just ment s to pri or yea rs’ acc rua ls in th e curr ent ye ar’s results; and > te sted r ebat e clai ms pro ces sed by t he Gro up, incl udin g evalu ating t hose cla ims fo r con siste ncy wi th the c ontr actu al and m anda ted te rms of th e Group’ s arrangements. Ba sed on t he pro ced ures p er for med, we d id not i denti fy a ny mate rial misstatements in the accruals. We als o evalu ated th e disc losu res in N otes 1 a nd 20, whi ch we co nsid ere d appropriate. As ses sme nt of th e rec over abi lit y of the c ar ry ing va lue of i nta ngi ble a sset s (being product, marketing and distribution rights and other intangible assets ex cluding goodwill and software development costs) (Group) Re fer to A udit C omm itt ee Re por t, Gr oup A cco unti ng Pol icie s and N ote 10 in the Group Financial Statemen ts Th e Grou p has p rodu ct, ma rketi ng and d istr ibut ion ri ghts a nd oth er int angi ble as sets exc ludi ng goo dwill a nd so ft ware de velop ment c ost s (he reaf ter r efer red to as t he inta ngib le as sets) to tall ing $4 2 ,06 2m at 31 Dece mbe r 2021 (2020: $20,6 2 7m) . Th ose in tang ible a sse ts und er deve lopm ent an d not ava ilabl e for us e ar e teste d annu ally f or impa irm ent an d othe r inta ngib le as sets a re tes ted whe n the re is a n indic atio n of imp airm ent. Th e reco verab ilit y of the c arr yi ng valu es of c ash ge ner atin g units ( to whic h the intangible assets belong ) depends on future cash ﬂows and/or the outcome of research and development activities including decisions by the Company to terminate development. The determination of the recoverable amounts i nclude sig niﬁc ant e stim ates, w hich a re hig hly se nsi tive an d depe nd up on key assumptions including the probability of technical and regulatory success, and the a moun t and ti ming of p roje cte d futu re cas h ﬂows (i n par tic ular p eak ye ar sa les a nd sal es er osio n cur ves). Ch ange s in the se as sum ption s coul d have an imp act o n the re cover able a moun t of int angib le as sets . For on e mater ial a sse t (Ardea) management determined that t here was no rec o verable value as the Company has tak e n the decision to t e rminat e dev elop ment of verinurad. Du ring 20 21 , $2,08 5m (2020: $ 2 4 0m) of im pair men t char ges we re re cord ed (of wh ich $1 ,4 64m (20 20: $55 m) was re cord ed in Re sea rch a nd devel opme nt exp ense s and $ 621 m (20 20: $1 8 5m) with in Sel ling, g ene ral a nd admi nist rati ve costs). T here is limit e d he adroom in the recoverable amount calculation for those pa rti ally i mpai red a sset s and th ey are i nher entl y sens itive to a ny vari atio ns in assumptions, which c ould give rise t o future impairments. We evalu ated t he des ign an d teste d the op era ting e ffe ctive nes s of con trol s over manageme nt’ s asses sment of the impairme nt of intangible assets. We deter mined tha t we coul d rely o n the se con trol s for the p urp oses o f our au dit. We sel ecte d as sets o r cas h gene rati ng uni ts to be in s cop e base d on ou r risk assessme n t which considers the mat eriality of the ca rrying value , whether the as sets h ad be en pre viou sly im pair ed in th e last t hree ye ar s and / o r whet her th ere have b een eve nts in t he yea r whic h may ind icate a n impa irme nt tr igge r . For t hose as sets o r cas h gen erat ing un its in th e sco pe of our a udit we: > te sted m ana geme nt’s pro ces s for as se ssin g whet her th ere is a n indi cati on of im pair men t and th e proc ess f or dete rmin ing th e recove rab le am ount; > evaluated the appropriateness of the m et hodology used in the impairme nt models; > te sted t he com plete nes s and a ccur acy of t he mod els as w ell as t he und erly ing dat a use d in the m odel s, inc ludi ng rec onc iling t he cas h ﬂows to th e Boar d ap proved M ediu m and L ong T e rm Pla ns; an d > evaluated the signiﬁcant assumptions used b y management in determining fu ture ca sh ﬂow s, inc ludin g the pr obab ilit y of tec hnic al an d regu lator y su cce ss, pe ak yea r sal es and s ale s ero sion c ur ves. In ev aluating the reasonableness of management’s as sumpt ions we : > compa red signiﬁcant assumptions (including management’s probability of tec hnic al an d regu lator y su cce ss, p eak yea r sal es as sump tion s and s ales er osio n cur ves) to ex tern al dat a and b enc hmar ks; and > p er for med a re tros pec tive co mpar iso n of fore cas ted reve nues a nd co sts to ac tual p ast pe r form ance . We util ise d our in -hou se val uatio n expe rt s to ass ess th e valu ation te chn ique s us ed an d to ass ist wi th the eva luati on of ce rt ain key a ssum ptio ns for h ighe r risk as sets ( pri mar ily the p roba bili ty of te chni cal a nd reg ulato ry s ucc ess). As a r esul t of our wo rk, we d eter mine d that th e net im pair men t char ge of $2,08 5m re cord ed for i ntan gibl e ass ets wa s reas onab le. We con side red t he dis clos ures i n Note 10 of the G roup Fi nanc ial S tatem ents . We a re s at isﬁed that t hese disclosures are appropriate. 128 A st raZ ene ca A nnu al R epor t & For m 20 - F In for mat ion 20 21 Financi al S tat eme nts Addit i onal In formation Strate gic Report Ke y audit m at ter How ou r aud it add res sed t he ke y audit m at ter Recognition and measurement of provisions and contingent liabilities for legal proceedings in both the Gr oup a nd the Parent Company (Group and Parent Company) Re fer to A udit C omm itt ee Re por t, Gr oup A cco unti ng Pol icie s, No tes 21 and 3 0 in th e Gro up Fi nan cia l Stat eme nts Re fer to C omp any Acc oun ting Po lic ies a nd Note 5 i n the P are nt Com pan y Financial Statemen ts Th e Grou p is eng age d in a num ber of l ega l proc eed ings , incl udin g paten t litigation, product liability , commercial litigation, a nd government inv e st igations/ pr oce edin gs. At 31 De cemb er 2021 th e Grou p held p rovi sion s of $239 m (2020: $348m) in re spect o f legal claims and settlements (together , legal pro visions) and dis clo sed th e more s igni ﬁcan t leg al pro cee ding s as co nting ent li abil itie s in Note 30 of t he Gro up Fina nci al Sta teme nts. T he Par ent Co mpany i s als o name d in ce rt ain of th ese l ega l proc eed ings , as dis clos ed in N ote 5 in the P aren t Comp any Financial Stat ements. There is signiﬁcant judgement b y management when asses sing the likelihood of a lo ss be ing in curr ed, in d eter minin g whet her a re aso nabl e est imate c an be ma de for th e loss o r ran ge of lo ss for e ach le gal p roc eedi ng an d wheth er a le gal pr ovisi on nee ds to be r eco rded o r a con tinge nt lia bili ty di sclo sed. We evalu ated t he des ign an d teste d the op era ting e ffe ctive nes s of con trol s in re spec t of the r eco gniti on an d meas ure ment o f lega l pro cee ding s and re late d dis clo sure s. We dete rmin ed tha t we coul d rely o n the se con trol s for the pu rpos es of ou r audi t. We obt aine d and eva luate d let ter s of aud it inqu ir y with th e Grou p’ s in tern al an d external legal counsel. We tes ted the c ompl eten ess of m anag eme nt’s ass es smen t of both t he identiﬁcation of legal proceedings and possible outcomes of e ach signiﬁc ant le gal pr oce edin g. Thi s incl ude d asse ss ment of w heth er the Pa ren t Comp any was n ame d as a par t y to thes e leg al pro cee din gs. We evalu ated m anag eme nt’s jud geme nt tha t each o f the pr oce edin gs set o ut in Note 3 0 rep rese nts a c ontin gent l iabi lit y and th at for on e mat ter ma nage men t is una ble to e stim ate the p ossi ble lo ss or r ange o f pos sibl e loss es at th is st age. For t he prov isions recorded and contingent liabi lities disclosed, we consider the m to be ap prop riat e. We evalu ated t he dis clos ures i n Notes 21 a nd 30 of th e Grou p Fina ncia l St ateme nts a nd Note 5 in t he Pare nt Co mpany F inan cial S tate ment s and co nsid ere d them to b e app ropr iate. Recognition and measurement of uncer tain tax positions (Group ) Re fer to A udit C omm itt ee Re por t, Gr oup A cco unti ng Pol icie s and N ote 30 i n the Group Financial Statemen ts Th e Grou p ope rates i n a comp lex mul tina tiona l ta x envir onme nt an d is sub ject to a ra nge of t ax r isks, l eadi ng to unc er tai n ta x posi tion s whic h aris e in the no rmal c our se of bu sine ss, i nclu ding tr ans acti on rel ated t ax m atte rs, t rans fer pricing arrangements and a number of audits and reviews with t ax authorities, an d in som e case s is in d ispu te with t ax au thor itie s. At 31 Dec emb er 2021 th e Grou p reco rde d accr ual s of $768m (20 20: $1 ,01 4 m) in re spec t of the se un cer ta in ta x pos ition s. As di scl osed i n Note 30, a ccr uals c an be b uilt up ove r a lon g per iod of ti me but t he ulti mate re sol utio n of ta x expos ure s us uall y occu rs at a p oint i n time. G iven th e inhe rent u nce rt ainti es in m anag eme nt’s as ses sme nts of th e outc omes o f thes e expos ure s, the re cou ld, in fu ture p eri ods, be a djus tmen ts to the se acc rua ls tha t have a mate ria l posi tive or n egat ive ef fec t on th e resu lts in a ny par tic ula r peri od. We evalu ated t he des ign an d teste d the op era ting e ffe ctive nes s of con trol s in respect of the identiﬁcation, recognition and me asurement of uncertain tax po sitio ns. We de term ined t hat we co uld re ly on th ese c ontro ls for t he pur pos es of ou r audi t. We tes ted the c ompl eten ess of m anag eme nt’s ass es smen t of both t he identiﬁcation o f tax contingencies and the possible ou t come s of each signiﬁcant mat ter. We also ev alua ted the s tatu s and re sult s of ta x aud its an d enqu irie s with the relev a nt ta x authorities. Wi th the as sis tanc e of our l oca l and in tern ation al ta x spe cia list s, we tes ted the inf orma tion u sed i n the dete rmi natio n of the p roba bilit y of di ffe rent o utco mes fo r tax contingencies and the e st imation o f the liability for those tax contingencies by j urisdiction, incl uding management’ s assessme nt of the t echnical merits of tax positions (including where relev ant evaluating a n y advice received from the Gr oup’ s ex tern al adv isor s) and e stim ates of t he amo unt of t ax be neﬁ t expe cted to be sustai ned. We note d that th e ass umpt ions a nd jud geme nts th at are r equ ired to d eter mine the a ccr uals m ean th at the re is a ra nge of p oss ible o utco mes. H owever, from th e evi denc e obta ine d, we con side red th e level o f provi sion ing to be a cce ptab le in the c ontex t of the G roup F inan cial S tate ment s taken a s a who le. We con side red t he dis clos ures i n Note 30 o f the Gr oup Fin anci al St ateme nts. We a re s at isﬁed that t hese disclosures are appropriate. Valuation of the Group’ s deﬁned beneﬁt obligations (Group) Re fer to A udit C omm itt ee Re por t, Gr oup A cco unti ng Pol icie s and N ote 22 in t he Group Financial Statemen ts The Group has deﬁned beneﬁt obligations o f $ 13, 01 8 m at 31 D ecember 202 1 (2020 : $ 1 3,870m), wh ich is s igni ﬁca nt in the c ontex t of the ove rall b ala nce sh eet. Th e Grou p’ s mo st si gniﬁ cant s che mes ar e in the UK a nd Swe den, w hich comprise 79 % of the Group’ s deﬁned beneﬁt obligations. The valuat ion of pe nsion plan obligations requires estimation in determining appropriate assumptions such as mortalit y , discount rates and i nﬂation le vels. Movements in these assumptions can hav e a material impact on the determination of the deﬁned beneﬁt obligations. Management uses e x t ernal actuaries to assist in determining these material assumptions. We evalu ated t he des ign an d teste d the op era ting e ffe ctive nes s of con trol s in respect of the determination of the Group’ s most signiﬁcant deﬁned beneﬁt obl igat ions . W e dete rmi ned th at we cou ld rel y on the se co ntro ls for th e pur pose s of ou r audi t. We use d our a ctua rial e xper ts to a sse ss wh ethe r the as sum ption s use d in calculating the deﬁned beneﬁt obligations for the UK and Sweden were reasonable. Our actuarial experts evaluat ed whether mortality assumptions, discount rates an d inﬂat ion ra tes wer e: > consistent with the spe ciﬁcs of each pla n and where relevant conside ring national information ; > consistent with independently developed ranges; > i n line wi th othe r com pani es’ re cent ex ter nal re por tin g; and > i n line wi th the r equi reme nts of I AS 1 9. We evalu ated t he cal cula tion s prep are d by mana gem ent’s ext erna l actu ari es to assess the impact of the assumptions used on the Group Financial Stat ements. Ba sed on o ur pr oce dure s, we note d no excep tion s and co nsi dere d management’s key assumptions to be within rea sonable range s. We as ses sed th e app ropr iaten ess o f the re lated d iscl osur es in No te 22 of the Group Financial S tat e ments and considered them to be reasonable. 129 Corporate Gover nance Financial Stat ements A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / In depe nden t audit ors ’ repo rt t o the m emb ers o f Ast ra Ze nec a PLC Ke y audit m at ter How ou r aud it add res sed t he ke y audit m at ter Accounting for the acquisition of Alexion Phar maceuticals, Inc. – valuation of the a cquired intangible assets, invent ory and contingent liabilities Re fer to A udit C omm itt ee Re por t, Gr oup A cco unti ng Pol icie s and N ote 27 in th e Group Financial Statemen ts As d esc ribe d in Note 27 to th e con soli dated ﬁ nanc ial s tatem ent s, on 21 July 202 1 the Company acquired Alexion Pharmaceuticals, Inc. for consideration of $41 ,0 58m. T he Com pany ha s rec orde d the a sset s and li abil itie s acqu ired a t fair value wh ich included the recognition of $26,855m of intangible assets and $6,769 m of inven tor y . At trib utin g fair va lue s to ass ets ac quire d and l iabi litie s assumed as part of business combinat ions is considered to be a k ey judgement. Th e purc hase p ric e allo cati on was p er form ed wi th ass ista nce f rom an independent valuer specialist to advise on the v aluation techniques and key as sump tion s in the va luati on, in pa r ticul ar in re spe ct of th e valua tion of t he intangible assets and inventory . Th e inta ngib le ass ets we re fai r value d usi ng the mu lti- per iod exce ss e arni ngs met hod, w hich u ses a nu mbe r of est imate s reg ardi ng the a mount a nd tim ing of fu ture ca sh ﬂow s. The re is si gniﬁ can t esti matio n req uire d in dete rmin ing th e fair val ue of the i ntan gibl e ass ets in re lati on to the ex pec ted fu ture c ash ﬂow s to be ge nera ted, wh ich is h ighl y sen sitive t o a chan ge in tho se as sump tion s. The key assumptions include the proba bi lity of t echnical and regulatory success (PTRS) an d the am ount a nd timi ng of pr ojec ted fu ture c ash ﬂo ws (in pa r ticul ar pe ak yea r sa les a nd sal es er osio n cur ves). Th e fair va lue of in ventor y al so invol ves es tima tion a nd was ca lcu lated a s the es tima ted se lling p ric e les s esti mated c ost s to comp lete a nd sel l the inve ntor y , the a sso ciate d mar gins o n thos e acti vitie s and h oldi ng cos ts. Th e fair va lue of c ontin gen t liabi liti es was $76m, r elat ing to va riou s clai ms and dis pute s in eac h cas e wher e ther e is a pos sib le, but n ot pro babl e, fut ure ﬁna nci al exp osur e, and inv olve an a sse ssm ent of th e likeli hoo d of a numb er of s cena rio s in re lati on to tho se mat ter s. Th ere is j udge men t by mana gem ent wh en as ses sing the l ikelih ood of a l oss b eing i ncur red a nd in de term ining t he fai r value o f ac quire d con tinge nt lia bili ties i nclu ding a re aso nabl e est imate of t he los s or ra nge of l oss fo r each c laim . We evalu ated t he des ign an d teste d the op era ting e ffe ctive nes s of con trol s implemented by the Group relating t o the accounting for the acquisition of Al exion P harm ace utic als, I nc. We dete rmin ed tha t we cou ld rel y on the se co ntrol s for th e purp ose s of our a udit. For each of intangible assets, in ventory and contingent liabi lities w e: > tested management’ s process and met hodology (including a ssessing the competency and objec t ivity of management’ s specialists) f or det ermining the fair values, > u tilis ed ou r in-h ous e valua tion ex per ts to eva luate th e app ropr iate nes s of the valuation techniques used by management’ s specialists; and > te sted t he com plete nes s and a ccur acy of t he mod els as w ell as t he und erly ing dat a use d in the d eter minat ion of th e fair v alue. For th e fair v alue of t he int angi ble as set s acqu ired we ev aluat ed the reasonablenes s of the signiﬁcant assumptions used b y management and their sp ecia list s in dete rmi ning P TRS an d the am ount a nd tim ing of p roje cted f uture ca sh ﬂows ( in par ti cula r pea k year s ales a nd sa les e rosi on cur ves). I n maki ng thi s evalu ation we: > compa red signiﬁcant assumptions (including management’s PTRS, peak year sa les a ssum ptio ns and s ale s eros ion cu rve s) to his toric al ma rket da ta, benchmarking and other external data (where appropriate ); > u sed o ur in- hous e valu ation ex per ts to a ssi st in th e evalua tion of t he methodology and certain signiﬁcant assumptions (including the P TRS ); and > p er for med a re tros pec tive co mpar iso n of fore cas ted reve nues t o actu al pas t performance for launched products. In or der to a sse ss the r eas onab len ess of t he fai r value o f the inve ntor y , we uti lise d our in -ho use val uati on expe rt s to evalu ate the a ppro pri atene ss of th e valuation techniques and underlying assumptions. We also asses sed whether the a ssu mptio ns re latin g to the co sts to c ompl ete and s ell th e invento ry a nd the as soc iated m argi ns wer e cons iste nt with e vide nce ob tain ed fr om othe r are as of the ac quisit ion accounting. For th e fair v alue of t he con ting ent li abili ties we a lso te sted t he com plete nes s of ma nage ment ’ s as ses smen t of bot h the ide ntiﬁ cati on of le gal cl aims a nd di spute s an d wheth er th ese me et the d eﬁni tion of a l iabi lit y to be rec ord ed und er IFR S 3. We dete rmi ned th at the fa ir valu es as cri bed to th e acqu ired i ntan gibl e ass ets, inv entory and contingent liabilities were r easonable. We as ses sed th e app ropr iaten ess o f the dis clo sure s in Note 27 of th e Gro up Financial Stat ements and considered t hem to be reasonable. Accounting f or sales, grant income and deferred income relating t o Vaxzevria (Group) Re fer to A udit C omm itt ee Re por t, Gr oup A cco unti ng Pol icie s and N otes 1, 2 and 20 in t he Gr oup Fi nan cia l Sta teme nts In 202 0, the Gr oup en tere d into an a rra nge ment w ith the U niver sit y of Ox ford for the globa l development, production and supply of the COVID- 19 vaccine, Va x zev ri a . The G roup h as re cord ed reve nue of $ 3,91 7m, col labo rati on reven ue of $6 4m an d gover nmen t gran t inco me of $ 531 m (wh ich re late s to both Va xzev ria an d Evush eld ) in the ye ar end ed 31 De cemb er 2021. Cer tai n adva nce sa les agr eem ents h ave bee n ente red i nto and t he Gro up has r eco gnis ed vac cine co ntra ct lia bilit ies of $1,003 m and de fer red gove rnm ent g rant i ncom e of $67m. We evalu ated t he des ign an d teste d the op era ting e ffe ctive nes s of con trol s in re spec t of the a cco untin g for Va x zev ri a . We dete rmin ed tha t we coul d rel y on the se co ntro ls for th e purp ose s of our a udit . We read the underlying funding and supply contracts based on our risk assessme n t which included consideration o f the materialit y of the individ ual contract. W e asses sed management’ s accounting analysis including where the re was b oth sup ply a nd gra nt inc ome. Fo r reven ue rec ogni sed we te ste d tra nsa ctio ns, on a s amp le bas is as pa r t of our ove rall r evenue te sti ng to supporting evidence. F o r vaccine contract liabil ities w e v ouched upfront funding t o bank statements for material arrangements. For grant i ncome we sa tisﬁ ed our sel ves tha t inc ome did n ot exce ed rel ated c osts . Ba sed on t he pro ced ures p er for med we c onsi der th e acc ounti ng tre atme nt for s ale s of Vax zevri a and re late d gra nt inc ome an d defe rre d inco me to be appropri ate . 130 A st ra Zen eca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents I ndependent aud i tor s’ repor t to t h e mem bers o f A stra Zeneca PLC c ont inue d Addit i onal In formation Strate gic Report How we t ailo red t he aud it sco pe We tai lore d the sc ope of o ur aud it to en sure th at we pe rfo rme d eno ugh wor k to be ab le to give a n opin ion on th e ﬁnan cia l state men ts as a wh ole, ta kin g into ac coun t the str uct ure of th e Grou p and th e Pare nt Company , the accounting p rocesses and controls, an d the ind ustr y in w hich t hey ope rate. In e stab lish ing the ov eral l app roach t o the Gr oup aud it, we de termi ned th e ty pe of wor k that n eed ed to be pe rfo rme d by us, a s the Gr oup en gage men t team, o r co mpon ent au ditor s wit hin Pw C UK and o ther P wC network ﬁrms operating under our instr uction . Where the wo rk was p er for med by c ompo nent a udito rs, we det ermi ned th e level o f involve ment we n eed ed to have in th e audi t work in t hese t err itori es to be a ble to conclude whether sufﬁcient appropriate audit evidence had been obtained as a basis for our opinion on th e Grou p Fina ncia l Sta temen ts as a w hole. Th e Grou p ope rates i n over 100 co untr ies an d the si ze of op era tion s withi n each te rr itor y vari es. We identiﬁe d 1 4 r epo rti ng com pone nts w hich re qui red a f ull s co pe audit of their complete ﬁnancial information, either due to t heir size o r risk characteristic s. The se components ar e the pr incip al op erat ing un its in th e US (tw o components which i ncludes the newly acquired Alexion Pharmaceuticals Inc. co mponent ), UK (two components), Sweden, China (two components) , Jap an, Fra nce, G erm any , S outh Ko rea , T urke y as well as th e Pare nt Com pany a nd Ast ra Zene ca T r easu ry. We als o ide ntiﬁe d a fur the r 1 2 r epor ti ng com pone nts whi ch had o ne or m ore ind ivid ual ba lan ces th at were considered signiﬁcant to t he Group ’ s Financial St ateme nts. Fo r the se com pone nts o ur work wa s sol ely foc uss ed on th e audi t of one o r more o f the fol lowing ﬁnancial statement line items: rev enue, accounts re ceiva ble, i nventor y, rese arc h and deve lop ment expense , taxation and / or property , plant and equipment. We als o ide ntiﬁe d four s hare d se rvi ce ce ntre s wher e aud it pro ced ure s were pe rf orm ed over c er tain s har ed ser vice functions for transaction processing. Fi na nci al s tate ment s – Group Fi na ncia l st atem ents – P are nt Compa ny Overall materi ality US$250 m (2020: US$20 0m). U S $10 0 m ( 20 2 0: US $10 0 m ). How we d eter min ed it Ba sed on 5% of pr oﬁt be fore t ax af ter a ddin g back i ntan gibl e ass et impa irm ent charges (Note 10) , fair value movements and d iscount unw ind on contingent co nsid era tion (N ote 20), the d isco unt unw ind on t he Ace rt a Phar ma pu t optio n lia bili ty (N ote 3), mate rial l ega l set tlem ents ( Note 21 ), the unw ind of t he fai r value adj ustm ent to A lexio n invento rie s (Note 2) a nd res tru ctur ing ch arge s rel ating t o the Po st Al exion A cqui sitio n Gro up Revi ew (Note 2). Approximately 0.5% of net assets as constrained by the a lloc atio n of over all Gr oup ma teria lit y . Rationale for benchmark applied Th e repo rte d pro ﬁt of the G roup c an ﬂu ctua te due to int ang ible a sset i mpai rme nt charges, fair v alue and discount un wind mo vements on contingent consideration, the discount unwind on the Acer ta Pharma put option liabilit y , mat e rial legal se ttle men ts and t he unwi nd of the f air val ue adj ustm ent to A lexio n invento rie s. In 202 1, the restructuring costs resulting from the Post A le xion Acquisition Group Rev iew res ulte d in a sig niﬁc ant ﬂu ctua tion to th e Gro up’ s r epor te d proﬁt . Th ese a moun ts are p rone to ye ar on ye ar vol atili ty an d are no t nece ss aril y reﬂ ect ive of the o per ating p er for manc e of the G roup a nd as s uch the y have be en ex cluded from the b enchmark amount. We have co nsi dere d the na ture of t he bus ines s of As tra Zen eca PLC ( bein g hold ing co mpany investment activities) and hav e determined that net assets is an appropriate ba sis for the calculation of th e overa ll mate rial ity l evel. For e ach co mpo nent i n the sc ope of o ur gro up audi t we all oca ted a mat eria lit y that i s les s than o ur overa ll Gr oup ma teria lit y . T he ra nge of ma teri alit y all ocate d ac ross c omp onen ts was b etwe en $20 m and $150m. We use p er for manc e mate rial ity to r edu ce to an appropriately low level the probability that the aggregate o f uncorrected and undetected misstatements e xceeds ov era l l materiality . Speciﬁcally , we us e per for man ce mate ria lit y in dete rmin ing th e sc ope of o ur aud it and t he natu re and ex ten t of our testing of acc ount balanc es, classes of transactions and disclosures, for example i n determining s ample siz es. Ou r per for man ce mate ria lit y was 75 % ( 2020: 75 %) of ove rall m ater iali ty , a mou nting to U S$1 87 .5 m (2020 : US$1 50 m) for the G roup F inan cial S tate ment s an d US$75m (20 20: US$75m) fo r the Par ent Co mpan y ﬁnancial statements. In de term inin g the pe rfo rma nce m ateri alit y , we co nsid ere d a numb er of fa ctor s – the hi stor y of misstatements, risk assessment and aggregation risk, an d the ef fec tiven ess o f cont rols – a nd con clud ed tha t an am ount at t he upp er en d of our n orma l ran ge was appropriate. We agr eed w ith the A udit C ommi ttee t hat we wou ld re por t to the m miss tate ment s ide ntiﬁe d dur ing ou r aud it ab ove US$1 2.5m (G roup a udit) (20 20: US$10m) an d US$1 2.5m ( Paren t Comp any au dit) (202 0: US $ 10m) as we ll as mis sta teme nts be low tho se am ount s that, i n our vi ew , wa rra nted r epor ti ng for qualitative reasons. Aud it pro ced ures we re pe rf orme d cen tral ly in re lati on to v a rious Group functions, including the accounting for the ac quisit ion of Alexion Pharmaceuticals Inc. , goodwill, intangible assets (e xcluding software) , pensions, certain cash and borrowi ngs, o ther inve stme nts an d liti gatio n mat ter s, as wel l as the consolidation. Our Group engagement team’ s invol veme nt in the a udit s of the re por tin g com pone nts was p er for med pr ima rily by v ir tual me etin gs an d tools and included regular me et ings with c omponent auditors, revie ws of the component audit or s ’ planned re spon se to sig niﬁc ant r isks, t he revi ew of aud itor wor king p ape r review s for ma teri al rep or ting co mpon ents a nd the r eview of t he work p er for med by the component auditors on the sub-c onsolida tion of Alexion. We at t ended meetings with local management alongside the component audit ors for all full scope and other material components. In planning and executing our audit, we c onsidered the p otent ial im pact o f clim ate cha nge on t he Gro up’ s bu sine ss an d the ﬁna nci al sta teme nts. T he Gro up ha s se t out it s inten tion – a s par t of the A mbi tion Ze ro Car bon p rogr amm e – to achi eve net-zero g reen hous e gas emissions b y maximising energy efﬁciency , shi fti ng to re newab le ene rgy s ourc es an d invest ing in na ture -ba sed r emova ls to com pen sate fo r any residual GHG footprint. As a p ar t of our a udit we m ade en quir ies of ma nage ment t o unde rst and th e exte nt of the p otent ial impact of the physical and t ransitional climat e change ri sk on the G rou p Finan cial S tate ment s. We als o discussed the clima te change initiatives and commitments from Ambition Zero Carbon and o ther ini tiati ves to re duce C O 2 emissions, and the i mpact the se have o n the Gr oup in cludi ng on fu ture c ash ﬂ ow forecasts. This incl udes the commit ment to develop next-generation respiratory inhalers with near -zero global warming potential propellants for the pMDI inhaled medicines port fol io. Management considers that the impact of climat e ch ange d oes no t give ri se to a mat eria l ﬁna ncia l st ateme nt imp act. W ith th e ass ista nce of o ur cli mate change experts, we evaluated management’ s risk as ses sme nt and u nder sto od the G roup’s gover nan ce processes including the newly formed Sustainability Co mmit tee. We rev iewed r eleva nt Boa rd an d Audit Committee papers related t o climate change and pe rfo rme d an au dit ri sk as ses smen t of how the i mpac t of th e Grou p’ s co mmit ment s in res pec t of cli mate change including A mbiti on Zero Carbon may af fect the ﬁnancial statements and our audit. We cha llen ged th e exte nt to whi ch cli mate ch ange considerations including the expected cash ﬂo ws from the init iatives a nd commitments had been reﬂected, where appropriate, in management’ s impairment assessment process, going concern assessment and viability assessment. We found that climat e change impacts are included within manageme nt’ s forecasts although the initiatives and commitments did not have a mat eria l impa ct inc ludi ng on ou r key audi t mat ter s. We as ses sed th e cons iste ncy of ot her in form atio n dis clo sed in t he Ann ual Re por t wi th the Gr oup Financial Stat ements, and wit h our knowledge obt aine d fro m the au dit. Materialit y Th e scop e of our a udit wa s inﬂu enc ed by our application o f materiality . We set cer tain quantitative thresholds for materialit y . These, together w ith qualitative conside rat ions, helped us to determine t he sc ope of o ur aud it and t he natu re, tim ing an d exten t of ou r audi t proc edu res on t he ind ividu al ﬁna nci al statement line items and disclosures and in evaluating the e ffe ct of mi sst atem ents , both in divi dual ly and i n ag greg ate on th e ﬁnan cial s tate ment s as a who le. Based on our professional judgement, we determined mat eria lit y for th e ﬁnan cial s tate ment s as a who le as follo ws: 1 31 Corporate Gover nance Financial Stat ements A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / In depe nden t audit ors ’ repo rt t o the m emb ers o f Ast ra Ze nec a PLC Conclus i ons re lati ng to going conc ern Ou r evalua tion o f the dir ecto rs’ as ses sme nt of the Gr oup’ s an d the Par ent Co mpan y’ s a bili ty to co ntinu e to adop t the going concern basis of ac counting included: > ag ree ing the u nde rlyi ng cas h ﬂow pr ojec tion s to Boa rd ap prove d Medi um and L ong T e rm Pla ns, as ses sing h ow thes e fore cas ts ar e comp iled, a nd assessing the accuracy of management’ s forecasts; > evaluating the key as sumpt ions withi n management’s forecasts; > considering liquidity and a vailable ﬁnancial resour ces; > as ses sin g wheth er th e stre ss tes ting p er form ed by management appropriately considered t he principal risks facing the business; and > evaluating the feasibility of management’ s mitigat ing ac tion s in the st res s testi ng sce nar ios. Ba sed on t he wor k we have pe rfo rme d, we have no t identiﬁed any mat e rial uncer tainties relating t o ev e nts or conditions that, individually or collectively , ma y cast signiﬁcant doubt on the Group’ s and the P a rent Company’ s ability to continue as a goi ng concern for a p eri od of at l east t wel ve month s fro m when the ﬁ nanc ial s tatem ents a re au thor ised f or is sue. In au ditin g the ﬁn anci al st ateme nts , we have co nclu ded th at the di rec tors’ u se of the g oing c onc ern basis of accounting in the preparation of the ﬁnancial statements is appropriate. Howeve r , b ecau se not a ll fut ure eve nts or c ondi tion s ca n be pre dic ted, thi s con clus ion is n ot a gua rante e as to t he Gro up’ s a nd the Pa ren t Comp any’s abil ity to cont inue as a going c oncern. In re lati on to the di rec tors’ r epor ti ng on how t hey have ap plie d the UK C orpo rate G overn ance C ode, we h ave not hing m ateri al to ad d or draw a tte ntion to i n rela tion to the d irec tor s’ state ment i n the ﬁn anci al st ateme nts about whether the directors considered it appropriate to adop t the going concern basis of ac counting . Our responsibilities a nd the responsibilities of the dir ecto rs wi th res pec t to goin g conc ern a re de scr ibed in th e relev ant se ctio ns of th is rep or t. Repor ti ng on other in format ion Th e othe r infor mati on com pri ses a ll of the in form atio n in th e Annu al Re por t othe r tha n the ﬁna nci al st ateme nts a nd our a udito rs’ re por t the reon . The dir ecto rs ar e resp ons ible fo r the oth er inf orm ation whi ch inc lude s rep or ting b ased o n the T a sk For ce on Climat e-related Financial Disclosures recommendations. Our opin ion on the ﬁnancial st ateme nts do es no t cover th e othe r infor mati on an d, ac cord ingl y , we do n ot expre ss a n audit o pini on or, exce pt to the ex tent ot her wis e expli citl y state d in thi s re por t, any f orm of a ssu ranc e ther eon. In co nne ctio n with o ur audi t of the ﬁ nanc ial st ateme nts, o ur re spon sibi lity i s to rea d the oth er information and , in doing so, consider wh ether the oth er info rma tion i s mater iall y inc onsi stent w ith th e ﬁnancial statements or our knowledge obtained in the aud it, or o ther wi se app ear s to be ma teri ally mi sst ated. If we id enti fy a n appa rent m ater ial in con siste ncy or mat eria l mis state men t, we are r equi red to p er form pr oce dure s to conc lude w heth er the re is a ma teri al mis sta teme nt of the ﬁ nanc ial s tatem ents o r a mate ria l mis sta teme nt of the o ther i nfor matio n. If, bas ed on th e wor k we have pe rfo rme d, we con clud e that t here i s a mat eria l mis state men t of this o ther i nfor matio n, we are re quire d to rep or t that f act. We have n othi ng to rep or t based on these responsibilities. Wi th res pec t to the Str ateg ic Rep or t and D irec tor s’ Repor t, we also considered whether the disclosures re quire d by the UK C omp anie s Act 20 06 have been included. Ba sed on o ur wor k unde rt aken i n the co urs e of the aud it, th e Comp anie s Act 20 06 re quir es us a lso to report certain opinions and matters as descri bed belo w . Strategic Report and Directors’ Report In ou r opin ion, ba sed o n the wor k und er take n in the co urs e of the au dit, th e info rmat ion give n in the Str ateg ic Rep or t and D irec tor s’ Repo rt fo r the ye ar en ded 31 De cem ber 2021 i s cons iste nt with t he ﬁna nci al sta teme nts an d has b een p repa red in accordance with appl icable legal requirements. In li ght of th e knowl edg e and un der sta ndin g of the Gr oup an d Pare nt Com pany an d thei r envir onme nt obt aine d in the c our se of th e audi t, we did no t ide ntif y any m ater ial mi sst ateme nts in t he Str ategi c Rep or t and Directors’ Repor t. Director s ’ Remuneration In our opinion, the par t of the Directors’ Remuneration Re por t to be au dite d has be en pr ope rly pr epa red in accordance with the Companies Act 2006. Cor porate g overn ance st atement Th e List ing Ru les re quir e us to revi ew the di rec tors’ statements in relation to going conce rn, longer-t e rm via bili ty an d that p ar t of the c orpo rate g overn ance statement relati ng to the Company’ s compliance with the p rovis ions o f the UK C orpo rate G overn anc e Code speciﬁed for our review . Our additional responsibil ities wit h resp ect t o the co rpor ate gove rna nce st atem ent as ot her in form atio n are de scr ibe d in the Re por tin g on ot her in form atio n sec tion of t his re por t. Ba sed on t he wor k unde rt aken a s par t of ou r audit , we have c oncl ude d that e ach of th e follow ing el eme nts of th e corp ora te gover nanc e sta teme nt, inc lude d wit hin the C orp orat e Gover nanc e Rep or t is mate ria lly consistent with the ﬁnancial statements and our kn owled ge obt aine d dur ing th e audit , and we h ave not hing m ateri al to ad d or draw a tte ntion to i n relation to : > The directors’ conﬁrmation that the y hav e carrie d ou t a robu st as ses smen t of the e merg ing an d principal risks; > Th e disc losu res i n the An nual R epo rt th at des cri be tho se pr inci pal ri sks, w hat pr oce dure s are in p lace to id entif y em erg ing ri sks an d an expl anat ion of ho w the se ar e bein g man aged o r miti gated; > Th e dire ctor s’ sta teme nt in the ﬁ nanc ial s tatem ents about whether they consi dered it approp riat e to adopt the g oing conc ern basis of accounting in pre par ing th em, an d thei r iden tiﬁc atio n of any mat eria l unc er tain ties to t he Gro up’ s a nd Par ent Co mpany ’ s a bilit y to co ntinu e to do so ove r a per iod of at l eas t twel ve mont hs fro m the dat e of app roval of the ﬁnancial statements; > Th e dire ctor s’ expl anat ion as to t heir a sse ssm ent of the G roup’s and P aren t Comp any’s pro spe cts, t he pe riod t his as ses sme nt cove rs an d why the p eri od is appropriate ; and > Th e dire ctor s’ sta teme nt as to wh ethe r they have a reasonable expectation that t he company will be able to continue in operation and meet its liabilities as th ey fal l due over t he per iod of i ts as ses sme nt, including an y related disclosures dra wing attenti on to an y necessar y q ualiﬁcations or assumptions. Ou r review o f the dir ecto rs’ st atem ent re gard ing th e longer -term viability of the Group was substantially le ss in sc ope th an an a udit a nd onl y cons iste d of making inquiries and considering the directors’ pr oces s sup por tin g thei r state men t; chec king t hat th e statement is in alignment with the rele vant pro vision s of th e UK Cor por ate Gove rnan ce Co de; and considering whether the statement is consistent with the ﬁnancial statements and our knowledge and und er stan ding o f the Gr oup an d Pare nt Com pany an d the ir env iron ment o btai ned in t he cou rse o f the aud it. In ad diti on, bas ed on t he work u nde rt aken a s par t of our a udit , we have co nclu ded th at eac h of the fo llowi ng el emen ts of th e corp ora te gover nanc e sta teme nt is materially consist ent with the ﬁnancial statements and our knowledge obtained during the audit: > Th e dire ctor s’ sta teme nt that t hey co nsid er the An nual R epo rt, t aken a s a whol e, is fa ir , ba lan ced and understandable, and provides t he information ne ces sar y for t he mem ber s to as ses s the Gr oup’ s and Parent C ompan y’s position, performance, business model and strategy; > Th e sec tion o f the An nual R epo rt th at des cri bes the r eview of e ffe cti venes s of ri sk man agem ent a nd internal control systems; and > Th e sec tion o f the An nual R epo rt de scr ibin g the wor k of the Au dit Co mmit tee. We have no thing to r epo rt in r esp ect of o ur responsibility to rep ort when t he directors ’ statement relating t o the company’ s compliance with the C ode do es not p rope rly d iscl ose a de par tur e from a r eleva nt provision of the Code speciﬁed under the Listing Rule s for r eview by th e audi tors . 132 A st ra Zen eca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents I ndependent aud i tor s’ repor t to t h e mem bers o f A stra Zeneca PLC c ont inue d Addit i onal In formation Strate gic Report Res ponsi bil itie s for the  na ncia l st atements a nd t he audit Responsibilities of the directors for the ﬁnancial statements As ex plai ned m ore fu lly in th e Prepa rat ion of th e Financial Stat ements and Directors ’ Responsibilit ies, the d irec tor s are re spon sibl e for th e prep arat ion of th e ﬁnancial statements in accordance wit h the applicable fr amewo rk and f or be ing sa tisﬁe d tha t they give a t rue an d fair v iew . Th e dire ctor s are al so re spon sibl e for su ch inte rna l contr ol as th ey dete rmin e is ne ces sar y to enable the preparation o f ﬁnancial statements that ar e free f rom ma teri al mis sta teme nt, whe ther d ue to fraud or e rror . In pr epa ring t he ﬁna ncia l state men ts, th e dire ctor s are re spon sibl e for as ses sing t he Gro up’ s and t he Pare nt Company’ s ability to continue as a goi ng concern, disclosing, as applicable, matters related t o going concern and using t he going c oncern basis of accounting unless the directors either int end to liq uida te the Gr oup or t he Pare nt Com pany o r to cea se op erat ions , or have no r eali stic a lter nati ve but to do s o. Aud itor s’ res pons ibil itie s for the a udit o f the ﬁnancial statements Ou r obje ctive s are to o btain r eas onab le as sura nce about whether the ﬁnancial statements as a whole are fre e fro m mate rial m iss tatem ent, w heth er due to f rau d or e rro r , an d to issu e an au ditor s’ rep or t that in clud es our opinion. Re asonable assurance is a high level of as sur ance, b ut is n ot a gua rante e that a n audi t co nduc ted in a ccor dan ce with I SAs ( UK ) will al ways det ect a m ateri al mis sta teme nt whe n it exis ts. Mis sta teme nts ca n ari se fro m frau d or er ror a nd are considered material if , individually or in the aggregat e, the y coul d reas onab ly be ex pec ted to inﬂ uen ce the ec onom ic de cisi ons of u ser s take n on the ba sis of these ﬁnancial stat e ments. Ir regu lari ties , incl udin g frau d, are i nsta nce s of non-compliance with laws and regulations. We de sign pr oce dure s in line w ith ou r resp onsi bili ties , outli ned ab ove, to dete ct mat eria l mis state men ts in re spe ct of ir regu lari tie s, incl udin g frau d. The ex ten t to whic h our procedures are capable of det e cting ir regularities, inc ludi ng fra ud, is d etai led b elow. Ba sed on o ur und er stan ding o f the Gr oup an d industry, we identiﬁed that t he principal risks of non-compliance with laws and regulations r elated to pate nt pr otec tion, p rodu ct sa fety ( incl udin g but no t lim ited to th e US Foo d and Dr ug Ad minis trat ion regulation) , anti bribery and competition law (including bu t not lim ited to th e Fore ign Co rru pt Prac tice s Act) an d tax l egi slati on, an d we con side red th e exte nt to whi ch non -c ompl ianc e migh t have a mate ria l eff ect o n the ﬁnancial statements. W e also considered those laws and re gulat ions that have a direct impact on the ﬁna nci al sta teme nts su ch as th e Comp anie s Act 20 06. We evaluated management’ s incentives and oppor t unities for fraudulent manipulation o f the ﬁnancial statements (including t he risk of o verride of controls) and determined that the principal risks were re lated to j our nal en trie s to man ipula te ﬁnan cia l resu lts and potential m anagement bias in accounting es tima tes. Th e Gro up eng agem ent te am sha red t his ri sk ass es smen t with th e comp one nt aud itor s so tha t the y coul d inclu de ap prop riate a udit p roc edur es in re spon se to su ch ris ks in the ir wor k. Aud it pro ced ures pe rfo rme d by the G roup e ngag eme nt team a nd/or component auditors included: > Eval uati on and te stin g of the d esig n and op era ting ef fec tiven ess o f mana geme nt’s co ntrol s to preve nt and detect irregularities; > Di scu ssio ns wit h VP Gro up Inte rna l Audi t, the De put y Chie f Comp lian ce Of ﬁc er , t he Hea d of Global Inv e stigat ions and the G roup ’s G eneral Counsel and De puty General Counsels, including consideration of known or suspe ct ed instances of non-compliance with la ws and regulations and fr aud ; > As ses sme nt of ma tte rs rep or ted on t he Gro up’ s whistleblowing helpline and the results of management’s investigation of such matters; > Challenging assumptions made b y manageme nt in its signiﬁcant accounting estimat es, in particular in relation to t he accounting for the ac quisit ion of Alexion Pharmaceuticals, Inc. , recognition and me asur eme nt of ce rt ain re bate ac cru als in t he US (exclu ding r are di seas es), the i mpai rme nt of intangible assets ( excluding goo dw ill and soft w a re development costs) , the recognition and measurement of legal provisions and contingent liabilities, the recognition and measurement of unc er tai n ta x posi tion s, and t he valu atio n of the deﬁned beneﬁt obligations (see related key audit mat ter s above); a nd > Id enti fyi ng and t esti ng the va lidit y of jo urna l entr ies , in pa rt icul ar any j ourn al ent rie s poste d with u nus ual account combinations, journals post ed by senior management and consolidation journals. Th ere ar e inhe ren t limit atio ns in the a udit p roc edur es de scri bed a bove. We are l ess l ikely to b eco me awar e of instances of non- compliance with laws and re gulat ions t hat ar e not cl osel y rela ted to eve nts an d transactions reﬂected in the ﬁnancia l statements. Al so, the r isk of n ot dete ctin g a mater ial m isst atem ent due to f rau d is hig her th an the r isk of n ot dete ctin g one re sulti ng fro m err or , a s fra ud may invo lve del iber ate co ncea lme nt by , fo r examp le, for ger y or i ntent iona l misrepresentations, or through collusion. Our audit testing might include testing complete populati ons o f certain transacti ons and balances, possibly using data auditing techniques. Ho wever , it t ypi call y involve s sel ecti ng a limi ted nu mbe r of item s for t esting, rather t han testing complete populations. We will o fte n see k to targ et pa rti cula r item s for tes ting ba sed on t heir s ize or r isk ch arac ter istic s. In ot her ca ses, w e will us e audi t sam pling to e nab le us to dr aw a conclusion about the population from which the sample is selected. A fu rth er de scr iptio n of our re spo nsib iliti es for t he aud it of th e ﬁnan cial s tate ment s is loc ated o n the FRC’s website at: ww w .frc .org. uk / auditorsresponsibilities. Th is des cri ption f orms p ar t of our a udito rs’ re por t. Use o f this r epo rt Th is rep or t, inc ludin g the op inio ns, ha s bee n pre par ed for a nd onl y for th e comp any’s mem ber s as a b ody in a cco rdan ce wit h Chap ter 3 of Par t 16 of the C ompa nie s Act 20 06 an d for no ot her p urpo se. We do no t, in giv ing the se op inio ns, ac cept o r ass ume re spon sibi lity f or any ot her pu rpo se or to a ny othe r pe rso n to whom t his re por t is sh own or in to whos e ha nds it m ay com e save whe re exp ress ly ag reed b y our p rio r cons ent i n writ ing. Ot her requi red report ing Companies Act 2006 e xception re porting Und er the C omp anie s Act 20 06 we a re req uire d to re por t to you if, in o ur opi nion: > we have n ot obt aine d all th e infor mati on an d exp lana tion s we requ ire for o ur aud it; or > adequate accounting records ha ve not been k e pt by the Pa ren t Comp any , o r retu rns ad equ ate for ou r aud it have no t bee n rec eived f rom b ranc hes n ot vis ited by u s; or > cer tain disclosures of directors’ remuner ation sp eciﬁ ed by law a re not m ade; or > th e Paren t Comp any ﬁn anci al sta teme nts an d the pa rt of t he Dir ecto rs’ Re mune rati on Rep or t to be aud ited a re not i n agre eme nt with t he acc ount ing records and r eturns. We have no exc epti ons to re por t ar isin g from this responsibil ity . Appointment Follo wing the recomme ndat ion of the Audit Co mmit tee, we we re ap point ed by the m embe rs o n 27 Ap ril 201 7 to a udit th e ﬁnan cia l state men ts for th e yea r end ed 31 Dec embe r 201 7 an d subs equ ent ﬁna nci al per iod s. The p eri od of tot al uni nter rupte d en gage men t is ﬁve yea rs, c overi ng the ye ars e nde d 31 Dec emb er 201 7 to 31 De cemb er 2021. Other req uired repor tin g As r equi red by th e Fina ncia l Cond uct Au thor it y Disclosure Guidance and T ransparency Rule 4 . 1 . 1 4R, the se Gr oup Fin anc ial St atem ents fo rm pa rt o f the ESEF -prepared annual ﬁnancial report ﬁled on the National Storage Mechanism of the Financial Conduct Authority in accordance with t he ESE F Regulatory T e chni cal S tand ard (E SEF RTS). T his au dito rs’ rep or t pr ovide s no as sura nce ove r whet her th e annu al ﬁna nci al rep or t has b een p repa red u sing th e sing le el ectr onic f orma t spe ciﬁe d in the ES EF RTS . R ich ard H ughes ( Sen ior St at utor y Aud itor) for a nd on b eha lf of Pr icewaterhous eCoopers L LP Ch ar ter ed Ac cou nta nts a nd S tat utor y Aud itor s London 10 Febr ua ry 2 02 2 133 Corporate Gover nance Financial Stat ements A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / In depe nden t audit ors ’ repo rt t o the m emb ers o f Ast ra Ze nec a PLC Cons o l idated St atement of Comprehensive Income for th e year e nded 31De cemb er 2021 2020 2019 Note s $m $m $m Product Sal es 1 36,541 25,890 23,565 Collaboration Rev enue 1 876 727 819 T ot al Revenu e 37,417 26,617 24,384 Cost of sales (12,437) (5,299) (4,921) Gross profit 24,980 21,318 19,463 Distribution costs (446) (399) (339) Research and de velopment expense 2 (9,736) (5,991) (6,059) Se lling, g ene ral a nd adm inis trati ve expe nse 2 (15,234) (11,294) (11,682) Ot her op era ting in com e and exp ens e 2 1,492 1,528 1,541 Operating profit 1,056 5,162 2,924 Finance income 3 43 87 172 Finance e xpe nse 3 (1,300) (1,306) (1,432) Sh are of af ter t ax l oss es in as soc iate s and jo int ven ture s 11 (64) (27) (116) (L oss )/pr ofi t bef or e ta x (265) 3,916 1,548 Ta x a t i o n 4 380 (772) (321) Pr ofi t for t he p eri od 115 3,144 1,227 Other comprehensive income: Ite ms that w ill not b e rec las sifi ed to pr ofit o r loss: Remeasurement of the defined benefit pension liability 22 626 (168) (364) Net (losses)/ gains on equity in vestments measured a t fair value through ot her comprehensive income (187) 938 (28) Fair va lue m ovemen ts rel ated to ow n cre dit ri sk on bo nds de sig nated a s fair v alue th roug h prof it an d loss – (1) (5) T a x on ite ms tha t will n ot be re clas sif ied to p rofi t or los s 4 105 (81) 21 544 688 (376) Ite ms that m ay be re cla ssif ied s ubse que ntly to p rofi t or los s: Foreign e xchange arising o n con solidat ion 23 (483) 443 40 Foreign e xchange arising o n de signat e d b orro wings in net in vestment hedges 23 (321) 573 (252) Fair va lue m ovemen ts on c ash fl ow hed ges (167) 180 (101) Fair va lue m ovemen ts on c ash fl ow hed ges tr ans ferr ed to pr ofit a nd los s 208 (254) 52 Fair va lue m ovemen ts on de riva tives d esig nate d in net i nvestm ent he dge s 23 34 8 35 (Costs)/ ga ins of hedging (6) 9 (47) T a x on ite ms tha t may be r ecla ssi fie d subs eque ntly to p rofi t or lo ss 4 46 (39) 38 (689) 920 (235) Ot he r co mpr eh ens ive ( los s)/ inc om e for t he p eri od, n et of t ax (145) 1,608 (611) T otal c omprehensive (loss)/income for the perio d (30) 4,752 616 Profit at tributable to: Ow ner s of the Pa rent 112 3,196 1,335 Non-c ontrolling intere sts 26 3 (52) (108) T otal c omprehensive (loss)/income at tributable t o: Ow ner s of the Pa rent (33) 4,804 723 Non-c ontrolling intere sts 26 3 (52) (107) Ba sic ea rnin gs pe r $0.25 Ordi nar y Sha re 5 $0.08 $2.44 $1.03 Di luted e arn ings p er $0.25 Or dina ry S hare 5 $0.08 $2.44 $1.03 Weight ed av erage number of Ordinar y Sha res in issue (millions ) 5 1,418 1,312 1,301 Diluted weight e d average number of Ordinar y S hares in issue ( millions) 5 1,427 1,313 1,301 Di vide nds de cla red an d pai d in the pe rio d 25 3,882 3,668 3,579 All activities were in respec t of continuing ope rations. $m m eans m illion s of US doll ars . 134 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Statem en ts Co nsoli dat e d State me n t of Fina n cial Posi t i on at 31Dec embe r 2021 2020 2019 Note s $m $m $m Assets Non-current assets Proper ty , plant and equipment 7 9,183 8,251 7,688 Right - o f-use assets 8 988 666 647 Goodw ill 9 19,997 11,845 11,668 Intangible assets 10 42,387 20,947 20,833 Inve stme nts in a sso ciate s and j oint ve nture s 11 69 39 58 Ot her inve stme nts 12 1,168 1,108 1,401 Derivative financial instruments 13 102 171 61 Other receivables 14 895 720 740 De ferr ed ta x as sets 4 4,330 3,438 2,718 79,119 47,185 45,814 Current assets Inven torie s 15 8,983 4,024 3,193 T rade and other r eceivables 16 9,644 7,022 5,761 Ot her inve stme nts 12 69 160 849 Derivative financial instruments 13 83 142 36 Intangible assets 10 105 – – Income tax receivable 663 364 285 Cash and cash equivalents 17 6,329 7,832 5,369 As set s held fo r sal e 18 368 – 70 26,244 19,544 15,563 T otal assets 105,363 66,729 61,377 Liabilities Current liabilities Interest -bearing loans and borrowings 19 (1,660) (2,194) (1,822) Lease liab ilities 8 (233) (192) (188) T rade and other pa yables 20 (18,938) (15,785) (13,987) Derivative financial instruments 13 (79) (33) (36) Provisions 21 (768) (976) (723) Income tax pay able (916) (1,127) (1,361) (22,594) (20,307) (18,117) Non-current liabilities Interest -bearing loans and borrowings 19 (28,134) (17,505) (15,730) Lease liab ilities 8 (754) (489) (487) Derivative financial instruments 13 (45) (2) (18) Defer red tax liabilitie s 4 (6,206) (2,918) (2,490) Retirement benefit o bligations 22 (2,454) (3,202) (2,807) Provisions 21 (956) (584) (841) Other payables 20 (4,933) (6,084) (6,291) (43,482) (30,784) (28,664) T otal liabilities (66,076) (51,091) (46,781) Net assets 39,287 15,638 14,596 Equit y Capital and reser v es attributable to equity h olders of the Company Share capital 24 387 328 328 Share premium account 35,126 7,971 7,941 Capital redemption reserve 153 153 153 Merger reser v e 448 448 448 Other reserves 23 1,444 1,423 1,445 Retained earnings 23 1,710 5,299 2,812 39,268 15,622 13,127 Non-c ontrolling intere sts 26 19 16 1,469 T otal equity 39,287 15,638 14,596 Th e Finan cial St ateme nts fr om page s 1 34 to 201 wer e appr ov ed by th e Boar d and wer e signe d on its b ehal f by Pas ca l Sor iot Ara d h ana Sarin Dir ector Di rector 1 0 Febr uar y 2022 135 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Con sol idat ed St atem ent of F in anc ial P osit ion Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Co nsoli dat e d State me n t of Changes in Eq uity for th e year e nded 31De cemb er Share Capital T otal Non- Share p remium re demption Merger Other Retaine d at tributable co ntrolling T otal capital acc ount reserve reserve reserves e arnings to ow ners interests equit y $m $m $m $m $m $m $m $m $m At 1Ja nu ar y 2 019 317 4,427 153 448 1,440 5,683 12,468 1,576 14,044 Adoption of new accounting standards 1 – – – – – 54 54 – 54 Prof it fo r the pe riod – – – – – 1,335 1,335 (108) 1,227 Other comprehensive loss 2 – – – – – (612) (612) 1 (611) T r ans fer to oth er re ser ves 3 – – – – 5 (5) – – – T ransactions with o wners Dividends – – – – – (3,579) (3,579) – (3,579) Issue of Ordinary Shares 11 3,514 – – – – 3,525 – 3,525 Sh are -bas ed pay ment s cha rge fo r the pe riod ( Note29) – – – – – 259 259 – 259 Se ttle men t of sha re pla n award s – – – – – (323) (323) – (323) Net m oveme nt 11 3,514 – – 5 (2,871) 659 (107) 552 At 31D ece mb er 2 019 328 7,941 153 448 1,445 2,812 13,127 1,469 14,596 Prof it fo r the pe riod – – – – – 3,196 3,196 (52) 3,144 Other comprehensive i ncome 2 – – – – – 1,608 1,608 – 1,608 T r ans fer to oth er re ser ves 3, 4 – – – – (22) 1,423 1,401 (1,401) – T ransactions with o wners Dividends – – – – – (3,668) (3,668) – (3,668) Issue of Ordinary Shares – 30 – – – – 30 – 30 Sh are -bas ed pay ment s cha rge fo r the pe riod ( Note29) – – – – – 277 277 – 277 Se ttle men t of sha re pla n award s – – – – – (349) (349) – (349) Net m oveme nt – 30 – – (22) 2,487 2,495 (1,453) 1,042 At 31D ece mb er 2020 328 7,971 153 448 1,423 5,299 15,622 16 15,638 Prof it fo r the pe riod – – – – – 112 112 3 115 Other comprehensive loss 2 – – – – – (145) (145) – (145) T r ans fer to oth er re ser ves 3 – – – – 21 (21) – – – T ransactions with o wners Dividends – – – – – (3,882) (3,882) – (3,882) Issue of Ordinary Shares 59 27,155 – – – – 27,214 – 27,214 Sh are -bas ed pay ment s cha rge fo r the pe riod ( Note29) – – – – – 615 615 – 615 Se ttle men t of sha re pla n award s – – – – – (781) (781) – (781) Issue of replacement Alexion sha re awards upon ac quisi tion ( Note27) 5 – – – – – 513 513 – 513 Net m oveme nt 6 59 27,155 – – 21 (3,589) 23,646 3 23,649 At 31D ece mb er 2 021 387 35,126 153 448 1,444 1,710 39,268 19 39,287 1 The Group adopted IFRIC 23 ‘Uncertainty over Income Tax Treatments’ from 1 January 2019. The cumulative effect of initially applying the interpretation was recognised as a decrease to income tax payable of $51m and to trade and other payables of $3m, and a corresponding adjustment to the opening balance of Retained earnings of $54m. 2 Included within Other comprehensive loss of $145m (2020: income of $1,608m; 2019: loss of $611m) is a charge of $6m (2020: gain of $9m; 2019: charge of $47m), relating to Costs of hedging. 3 Amounts charged or credited to other reserves relate to exchange adjustments arising on goodwill. 4 The non-controlling interests reserve relating to the minority shareholders of Acerta Pharma, totalling $1,401m, was reclassified into Retained earnings in 2020 (see Note 26). 5 Replacement share awards were issued as part of the acquisition of Alexion in 2021 (see Note 27). 6 As part of the acquisition of Alexion in July 2021, a pre-existing non-controlling interest in Caelum Biosciences was recognised (Note 27). This was valued at $150m, the agreed exercise p rice for the exclusive option to acquire the remaining equity. The option was exercised on 28 September 2021 and the acquisition of Caelum Biosciences closed shortly thereafter on 5 October 2021. 136 A st ra Zen eca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents Co nsoli dat e d State me n t of C a sh Flo ws for th e year e nded 31De cemb er 2021 2020 2019 Note s $m $m $m Cash flo ws from operating act ivities (Loss)/ profit befor e tax (265) 3,916 1,548 Finance income and expense 3 1,257 1,219 1,260 Sh are of af ter t ax l oss es of as soc iates a nd jo int vent ures 11 64 27 116 Depreciation, amortisation and impairment 6,530 3,149 3,762 Inc rea se in tr ade an d othe r rece ivab les (961) (739) (898) Decrease/ (increase) in inv entories 1,577 (621) (316) Inc rea se in tr ade an d othe r payab les an d provi sio ns 1,405 1,721 868 Ga ins on d ispo sal of i ntan gibl e ass ets 2 (513) (1,030) (1,243) Ga ins on d ispo sal of i nvest ment i n ass ocia tes an d joint ve ntur es 2 (776) – – Fair value movements on contingent consideration arising f r om business combinations 20 14 (272) (614) Non-cash and other mo vements 17 95 (276) 378 Cas h gen erat ed fro m ope rati ons 8,427 7,094 4,861 Interest paid (721) (733) (774) Ta x p a i d (1,743) (1,562) (1,118) Ne t cash i nflow f rom op era ting a ctivi ties 5,963 4,799 2,969 Ca sh f lows f rom i nve sti ng a cti vi ti es Acquisition o f subsidiaries, net of c ash ac qu ired 27 (9,263) – – Payments upon v esting of employee share a wards attributable to business combin ations (211) – – Payment of cont ingent consideration from business combinati ons 20 (643) (822) (709) Pur chas e of pro per t y , pl ant an d equi pmen t (1,091) (961) (979) Di spos al of p rope rt y , p lant a nd eq uipme nt 13 106 37 Purchase o f intangi ble assets (1,109) (1,645) (1,481) Disposal of intangi ble assets 587 951 2,076 Movement in profit-participation li ability 2 20 40 150 Purchase of non- current asset inv estments (184) (119) (13) Disposal of non-current asset in vestments 9 1,381 18 Movement in shor t -term inv estments, fixed deposits and other investing instruments 96 745 194 Paym ents to a sso cia tes and j oint ve ntur es 11 (92) (8) (74) Di spos al of inve stm ents i n ass ocia tes an d joint ve ntur es 776 – – Interest received 34 47 124 Net cash outflow from investing a ctivities (11,058) (285) (657) Net cash (outflow)/inflo w before financing activities (5,095) 4,514 2,312 Cash flo ws from financing activities Pro cee ds fro m iss ue of sh are ca pit al 29 30 3,525 Is sue of l oans a nd bo rrowi ngs 12,929 2,968 500 Repayment of loans and borrowings (4,759) (1,609) (1,500) Dividends paid (3,856) (3,572) (3,592) Hedge contracts relat ing t o dividend payments (29) (101) 4 Repayment of obligations under leases (240) (207) (186) Movement in shor t -term borrowings (276) 288 (516) Payments to ac quire n on-controlling interests (149) – – Net cash inflow/ (outflow) from financing act iv ities 3,649 (2,203) (1,765) Net ( decrease)/increase in Cash and cash equivalents in the period (1,446) 2,311 547 Cas h and c ash e quiva lent s at the b egin ning of t he pe riod 7,546 5,223 4,671 Exc hang e rate e ffe cts (62) 12 5 Ca sh a nd ca sh e qui val en ts at t he e nd of t he p er iod 17 6,038 7,546 5,223 137 A st ra Ze neca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 F in anc ia l St ateme nts / Co nso lid ated S tat emen t of Cas h Flo ws Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Gro up Accounting P oli cies Ba sis of acc ounti ng a nd prepa ration of n anci al in for mation The Consolidated Financial Statements ha ve be en pre pare d unde r the his toric al cos t convention, modiﬁed to include rev a luation to fai r value of c er tain ﬁ nanci al ins trume nts as de scr ibed b elow, in acco rdan ce with UK -adopted International Accounting Standards and w ith the r equir emen ts of the Co mpan ies Act 20 06 a s appl icab le to comp anie s repo rti ng under those standards. The Consolidat e d Financial Stat e ments also comply fully wit h International Financial Reporting Standards (IFRSs) as issued by the International Acc ounti ng Sta ndar ds Boa rd (IAS B) and International Accounting Standards as ado pted by the Eu rope an Unio n. The Consolidated Financial Statements are pre sente d in US do llar s, whic h is the Co mpany ’ s functional currency . In preparing their individual ﬁnancial statements, the accounting policies of som e overs eas su bsidi arie s do not c onfor m wit h IASB is sue d IFRSs. T here fore, wh ere appropriate, adjustments are made in order to present the Consolidat ed Financial Statements on a consistent basis. UK -adopted International Acco untin g Standards On 31 De cemb er 2020, EU -adop ted IFRS was b rough t into UK law a nd bec ame UK -adopted International Accounting St anda rds, wi th futu re chan ges to IFR S be ing subj ect to e ndor seme nt by the UK En dor se men t Boa rd. T he Consolidated Financial Statements transitioned to UK - adopted Int e rnational Accounting S tandards for ﬁnancial peri ods beginning 1 Januar y 2021 . T his ch ange c onstitu t es a cha nge in accounti ng fram ew ork. Ho wev er , there is no impact on recognition, meas urement or dis clos ure in the p erio d reported as a result of the c hang e in fra mework . IFR S9, IFRS7 The replace ment of b enchmark interest rates such as LIBOR and other interbank offere d rates (IBORs) is a priorit y f or global regulators. Pha se 2 ame ndme nts to IFRS 9 ‘F inanc ial Ins trum ents’ an d IFRS 7 ‘Fin anci al Inst rume nts: Di sclos ures’ we re iss ued in Au gust 20 2 1 a nd have be en ado pted by the G roup fo r 2021 rep or ting. A s at 3 1 D ece mbe r 2021 , the Gr oup hel d instr umen ts total ling $1 ,43 9m tha t refere nce US D LIBOR b ut will e ither h ave mat ured o r will have the ir las t LIBOR ﬁ xings set before the relevant USD LIBORs cease pub licat ion on 3 0 June 2023 . Thes e inst rume nts inc lude ﬂo ating r ate bond s, inter est r ate swaps and o ther a rran geme nts. T he Gro up als o has $ 4bn of te rm ban k loan s that cur rent ly reference US LIBOR but these agree ments have a ma ndator y swi tch fro m US LIBOR to an a ltern ative ris k free r ate on 30 J une 2023, sho uld the G roup no t elec t to do so be fore that date . Ba sis for prep arat ion of Fi na ncia l St atement s on a going co ncer n basi s The Group has considerable ﬁnancial res ourc es avail able. A s at 3 1 De cemb er 2021 , the Group has $ 1 1 .2bn in ﬁnancial resources (cas h and ca sh eq uivale nt bala nce s of $6.3 bn and undrawn committed bank faciliti es of $4. 9bn avail able un til Ap ril 2025 wit h only $1 .9 bn of bor rowing s due wi thin one ye ar). All facilities contain no ﬁnancial covenants and we re und rawn at 31 Dec emb er 2021 . Th e Dire ctor s have cons ider ed the im pact of COVID - 19 on Astr aZe nec a ’s ope ratio ns and mitigations to thes e r isks. Overall, the impact of the se item s would h eighte n cer ta in risk s, suc h as tho se rela ting to the d eliver y of th e pip eline o r launc h of new me dicin es, the ex e cution o f AstraZenec a ’s c ommercial strategy , the manufacturing and supply o f me dicin es and r elian ce on thi rd-p ar ty go ods and s er vice s. Th e Group i s conti nuous ly monitoring, and mit igating where possible, impacts of these risks. Th e Group’s revenue s are la rgel y deri ved fro m sale s of med icine s covere d by paten ts, whi ch provi de a rela tively h igh level of res ilien ce and p redi cta bilit y to cas h inﬂows, although government pric e interventions in response t o budgetar y constraints a r e expe cted to c ontin ue to adver sel y affe ct reven ues in s ome of ou r signi ﬁcan t market s. The Group, howe ver , anticipates new revenue streams from both recently launche d me dicin es and t hose in d evelopm ent, a nd the Gr oup has a w ide dive rsi ty of cu stome rs an d suppliers across different geographic areas. Con sequ entl y , the Di rec t or s beli eve that, over all, the G roup is we ll plac ed to ma nage it s busi ness risks succe ssfully . Accordingly , they continue to ado pt the goi ng con cer n basis i n prep arin g the Annual Repor t a nd Financial Statements. Es tim a tes a n d judgements The preparation of the Financial Statements in conformity with generally accepted accounting principle s requires manag ement to m ak e es timate s and jud geme nts th at af fect th e rep or ted am ounts of a sse ts and li abili ties at the d ate of the Fin ancia l State ment s and th e rep or ted am ounts of r evenue s and exp ense s during the repor ting period. Actual results could differ fr om those e st imates. The accounting policy descriptions set out the are as whe re jud geme nts an d estim ates ne ed exerc ising, t he most s igniﬁ cant o f which inc lude th e followin g Key Judge ment s KJ and S igni ﬁcant E stima tes SE : > revenue recognition – see Revenue Acc ounti ng Policy o n page 139 KJ and N ote 1 on pag e 1 45 SE > expensing of internal development expenses – see Research and Devel opme nt Policy o n page 1 40 KJ > impair ment re views of Intangible assets – se e Note 1 0 o n page 156 SE > us eful e conom ic life of I ntang ible as set s – se e Rese arch a nd Devel opme nt Policy o n pag e 1 40 KJ and N ote 1 0 o n page 156 SE > business combinations and G oodwi ll (and Contingent consideration ar isi ng from business combinations) – see Business Combinations and G oodwi ll P olicy on pag e 1 42 KJ , Note 10 on pag e 1 56 KJ , Note 20 o n page 166 SE and N ote 27 on pag e 1 78 SE > litigation liabilities – see Litigation and Envir onme ntal L iabili ties w ithin No te 30 on pa ge 1 8 9 KJ > op erati ng seg ment s – see No te 6 on pag e 1 52 KJ > em ployee b eneﬁt s – see N ote 22 on pag e 1 68 SE > ta xati on – see T a xation Po licy on pa ge 1 4 1 KJ and N ote 30 on p age 1 8 9 KJ SE . Astra Z eneca has asse ssed the impact of the u ncer ta int y pres ented by th e COVID - 1 9 pandemic on the Fi nancial Statements, speciﬁcally conside ring the impact on ke y judgements and signi ﬁcant estimat es along wit h severa l other a reas o f incre ase d risk . A det aile d ass essm ent ha s bee n per for med, foc using o n the foll owing ar eas: > recoverable value of goodwill, intangible as sets a nd pro per ty, plant a nd equ ipme nt > imp act on key a ssum ption s used to estimate contingent consideration liabilities > key as sumpti ons us ed in es timat ing the Group’ s deﬁned beneﬁt pension obligations > ba sis for e stima ting cli nica l trial a ccr uals > key assumptions used in estimating rebates and chargebacks for US Product Sales > valuations of unlisted equity investments > exp ected credit losses ass ocia ted with cha nges i n cred it ris k relati ng to trad e and o ther re cei vable s > net r eali sabl e value of inve ntorie s > fai r value of c er tain ﬁ nanc ial ins trum ents > re covera bilit y of defe rre d tax a sse ts > effe ctiv e ness of he dge r elationships. No material accounting impacts r elating to the a reas a sse sse d above were r eco gnise d in the ye ar . Th e Group w ill con tinue to mo nitor th ese ar eas of inc rea sed ju dgem ent, es timat ion an d risk for material changes. The Group has assesse d the impact o f clim ate ris k on its ﬁn anci al rep or ting. Th e imp act as ses smen t was pr imari ly focu sed on th e valuati on and u sefu l lives of in tangi ble assets and the identiﬁcation and val uation o f provisions and contingent liabilities, as these are j udge d to be the key ar eas th at coul d be im pacte d by clima te risks . No mate rial accounting impacts or changes t o judgements or oth er re quire d discl osur es were n oted. 138 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Statem en ts Financial risk management policies are detailed in No te 2 8 to t he Fina ncial S tatem ents f rom page 1 80. Astra Z eneca’ s management conside rs the following to be the most important accounting pol icie s in the co ntext of th e Grou p ’s ope ratio ns. Revenu e Reven ue com pris es Prod uct Sa les a nd Collaboration Revenue. Pro duct S ales a re revenu es ar ising f rom contracts with customers. Collaborat ion Reven ue ari ses fr om othe r cont ract s, however , the recognition and mea surement principles of IFR S 1 5 ‘Reve nue fro m Contr acts w ith Cus tomer s’ are ap plie d as set o ut bel ow . Revenue ex clud es int e r -comp an y rev enues and value-added taxes. Product Sales Product Sale s re present net inv oice valu e less e stim ated re bates, r eturn s and cha rgeb acks, w hich a re cons ider ed to be var iabl e consideration and include sign iﬁcant estimates. Sa les a re rec ognis ed whe n the con trol of th e good s has be en tr ansfe rre d to a thir d par ty. This i s usua lly whe n title p asse s to the c ustome r , ei ther on s hipme nt or on r ecei pt of go ods by the c ustom er , de pend ing on lo cal tra ding ter ms. In m arkets w here r eturn s are signiﬁcant, es timat es of returns are accounted for a t the poin t revenue i s rec ognis ed. Reven ue is no t reco gnise d in full u ntil it i s highl y proba ble tha t a signi ﬁcant r evers al in the a moun t of cum ulative r evenue re cogn ised w ill not o ccur . Reb ates ar e amou nts payab le or cr edite d to a cus tomer, usua lly bas ed on th e quant ity or val ue of Prod uct S ales to th e custo mer for speciﬁc products in a certain period. P roduct sa les re bates, w hich re late to Pro duct S ales tha t occu r o ver a p erio d of time, a re norm ally issued retrospectively . At the ti me Prod uct Sa les ar e invoice d, rebates and deductions that t he Group expe cts to p ay , are e stima ted. The se re bates t ypica lly ar ise fr om sal es con trac ts with government pa yers, third-par ty managed care organisations, hospitals, long-term care facilities, group purchasing organisations and v arious stat e programmes. For th e market s wher e retur ns are s igniﬁ cant, we es timate th e quant ity a nd value of g oods whi ch may ult imatel y be retu rned a t the poi nt of sa le. Our r etur ns acc rual s are ba sed on ac tual exp erie nce over t he pre cedi ng 1 2 months f or established products t ogether wit h market -related inf or mat ion such as estimat ed stock lev els at wholesale rs and competit or ac tivit y whic h we rece ive via thi rd-pa r ty information servic es. F or newly launched pro duct s, we use r ates ba sed on o ur expe rie nce wi th simil ar pro duct s or a predetermine d perce ntage. Whe n a pro duct fa ces ge ner ic com petiti on, par ti cular a tten tion is g iven to the po ssib le level s of retur ns and , in cas es whe re the cir cums tanc es are s uch tha t the level of Pro duct S ales a re con side red hig hly pro babl e to re verse, revenues are only recognise d w hen the r ight of re turn ex pires , which i s gene rall y on ulti mate pre scr iption o f the pro duct to p atien ts. Th e metho dolog y and a ssum ptions u sed to estimate rebates and returns are monitored and a djus ted reg ular ly in the li ght of co ntrac tual and legal obligat ions, hist oric al trends, past experience and projected market condi tions. On ce the un cer tai nty a sso ciated w ith retu rns is re solve d, revenu e is adju sted ac cordi ngly. Under cer tain collaboration agreements which include a proﬁt sharing mech anism, our r eco gnitio n of Produ ct Sa les de pend s on whi ch par t y acts a s prin cipal i n sale s to the en d cus tomer. In the ca ses wh ere As tra Zene ca ac ts as pr incip al, we rec ord 100% of sal es to the e nd cus tomer . Con trac ts rela ting to the s upply o f Va x zev ri a during the COVID- 1 9 pandemic include con ditio ns whe reby pay ments a re rec eivab le fro m custo mer s in advan ce of the d eliver y of pr oduc t. Such a moun ts are he ld on th e balance sheet as contract liabilities until the related revenue is recognised, gener ally upon product del ivery . Certain of these contracts con tain f ur ther p rovisio ns that r estr ict th e use of inv e nt o ry manufacture d in s peciﬁed supply cha ins to sp eciﬁ ed cus tomer s, re sultin g in an enf orce able r ight to pay ment a s the act ivitie s are p er form ed. Und er IFRS 15, suc h contr acts require revenue to b e recognis ed o ver time using an appropriat e and reasonably measurable method t o measure progress. Reven ue is re cogn ised o n these c ontr acts bas ed on th e prop or tion of p roduc t deli v ere d com pare d to the tota l contr acte d volume s. Collaboration Rev enue Collaboration Re venue includes income from collaborative arrangements where either the Gr oup has s old ce rt ain ri ghts a ssoc iated wit h those p roduc ts, bu t reta ins a sig niﬁc ant ongoing econo mic interest or has acquired a signiﬁcant interest from a third par ty . Signiﬁcant interes t can include ongoing supply of ﬁnished goods, participation in sha ring of p roﬁt a rra ngeme nts or d irec t inte rest f rom sa les of me dici nes. These arrangeme nts may include dev elopme nt arrangements, commercialisation arrangements and c olla bora tions . Incom e may take th e form of upfront f ees, milestones, proﬁt sha ring a nd royal ties an d inclu des s harin g of pr oﬁt ari sing f rom sa les ma de as pr incip al by a c ollaboration partner . KJ Timing of recognition of clinical and re gulator y mi lesto nes is c onsid ere d to be a key jud geme nt. The re ca n be sign iﬁca nt uncer tainty ov e r whether it is highly probable tha t there wo uld not b e a signi ﬁcant r evers al of reve nue in re spec t of spe ciﬁc m ilesto nes if th ese ar e reco gnise d befo re they ar e tri gger ed due to th em bei ng subj ect to th e ac tions of t hird pa rti es. In g ener al, whe re the tr igge ring o f a miles tone is su bjec t to the de cisio ns of thir d par tie s ( e.g. the ac cept anc e or ap proval of a ﬁ ling by a re gulato ry aut hori ty), the G roup do es not c onsid er that the threshold for recognition is met until t hat decision is made. Where Collaboration Revenue arises from the li cens ing of th e Group’s own intell ectu al pro per t y , the lic enc es we gra nt are t ypi cally rig hts to us e intelle ctua l prop er ty wh ich do not c hange d urin g the per iod of th e lice nce and therefore relat ed non-conditional revenue is re cogn ised a t the poi nt the lic ens e is granted and variable consideration a s so on as re cog nitio n crite ria ar e met. Th ose lic enc es are g ene rally u nique a nd the refore w hen the re are ot her pe rfo rma nce ob ligati ons in the contract, the basis of allocation o f the con side rati on makes u se of the r esidu al app roac h as per mit ted by IFRS 15. Th ese ar ran geme nts t ypica lly invol v e the re ceipt of a n upfro nt paym ent, wh ich the con trac t attr ibute s to the lic ense of t he intangible ass ets, and ongoing receipts, whi ch the co ntrac t att ribu tes to the sa le of the pro duct we m anuf actur e. In cas es whe re the tra nsac tion h as two o r more co mpon ents, we acc ount fo r the del ivere d item (for ex ampl e, the tr ansf er of titl e to the int angib le ass et) as a se parate u nit of ac coun ting and r eco rd revenu e on de liver y of tha t comp onen t, provid ed tha t we ca n make a rea sona ble es timate of t he fair valu e of the und elive red co mpone nt. Where non- contingent amounts are payable over on e year fr om the ef fec tive date of a con trac t, an as ses smen t is made a s to whether a signiﬁcant ﬁnancing component exis ts, an d if so, the fa ir value o f this com pone nt is def erre d and re cog nise d ov er the p erio d to the expe cted d ate of rec eipt. Whe re con trol of a r ight to us e an inta ngib le as set pa sse s at the ou tset of a n arr ange ment, revenue is recognised at the point in time con trol is t rans ferr ed. Whe re the su bsta nce of an a rra ngem ent is th at of a rig ht to acce ss rig hts at trib utab le to an int angib le as set, reven ue is re cogni sed over t ime, nor mall y on a str aigh t - line ba sis over th e life of the c ontra ct. Whe re the fa ir mar ket value o f the und eliver ed component (for ex ample, a manufacturing agreement ) e xceeds the contract ed price for that component, we defer an appropriate ele ment o f the upfr ont co nside rati on and am or tise thi s ov er th e per for manc e per iod. However, where t he fair m arket va lue of the 139 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Gro up Acc oun ti ng Pol icie s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements und eliver ed com pone nt is eq ual to or l ower than the contracted price f or that component, we tre at the wh ole of the u pfront a moun t as being attributab le t o the deli vered intangibl e as sets a nd rec ogni se that pa r t of the reven ue upo n delive ry. No ele ment o f the con trac t ed revenue related t o the undelivered component is or dinar ily al locate d to the sa le of the in tang ible as set. T his is be cau se the co ntrac ted reve nue relating t o the undeliv e red component is contingent on future events (such as sales) and c anno t be rec ogni sed un til eith er rec eipt of the a moun t is highl y prob able o r where the c onsi dera tion is re cei v ed fo r a lice nce of inte llec tual pr oper t y , on th e occu rren ce of the related sales. Where the Group provides ongoing servic es, revenue in respect of this element is recognise d over th e durati on of tho se ser vi ces. W here th e ar rang emen t meet s the deﬁ nition o f a lice nce agreement, sales milestones and sales royalties are r eco gnise d when a chieve d by apply ing the royal ty exemp tion un der IFR S 1 5. Al l other mile stone s and s ales r oyaltie s are re cogn ised when considered it is high ly probable there will n ot be a sig niﬁc ant rever sal o f cumul ative income. The determination require s estimates to be ma de in rel ation to f uture Pr oduc t Sale s. Whe re Col labo ratio n Revenue i s reco rded a nd the re is a rel ated Int angi ble as set tha t is lice nse d as pa r t of the ar rang emen t, an ap propr iate am ount of th at Inta ngibl e asse t is cha rged to Cos t of sal es bas ed on a n alloc ation o f cost or val ue to the ri ghts th at have bee n lice nce d. Cos t of sale s Cos t of sal es are r eco gnise d as the as soci ated reve nue is re cogn ised. C ost of sales includ e m anufacturing costs, royalties payable on rev e nues recognised, movements in provisions for inv e nt o ries, inv e nt o ry write-of fs and impairment charges in relation to man ufac turin g asse ts. Co st of sa les al so includes co-collaborator sharing of proﬁt arising from collaborations, and foreign excha nge gai ns and l osse s ari sing fr om business trading activities. Res earc h and developme nt Re sear ch expe nditu re is cha rged to p roﬁt and l oss in t he year i n which i t is incu rre d. KJ Internal development expenditure is capitalised only if it meets the recognition cr iteri a of IAS 38 ‘I ntang ible A sset s ’ . Thi s is co nsid ered a key j udge ment. W here regulator y and other uncer tainties are such tha t the cri teria a re not me t, the exp endit ure is ch arge d to proﬁt a nd los s and th is is alm ost inva riab ly the ca se pri or to app roval of the d rug by the r elevan t regul ator y authorit y . Where, how ever , recognition criteria are met, Intangible as sets are ca pita lised a nd amo rt ised o n a stra ight-lin e bas is over the ir use ful ec onom ic lives f rom pro duct l aunc h. At 3 1 D ece mber 20 2 1, no amounts hav e met the recognition crit e ria. Payme nts to in -lice nse pr oduc ts and com poun ds fro m third pa rt ies for n ew rese arc h and d evelop ment p rojec ts (in p roce ss re sear ch and d evelop ment) ge ner ally ta ke the for m of upf ront pay ment s, mile stone s and roya lty paym ents . Wher e payme nts mad e to third par ties represent cons ideration for future res ear ch and de v elo pmen t activ ities , an evalu ation i s made a s to the natu re of the paym ents . Such pay ment s are exp ense d if they represe nt compen sation for sub- contracted res ear ch and de v elo pmen t ser vic es not resulting in a transfer of intellectual proper ty . By co ntra st, paym ents a re cap ital ised i f they rep rese nt com pens atio n for the tr ansfe r of identiﬁable intellectual propert y de veloped at the ris k of the thi rd par t y . Devel opme nt mile stone payments relating to identiﬁable intellectual pro per t y are ca pita lised a s the mil eston e is tri gger ed. Any u pfron t or mile stone pay ment s for re sea rch ac tiviti es whe re the re is no associated identiﬁable intellectual proper ty are e xpensed. Assets capitalised a r e am or tised, o n a stra ight-lin e basi s, over the ir useful economic lives from product launch. KJ The determination of u seful economic life i s cons idere d to be a key jud geme nt. On p roduc t laun ch, the G roup ma kes a jud geme nt as to the ex pec ted use ful ec onomi c life wit h refer ence to th e expir y of as soc iated pa tents fo r the pro duct , expectation around the competitiv e envi ronme nt spe ciﬁc to t he prod uct an d our detailed long-term risk -adjusted sales projections compiled annually across the Gr oup and a pprove d by the Boa rd. Th e usefu l eco nomic li fe can ex tend b eyond pate nt expir y de pen dent up on the na ture of the p rodu ct and t he comp lexit y of the dev elopment and m anufactu ring pr ocess. Sig niﬁc ant sa les ca n ofte n be ach ieved post patent e xpiration. Intangible assets Int angib le ass ets ar e state d at cos t les s amor tisation and impairment s. Int angible as sets re latin g to produ cts in d evelop ment are subject to impairment testing annually. All Intangible ass ets are t e st ed for impairment when there are indications that the ca rr ying va lue may not b e rec ov er able. T he determination of the recov e rable amounts include key estimates which are highly se nsiti v e to, and d epen d upon, key as sumpt ions a s detai led in N ote 1 0 to the Financial Statements from page 1 56. Imp airm ent revi ews have be en car rie d out on all Intangible asse ts that are in dev el opment (and n ot bein g amor tis ed), all m ajor i ntang ible as sets a cquir ed dur ing the ye ar and a ll othe r intangible assets that hav e had indications of impairment during the y ear . Recoverable am ount is d eterm ined a s the high er of valu e in us e or fai r value le ss co sts to se ll usin g a discounted cash ﬂow calculation, where the pro duct s’ expec ted ca sh ﬂows a re risk-ad juste d over their estimated remaining useful economic life. The determination of the recoverable amounts include signiﬁc ant estimates which are h ighly s ensi tive and d epen d upon key as sumpt ions a s detai led in N ote 1 0 to the Financial Stateme nts from page 1 56. Sa les for eca sts an d spec iﬁc all ocate d cost s (whi ch have both b een s ubje ct to app ropr iate se nior ma nage ment re view and a pprova l) are risk -adjusted and discounted using appropriate rate s base d on ou r post-ta x weig hted aver age co st of cap ital o r for fai r value le ss co sts to sel l, a requ ired ra te of retur n for a ma rket par ti cipan t. Our we ighted ave rage c ost of ca pita l reﬂec ts fac tors s uch as o ur cap ital str uctu re and ou r cos ts of debt a nd eq uity. Any impairment los ses are recognised immediately in proﬁt. Intangible ass ets relating to pro duct s which f ail dur ing deve lopme nt (or for w hich deve lopm ent ce ases f or othe r rea sons) a re als o tested f or impa irme nt and are w rit ten down to th eir re covera ble am ount (whi ch is us ually n il). If, subs eque nt to an im pairm ent lo ss be ing recogni sed, de velopment restar ts or other facts and circumstances change indicating that the impairment is less or no longer e xists, the va lue of the a sset i s re- esti mated a nd its ca rr ying va lue is in crea sed to the r ecover able am ount, bu t not exce eding t he orig inal va lue, by recognising an impairme nt reversal in Ope rating proﬁt. Gov ernment grants Government grants are rec ognised in the Consolidat ed Statement o f Comprehensive Inc ome so a s to match wi th the re lated expe nse s that the y are inte nded to c ompe nsate. Whe re gra nts ar e rece ived in a dvance o f the related expenses, they are initially recognis ed in the C onso lidate d State ment o f Financ ial Posi tion un der T r ade an d other p ayable s as defe rre d inco me and re lea sed to ne t off against the related expenditure when incur red. Eac h cont ract i s asse sse d to deter mine wh ethe r the re are b oth gra nt ele ments a nd suppl y of pro duct w hich n eed to be s epa rated. I n eac h ca se, the co ntra cts se t out the s peci ﬁed ter ms for th e supp ly of the pr oduc t and th e provis ions for fund ing f or certain costs, primarily research an d deve lopm ent ass ociate d with th e IP . It is considered whether there are any condition s for the fundi ng t o be re funded. The considerati on in the c ontr act is a lloca ted bet wee n the gra nt and supply elements. T he sta ndalone selling pr ice for t he supp ly of pro duct s is dete rmine d by refe renc e to obse rve d pric es wit h other cus tomer s. Th e amou nt allo cated a s a government grant is determined by reference to the sp eci ﬁc agre ed co sts an d activ ities ide ntiﬁe d in the c ontra ct as no t direc tly attributable to the supply of product. Gove rnme nt gra nts are r ecor ded a s an of fset to the re levant ex pens e in the Co nsoli dated St atemen t of Comp rehe nsive In come a nd are ca pped to m atch the r elevant c osts i ncur red. Gro up Accounting P oli cies c ont inue d 14 0 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents Joint a rr angeme nts and a sso ciates Th e Group h as ar rang emen ts over whi ch it has j oint c ontrol a nd whi ch qual ify a s joint ope rati ons or jo int vent ures un der IFR S 1 1 ‘ Joint Ar rangements’ . For joint operations, the Gr oup rec ogni ses it s shar e of revenue t hat it ea rns fr om the jo int ope ratio ns and i ts sha re of expe nse s incur red. T he Gro up als o reco gnis es the a sset s ass ociate d with th e joint o pera tions tha t it cont rols an d the lia biliti es it in curs u nder the joint arrange ment. F o r joint ventures and as soci ates, th e Grou p reco gnise s its in teres t in the jo int vent ure or a ssoc iate as a n investm ent and u ses th e equi ty me thod of ac coun ting. Employe e b enet s Th e Group a ccou nts for p ensi ons an d other employee beneﬁts (principally healthcare) und er IAS 19 ‘Empl oyee Ben eﬁts’ an d recog nises all ac tuar ial ga ins an d loss es immediately through Other comprehensive inc ome. In r espe ct of de ﬁned b eneﬁ t plans , obl igatio ns are m easu red at d isco unted p rese nt valu e while p lan as sets a re mea sure d at fair valu e. Given t he exten t of the as sump tions use d to dete rmine t hese va lues, t hese a re con side red to be s igniﬁ cant e stim ates. T he ope rati ng and ﬁn anci ng cos ts of suc h plan s are recognis ed separately in proﬁt, current se rvi ce cos ts are s prea d system atica lly over the lives of employees and ﬁnancing costs are rec ognise d in full in t he per iods in w hich th ey arise. Remeasureme nts of the net deﬁned beneﬁt pension liability , including actuarial gains and losse s, are recogni sed immediately in Other comprehensiv e income. Whe re the c alcul ation r esult s in a sur plus to the G roup, the r ecog nise d ass et is limi ted to the p rese nt value o f any availa ble fut ure ref unds f rom the pl an or re duct ions in f uture con tribu tion s to the pla n. Paymen ts to deﬁn ed con tribu tion p lans a re rec ognis ed in pr oﬁt as they f all due. Ta xat ion Th e curre nt ta x payab le is bas ed on t axa ble pro ﬁt for the ye ar . T a xab le proﬁ t dif fers fro m repo rte d proﬁt b eca use ta xab le proﬁ t exclud es item s that a re eith er never t axa ble or ta x ded uctib le or ite ms that a re ta xabl e or ta x de ducti ble in a dif fe rent pe rio d. The Gr oup’ s cur rent t ax a sset s and li abilit ies ar e calc ulated usi ng ta x rate s that have be en en acted o r sub stan tively e nacte d by the rep or ting da te. KJ Def erre d ta x is provi ded u sing the balance sheet liability method, providing for temp ora ry di ffe renc es bet wee n the ca rr ying am ounts of a sse ts and li abili ties fo r ﬁnanc ial rep or ting pu rpos es an d the amo unts us ed for t axa tion pu rpos es. De ferr ed ta x ass ets are r eco gnise d to the ex t ent t hat it is pro babl e that fu ture ta xab le proﬁ t will be avail able ag ains t which t he ass et can b e utilised. This requires judge ments to b e mad e in res pect o f the availa bilit y of future taxable income. No de ferr ed ta x ass et or li abilit y is re cog nised in re spe ct of temp orar y di ffe renc es as soci ated wit h investme nts in s ubsid iari es and b ranc hes whe re the G roup is a ble to co ntrol th e timing of reve rsa l of the temp ora ry di ffe renc es an d it is probable that the temporar y differences will n ot rever se in the fo rese eab le futu re. Th e Group’s Defe rred t ax a sset s and lia bilit ies are c alcu lated u sing ta x ra tes that a re expe cted to app ly in the p erio d when t he liab ilit y is set tle d or the a sset r ealis ed ba sed on t ax rate s that have b een e nacte d or sub stan tively enacted by t he reporting date. Accrua ls for tax continge ncies require ma nagem ent to ma k e jud geme nts of po tentia l expo sure s in rela tion to ta x au dit iss ues. T a x be neﬁts a re not re cog nise d unles s the ta x po sition s will pr obab ly be ac cepte d by the ta x aut hori ties. T his is ba sed u pon ma nage ment ’ s interpretation of applicable la ws and regulations and t he expe ctat ion of how th e ta x autho rit y will r esol ve the mat ter . O nce co nsid ered probable of not being accepted, management reviews each material tax beneﬁt and reﬂects the effec t of the uncer tainty in determining the related taxab le result. Accruals for tax contingencies are measured usi ng eith er the m ost likel y amou nt or the expe cted va lue am ount de pen ding on wh ich met hod the e ntit y expe cts to be tter p redic t the re solu tion of th e unce rt aint y . Fur ther d etail s of the es timate s and assumptions made in determining our recorded liability for tran sf e r p ricing contingencies and othe r ta x conti ngen cies a re incl uded i n Note 30 to the Fi nanci al Sta temen ts from p age 1 89. Share -based payments All p lans h ave been c las siﬁe d as equ ity s ettl ed af ter as ses smen t. The g rant d ate fair va lue of emp loyee sh are pl an award s is cal culate d usi ng a Monte C arlo m odel. In a cco rdanc e with IFRS 2 ‘ Share -ba sed Pay ment ’ , t he resu lting co st is re cogni sed in p roﬁt over t he vesti ng pe riod of t he awards , bein g the pe riod in whi ch the se rv ices a re rec eived . The valu e of the c harge i s adju sted to reﬂ ect ex pecte d and ac tual leve ls of award s vestin g, ex ce pt wher e the fa ilure to ve st is as a r esul t of not me eting a ma rket con ditio n. Canc ellati ons of e quit y ins trum ents a re trea ted as an a ccel erat ion of the ve sting p eri od and a ny outst andi ng cha rge is r ecog nise d in proﬁ t imme diatel y . Cas h out ﬂows rel ating to th e v es ting of sh are pla ns for ou r empl oyees a re rec ognis ed wit hin operating activities, as they relate to emplo yee remuneration. The cash ﬂows relating t o rep lace ment awa rds is sued to e mploye es as par t of th e Alexi on acq uisiti on (see N ote 27 fro m page 1 78) a re clas siﬁe d withi n investi ng ac tiviti es, as th ey are pa rt o f the agg regate ca sh ﬂows ar isin g from ob taini ng cont rol of the subsidiary. P roper ty, pla nt and eq uipment Th e Group’s polic y is to write o ff th e dif fer ence b etwe en the c ost of ea ch item of Pro per ty, plant a nd eq uipme nt and it s res idua l value over i ts est imated u sefu l life o n a stra ight-lin e basis . Ass ets und er construction are not depreciated. Revi ews are m ade ann ually o f the estimated remaining lives and residua l values of individual productive assets, taking account of commercial and t echnological obs oles cen ce as well a s nor mal wea r and tea r . It is im prac tica l to calc ulate aver age as set live s exac tly . H owever , the tot al live s rang e from app roxima tely 1 0 to 50 yea rs for b uildi ngs, and t hree to 15 year s for pla nt and e quipm ent. All i tems of Pr oper t y , pla nt and e quipm ent are te sted fo r impai rme nt when t here a re ind icati ons tha t the car r ying val ue may not be re cover able. A ny impa irme nt los ses ar e recogni sed immediately in operating proﬁt. Bor rowi ng cost s Th e Group h as no bo rrowi ng cos ts with respect to the a cquis ition o r cons truc tion of qu al if y in g a sset s. All ot her bo rrowin g cost s are recognised in proﬁ t as inc urre d and in acc orda nce wi th the ef fec tive inter est rate method. Leases Th e Group’s leas e arr ange ment s are pr incip ally for p rope rt y , mo st nota bly a po rt foli o of ofﬁ ce premises and emplo yee accommodation , and for a gl obal c ar ﬂe et, util ised p rima rily by ou r sa les an d marke ting tea ms. The lease liabil ity and corresponding rig ht-of-us e ass et ari sing f rom a lea se are initially measure d on a present value basis. Lea se lia biliti es inc lude th e net pre sent va lue of the f ollowin g leas e payme nts: > ﬁxed p aymen ts, le ss any le ase incentives receivable > var iable l eas e payme nts that d epe nd on an ind ex or a rate, in itial ly mea sure d using t he ind ex or rate a s at the co mmen ceme nt date > the exer cise p rice o f a purch ase op tion if the G roup is r easo nabl y cer ta in to ex erc ise that option > payments of penalties for terminating the lea se, if th e leas e term re ﬂec ts the Gr oup ex e rcising t hat option, a nd > am ounts ex pec ted to be paya ble by the Group under residual value guarantees. Rig ht-of-us e ass ets ar e meas ured a t cost comprising the follo wing: > the amount of the initial measurement of lease liabili ty > any le ase p aymen ts made a t or befo re the c omme ncem ent date l ess a ny leas e incentives received > any in itial d irec t cost s, and > restoration costs. 141 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Gro up Acc oun ti ng Pol icie s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Judgeme nts made in calculating the lease liability include asses sing whethe r arra ngements contain a lease and determining the l ease te rm. Le ase ter ms are n egoti ated on an in divid ual ba sis an d conta in a wid e rang e of dif fer ent ter ms and c ondi tions . Prope rt y lea ses w ill of ten incl ude an e arly te rmin ation or ex tensi on opti on to the le ase ter m. Flee t management policies vary by jurisdiction and m ay incl ude ren ewal of a le ase unt il a me asure ment t hres hold, su ch as mi leage , is reached. Ex t e nsion and termination opt ions have been cons idered when determining the l ease te rm, al ong with a ll fac ts and cir cums tanc es that m ay crea te an eco nomi c inc entive to exer cise a n exten sion op tion, or not ex ercise a termination option. E xtension periods (or periods after termination options ) are o nly inc lude d in the le ase ter m if the lea se is re aso nably c er tain to b e exten ded (or not terminat ed). Th e leas e payme nts are d isco unted u sing inc reme ntal b orrow ing rate s, as in th e majo rit y of le ases h eld by the G roup t he intere st ra te imp licit i n the lea se is not r eadil y iden tiﬁab le. Calculating the discount rate is an estimate made in calculating the lease liability . This rate is th e rate that t he Gro up would h av e to pay to bo rrow the f unds ne ces sar y to obt ain an a sse t of sim ilar va lue to the ri ght-of-u se as set in a similar economic environment with similar ter ms, se curi ty an d cond ition s. T o deter mine the in crem enta l bor rowing r ate, the Gr oup use s a ris k -fr ee inte rest r ate adju sted for cre dit ri sk, ad justin g for ter ms spe ciﬁc to th e lease including term, countr y and currency . Th e Group i s expos ed to pote ntial f uture inc reas es in var iabl e leas e payme nts tha t are bas ed on a n index or r ate, whi ch are in itiall y me asure d as at th e comm ence ment d ate, with any fu ture ch ange s in the in dex or ra t e exclud ed fro m the lea se lia bilit y until t hey take ef fec t. Whe n adju stmen ts to lea se paym ents ba sed on an i ndex or r ate take ef fec t, the le ase lia bilit y is rea sse sse d and ad juste d again st the r ight-of- use as set. Lea se pay ments a re allo cate d bet ween principal and ﬁnance cost . The ﬁnance cost is ch arge d to the Co nsoli dated S tateme nt of Com preh ensi ve Incom e over the le ase pe rio d so a s to produ ce a con sta nt per iodic r ate of interest on the remaining balance of the lia bilit y for ea ch per iod. Payme nts as soc iated wi th sho rt-ter m leas es of Pro per ty, plant a nd eq uipme nt and a ll lea ses of l ow-value a sset s are re cogn ised on a st raig ht -lin e basi s as an exp ens e in the Consolidat ed Statement o f Comprehensive Inc ome. Sh or t -te rm le ases a re lea ses w ith a lea se ter m of 1 2 mo nths or l ess . Low-value lea ses a re thos e wher e the und erly ing as set valu e, when n ew , is $ 5,00 0 or le ss and inc lude s IT equi pmen t and sm all item s of ofﬁce furniture . Con trac ts may co ntain b oth lea se an d non-lease components. The Group allocates the c onsi dera tion in th e contr act to the l eas e and non-lease components based on their relative standalone price s. Rig ht-of-us e ass ets ar e gene rally d epre ciate d over th e shor ter of th e ass et’s usefu l life an d the l ease te rm on a st raig ht -lin e basi s. If the Gr oup is re ason ably c er tain to exer cise a pur chas e optio n, the rig ht-of-us e ass et is dep reci ated over t he unde rlyi ng ass et’s usef ul life. I t is impr acti cal to ca lcula te averag e asse t live s exactl y . However, the total l ives ra nge fro m appr o xim ately 10 to 50 year s for bui lding s, and th ree to 1 5 ye ars f or motor vehi cles a nd othe r ass ets. Th ere are n o mater ial le ase ag reem ents u nder whi ch the G roup is a le sso r . Busi nes s com binat ions a nd goodw il l In as ses sing w hethe r an acq uired s et of as sets a nd acti vitie s is a bus ines s or an a sset , ma nagem ent wil l ﬁrst e lec t wheth er to app ly an optional concentration t est to simplify the as ses smen t. Whe re the co ncen tratio n test is app lied, t he acqu isiti on will be t reate d as the acq uisit ion of an a sse t if subs tanti ally a ll of the fa ir valu e of the gro ss as sets a cquir ed (e xcluding cash and cash equivalents, defe rre d ta x asse ts, an d relate d goo dwill) is co nce ntrate d in a sing le ass et or gr oup of similar ide nt iﬁable assets. Whe re the c once ntrat ion test i s not ap plied, or is n ot met, a f ur ther a sses sme nt of whe ther the a cquire d set of a sse ts and ac tivit ies is a bus ines s will be p er form ed. KJ The determination of w het her an acq uire d set of as sets a nd act ivitie s is a bus ines s or an a sset c an be ju dgem enta l, par ticularly if the target is no t producing out puts. M anag emen t uses a n umbe r of fac tors to m ake this de termi nation , which are p rima rily fo cuse d on whe ther th e acq uire d set of as sets a nd act ivitie s incl ude sub stan tive pro ces ses tha t mean t he set is ca pable o f being m anag ed for th e purp ose of providing a return. Ke y determining fac tors in clud e the sta ge of devel opme nt of any a sset s acqu ired, th e readi ness and a bilit y of the a cquir ed set to p rodu ce out puts a nd the pr esen ce of key experienced employees capable of conducting ac t ivities required to develop or ma nufa cture th e ass ets. T y pica lly , the specialised nature of many pharmaceutic al as sets a nd pro ces ses is s uch tha t until assets are substan tivel y ready for pro duct ion an d promo tion, th ere are n ot the re quire d proc ess es for a se t of ass ets an d ac tiviti es to mee t the deﬁ nition o f a busin ess in IFR S 3. On th e acqui sitio n of a bus ines s, fair va lues are a ttr ibute d to the ide ntiﬁa ble as sets a nd lia biliti es. At tribu ting fa ir value s is a key jud geme nt; refe r to Note 27 to the Fina ncia l St atemen ts on pa ge 1 78 for add ition al deta ils of the 20 2 1 a cqui sitio n. Conti ngent l iabili ties are a lso re cord ed at fa ir value u nles s the fa ir valu e cann ot be mea sure d reli ably , in whi ch ca se the val ue is sub sume d into goo dwill. Where fair values of acquired contingent liabilitie s cannot be me asured reliabl y , the assume d contingent liability is not recognise d but i s disc lose d in the sa me man ner as o ther contingent liabilities. Whe re the Group fully acquires, through a business combination, as sets th at were p reviou sly he ld in joi nt operations, the Group has elected not to upl ift the b ook valu e of the exi sting in teres t in the as set he ld in the jo int ope rati on to fair va lue at the d ate full co ntrol i s taken. Whe re not a ll of the eq uit y of a subs idiar y is acquired, the non-co ntroll ing interest is re cogni sed e ither a t fair val ue or at th e non-c ontrolling int e rest’ s propo rtionate sha re of the n et ass ets of th e subsi diar y , on a ca se -by-c ase ba sis. Pu t option s over non-c ontrolling int e rests are recognise d as a ﬁn anci al liab ilit y , with a c orr espo nding entr y in either Retaine d earning s o r against non-c ontrolling int e rest reser v es on a case-by-case basis. The timing and amount of future contingent elements of consideration is c onsidered a sig niﬁc ant es timate; se e Note 20 fro m page 1 6 6. C ontingent consideration, which may include development and launch milestones, rev e nue thre shold milestones and r evenue -ba sed roya lties , is fair va lued at th e date of acq uisit ion usi ng dec isio n-tree analysis with key inputs including probability of su cces s, co nside rati on of pote ntial de lays and r evenue p rojec tion s base d on the G roup’ s internal foreca sts. Unsettled amounts of con side rati on are he ld at fa ir value w ithin payab les wi th chan ges in f air valu e recogni sed immediately in proﬁt. Go odwill i s the dif fer ence b etwe en the fa ir valu e of the co nside rati on and th e fair val ue of ne t asse ts acq uired. Goodwill arising on acquisitions is capitalised and s ubje ct to an im pair ment rev iew , b oth ann ually a nd whe n ther e is an ind icati on that the c arr yin g value may n ot be re covera ble. Th e Group’s polic y up to and in cludi ng 1 9 9 7 was to e limina te Good will ar ising u pon acq uisit ions ag ains t rese rve s. Unde r IFRS 1 ‘First- time Adoption of In ternational Financial Rep or ting St anda rds’ an d IFRS 3 ‘Bu sine ss Com binat ions’ , su ch Goo dwill wi ll rema in eliminated against rese rves. Gro up Accounting P oli cies c ont inue d 14 2 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents Su bsid iar ies A sub sidia r y is an ent ity c ontro lled, di rect ly or in direc tly , by A stra Zen eca PLC. Con trol is re gard ed as th e expos ure or r ights to th e var iable r eturn s of the en tity w hen co mbin ed wit h the power to af fe ct thos e retur ns. Co ntrol is no rmal ly evide nce d by holdi ng more t han 50% of the s hare c apit al of the c ompany, however o ther ag reem ents m ay be in pla ce tha t result in control where they give Astra Zeneca ﬁnance decision-mak ing au t hority over the relevant activities of the c ompan y . The ﬁnancial results of subsidiaries are consolidated from t he dat e control is obtained unti l the date th at cont rol ce ase s. Inventor ies Invento rie s are st ated at th e lower of co st and net r ealis able va lue. T he ﬁrs t in, ﬁr st out or an aver age me thod of va luatio n is use d. For ﬁni shed g oods a nd work i n prog ress , cost includes directly attributable costs and certain ov erhead expenses (including depreciation). Se lling exp ense s and c er tain ot her over head expenses ( principally central administration co sts) are excl uded. N et rea lisa ble valu e is dete rmin ed as e stima ted sell ing pr ice le ss all es timate d cost s of comp letio n and co sts to be in curr ed in se lling a nd dist ribut ion. Write -d owns of inven tor y occu r in the ge nera l cou rse of b usin ess a nd are re cog nise d in Co st of sa les for l aunc hed or a pprove d pro duct s and in R esea rch an d develo pment expense f or products in de velopment. A sset s held for sa le Non -cu rren t ass ets are c las siﬁe d as As sets hel d for sa le whe n their c arr yin g amou nt is to be re covere d prin cipa lly thro ugh a sa le tra nsac tion a nd a sal e is con side red hig hly probable. A s ale is usually considered highly probable only when the appropriate lev el of ma nagem ent ha s comm itte d to the sa le. As sets h eld for s ale ar e state d at the lowe r of ca rr ying a mount a nd fai r value le ss co sts to sel l. Wher e there i s a par tial t rans fer of a non -cu rren t ass et to held fo r sale , an all ocati on of valu e is made b etwe en the cur rent a nd non -cu rren t por tion s of the as set ba sed on t he rela tive value o f the two por tions, unless there is a met hodology that bet ter re ﬂec ts the as set to be d ispo sed of. As sets h eld for s ale ar e not dep reci ated or amortised. T rade and ot her rece ivables Fina ncia l ass ets inc lude d in T rad e and oth er receivable s are recognis ed initially at fair valu e. The G roup ho lds the T rad e rece ivabl es wit h the obje ctive to c ollec t the co ntrac tual ca sh ﬂows an d there fore me asur es the m subsequently a t amortised cost using the ef fec tive inter est ra te metho d, les s any impairme nt losses. T ra de rec eivab les tha t are sub ject to d ebt factoring arra ngements are dereco gnised if th ey meet th e cond ition s for der eco gnitio n det aile d in IFRS 9 ‘Fi nanc ial Ins trum ents’ . T rade and ot her paya bles Fina ncia l liabi litie s inclu ded in T rad e and oth er payab les a re reco gnis ed init ially a t fair val ue. Subsequ ent t o initial rec ognition they a re me asure d at am or tised c ost u sing the e ffe ctive interest rate method. Contingent consider ation payab les a re held a t fair val ue withi n Level 3 of the fa ir valu e hier archy a s deﬁne d in Note 12 on pa ge 1 6 0 of the Fin anci al Sta temen ts. Fi na ncia l inst r ument s The Group’ s ﬁnancia l instrument s in clude Lea se lia biliti es, T r ade an d other re cei vable s and p ayable s, liab ilitie s for co nting ent consideration and put options under business combinations, and rights and obligations und er emp loyee be neﬁt p lans w hich a re dealt with in spe ciﬁc accounting policies. The Group’ s other ﬁnancial instruments include : > Cas h and c ash eq uivale nts > Fixed deposits > O ther i nvest men ts > Ba nk and oth er bo rrowin gs > Derivatives. Cas h and c ash e qu ivale n ts Cas h and ca sh eq uivale nts co mpri se cas h in han d, cur rent ba lanc es wit h banks a nd simil ar institutions, and highly liquid investments wit h matur ities o f three m onths o r les s when acquired. They are readily convertible into kn own amou nts of ca sh and a re hel d at am or tised c ost un der th e hold to co llec t classiﬁcation, where they meet t he hold t o col lect ‘s olel y payme nts of pr incip al and inte rest ’ test cr iter ia unde r IFRS 9. Th ose not me eting th ese cr iter ia are he ld at fa ir value thr ough pr oﬁt an d loss. C ash an d cas h eq uivale nts in th e Conso lidate d State ment o f Cash Flo ws include unsecured bank ov e rdrafts at the balance sheet dat e where balance s often ﬂuc tuate be twee n a cas h and over draf t pos ition. Fi xed de posit s Fix ed deposits, principal ly comprising funds held with banks and other ﬁnancial institutions, are initially measure d at fair value, plus direct transaction costs, and are subsequently measured at am or tise d cost u sing th e eff ective i ntere st rate method at each reporting date. Changes in ca rr ying va lue are r ecog nise d in the Co nsoli dated Statement o f Comprehensive Income. Ot her i n ves tments Inves tment s are cl assi ﬁed a s fair val ue thro ugh pro ﬁt or los s (F VPL), unle ss the G roup m akes an ir revoca ble el ecti on at ini tial re cogn ition fo r cer tain non-cu rrent equity investments to present cha nges in Other comprehen siv e inc ome (F VOCI). If t his ele ctio n is made , there is no s ubse quen t recl assi ﬁcati on of fai r value gai ns and l osse s to proﬁ t and lo ss follow ing the derecogni tion of the in vestm ent. Ba nk a nd other b orrow ings The Group uses derivatives, principally inte rest r ate swaps, to h edge t he inter est rate ex posu re inhe rent in a p or tion of i ts ﬁxed inte rest r ate debt . In such c ase s the Gro up will eit her de sign ate the deb t as fai r value th rough pro ﬁt and l oss wh en cer ta in cri teria a re met o r as th e hedg ed item u nder a f air valu e hed ge. If the d ebt ins trum ent is d esign ated a s fair valu e throu gh proﬁ t or los s, the de bt is ini tiall y me asure d at fai r value (wi th dire ct tra nsac tion co sts be ing inc luded i n proﬁt a s an exp ense) and i s reme asur ed to fai r value at e ach rep or ting da te with ch ange s in car ry ing valu e be ing rec ogni sed in p roﬁt (alo ng with c hang es in the f air valu e of the re lated de rivat ive) , w ith the exce ption of c hang es in the f air val ue of the d ebt ins trum ent rel ating to own c redi t risk which are recorde d in O ther comprehens iv e inc ome in ac cor danc e with IFRS 9. S uch a designation has been made where this signiﬁcantly re duces an accounting mismatch which would result from recognising gain s and l oss es on dif fer ent ba ses. If the d ebt is de sign ated as t he hed ged ite m und er a fai r value he dge, th e debt is i nitia lly me asure d at fai r value (wi th dire ct tra nsac tion co sts be ing amo rt ised ove r the life of t he debt) and i s reme asur ed for f air valu e chan ges in res pec t of the he dged r isk at e ach re por ting date w ith cha nges i n carr yi ng value b eing re cogni sed in p roﬁt (al ong wit h chang es in th e fai r value of th e relate d der ivative). If the d ebt is de sign ated in a c ash ﬂow h edge, the d ebt is me asur ed at am or tise d cost (wit h gains o r loss es ta k en to p roﬁt an d direc t transaction costs b ei ng amortised ov er the life of t he debt). T he rela ted der ivative i s rem eas ured fo r fair val ue cha nges a t each rep or ting da te with the p or tion of th e gain o r los s on the d eriva tive that is d eterm ined to be a n effe ctive h edge r ecog nise d in Oth er comprehensive income. The amounts that have be en re cogni sed in O the r comp rehe nsive inc ome ar e recl assi ﬁed to pr oﬁt in the s ame pe riod th at the he dge d forec ast c ash ﬂows affec t p ro ﬁt. The reclassiﬁcation adjustment is inc lude d in Finan ce expe nse in t he Con solid ated Statement o f Comprehensive Income. Other interest-bear ing loans are initially me asure d at fai r value (wi th dire ct tra nsac tion co sts be ing amo rt ised ove r the life of t he loan) and are subsequently mea sured at amortised co st usin g the ef fec tive inter est ra te metho d at each reporting date. Changes in carr ying value are recognise d in the Consolidated Statement o f Comprehensive Income. 14 3 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Gro up Acc oun ti ng Pol icie s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Der ivat ives De rivati v es a re initi ally me asu red at fa ir valu e (wit h direc t tran sact ion co sts be ing inc lude d in pr oﬁt as a n expen se) and a re subs eque ntly rem eas ured to fa ir value a t each r epor tin g date. C hang es in ca rr ying va lue are recognised in the Consolidat e d S tat e ment of Comprehensiv e Income. Foreign c ur rencie s Foreign currency trans actions, being transactions denominated in a currency ot her tha n an indi vidua l Grou p entit y’s func tiona l currency , are translated into the relevant functional currencies of individual Group ent ities a t averag e rates fo r the rel evant mo nthly accounting per iods, which approximate to actual rates. Monetar y a ssets and liabil ities arising fr om foreign curren cy tr ansactions are retranslated at ex chang e r at e s p re vailing at the r epor ting date. E xchan ge gai ns and l osse s on loa ns and o n shor t-term f oreig n curr ency borrowings and depo sits are included within Fina nce exp ens e. Excha nge dif fer ence s on all ot her fo reign c urre ncy tra nsac tion s are recogni sed in Oper ating p roﬁt in the individual Group entit y’ s accounting record s. Non -mon etar y ite ms ar ising f rom for eign cur renc y tran sacti ons ar e not retr ans lated in t he individual Group entit y’ s accounting reco rds. In the Consolidat ed Financial Statements, inc ome an d expen se item s for Gr oup ent ities wit h a func tiona l curre ncy oth er tha n US dolla rs are t rans lated in to US doll ars at ave rage excha nge rate s, whi ch app roximate to a ctual rates, for t he relev ant accounting periods. As sets a nd liab ilitie s are tr ansl ated at th e US dollar e xchange rat e s prevailing at the repor ting date. E x change difference s arising on co nsol idatio n are re cogn ised i n Othe r comprehensive income . If ce rt ain cr iteri a are me t, non- US dol lar denominated loans or derivat ives are de signa ted as ne t investm ent he dges o f foreign operations. Exchange differences ar ising o n retra nsla tion of ne t investm ents, and o f forei gn cur rency l oans w hich ar e de signa ted in an e ffe ctive ne t investm ent hedge relations hip , are reco gnised in Other comprehensive income in the Consolidat e d Financial Statements. Foreign ex change derivatives hedging net investments in foreign ope rati ons ar e carr ied at f air val ue. Eff ecti v e fair value mov e ments are recognise d in Ot her co mpre hens ive inco me, with a ny ine ffe ctiven ess t aken to pro ﬁt. Ga ins and losses accumulated in the t ranslation reser ve will b e recyc led to pro ﬁt and l oss wh en the foreign operation is s old . Lit igat ion and env iro nment al l iabi lit ies As tra Zene ca is involve d in leg al dis putes , the set tle ment of w hich may i nvolve cos t to the Gr oup. Provis ion is m ade whe re an ad verse outc ome is p roba ble and a sso ciate d cost s, inc ludin g relate d lega l cos ts, can b e esti mated rel iably. In othe r case s, ap propr iate dis clos ures are included. Determining the timing of re cogni tion of w hen an a dvers e outco me is pro babl e is con side red a key jud geme nt, refe r to Note 3 0 to the Fina ncial S tatem ents o n page 1 89. Whe re it is c onsi dere d that th e Group i s mor e likely th an not to pr evail, or in t he rare cir cums tanc es whe re the am ount of t he leg al liability cannot be estimated reliably , legal co sts involve d in defe nding t he clai m are cha rge d to the Con solid ated St ateme nt of Comprehensive I ncome as the y are incurred. Whe re it is c onsi dere d that th e Group h as a vali d contr act wh ich prov ides t he righ t to reimbursement (from i nsurance or oth er wi se) of le gal co sts an d/or all o r par t of any lo ss inc urre d or for w hich a pr ovisio n has be en es tabli shed , the bes t esti mate of the a moun t expe cted to b e rec eived is r eco gnise d as an as set on ly when i t is vir tua lly ce rt ain. As tra Zene ca is exp osed to e nviron ment al liabilities relating to its pa st operations, pr incip ally in re spe ct of so il and gr oundwa ter remediation costs. P rovisi ons for these costs are m ade wh en ther e is a pre sent o bliga tion and w here i t is pro bable t hat expe nditu re on rem edia l work wil l be req uired a nd a rel iable es timate c an be ma de of the co st. Prov ision s are d isco unted at t he releva nt ris k free r ate where the effect is material. I mpai r ment The carr ying v alues of non-ﬁnancial assets, othe r than I nv ento ries a nd Def erre d ta x ass ets, are r eviewed a t leas t annu ally to de termin e whether there is an y indication o f impairment. For G oodwi ll, Inta ngibl e asse ts und er devel opme nt and fo r any othe r ass ets whe re such indication exists, the asset’ s recov erable am ount is e stima ted bas ed on th e grea t er of its va lue in us e and it s fair va lue les s cos t to sel l. In ass ess ing the re cover able a mount , the es timate d futur e cash ﬂ ows, adju sted fo r the ris ks spe ciﬁc to e ach as set, a re disc ounte d to the ir pre sent val ue usi ng a disc ount r ate that reﬂ ects c urre nt mar ket ass ess ment s of the time va lue of mo ney , th e gene ral ri sks af fec ting the p harm aceu tica l indus tr y and oth er ris ks spe ciﬁc to e ach a sset. Fo r the pu rpos e of impairme nt testing, assets are grouped toge ther in to the sma lles t group o f asse ts that gener at e s cash inﬂows from continuing use tha t are lar gely i ndep ende nt of the ca sh ﬂows of o ther a sset s. Impa irme nt los ses ar e recognised immediately in the Consolidat ed Statement o f Comprehensive Income. In te rnati onal ac co untin g tr ans i ti on On tr ansi tion to us ing ado pted IFR Ss in the ye ar end ed 31 Dec embe r 2005, t he Group took adv a ntage of sev e ral optional exempt ions avai lable i n IFRS 1 ‘Fir st-time Adoption of International Financial Repor ting St anda rds’ . The m ajor im pact s which a re of continuing impor tance are detailed be lo w: > Business combinations – IFRS 3 ‘Business Combinations’ has been applied from 1 Ja nuar y 20 03, the d ate of tran sitio n, rath er than being applied fully retrospec t ively . As a re sult , the com binat ion of As tra an d Zen eca is s till ac counte d for as a m erge r , rather than through purchase accounting. If purchase accounting had been adopted, Zen eca wou ld have be en dee med to have acquired Astr a. > Cumulative ex change difference s – the Group chose t o set the cumulative ex change difference rese rve at 1 Jan uar y 200 3 to nil. Appl icable ac count ing st anda rds a ndinter pret ation s i ssue d b ut not yetadop ted At the date of authorisation of these ﬁnancial statements, ce rtain amen dments w ere in issue relating to the following standards and i nterp reta tions b ut not yet a dopted by the Group: > am endme nts to IA S 1 2 ‘Inc ome T a xes’ , IAS 8 ‘ Acc ount ing P olicies, Changes in Acc ounti ng Esti mates a nd Erro rs’ , IAS 1 ‘Presentation of Financial Stateme nts ’ and I FRS Prac tice S tatem ent 2 ‘Ma king mate rial ity ju dgem ents’ , ef fe ctive for perio ds beginning on or after 1 Januar y 2023 – no t endo rse d by the UK Endorsement Board (UKEB) ; > am endme nts to IA S 3 7 ‘ Provisi ons, Contingent Liabilitie s and Contingent As sets’ , IA S 1 6 ‘Pro per t y , Plant a nd Equip ment ’ and IFR S 3 ‘Bus ines s Combinations’ , ef f ective for periods be ginnin g on or af ter 1 Ja nuar y 202 2 – not e ndor sed by th e UKEB; > am endme nts to IA S 1 ‘Prese ntat ion of Financial Statements’ , effec tiv e for periods be ginnin g on or af ter 1 Ja nuar y 2024 – not e ndor sed by th e UKEB; an d > am endme nts to IFR S 1 6 ‘Le ase s’ , ef fe ctive for p erio ds be ginnin g on or af ter 1 A pril 20 2 1 – en dors ed by the U KEB on 1 2 May 2021 . These ame ndments and interpretations are not ex pecte d to have a sig niﬁca nt impa ct on the G roup’ s net r esult s. Gro up Accounting P oli cies c ont inue d 14 4 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents No tes to t h e Grou p F ina n cia l Statem ents 1 Reven ue Product Sales 20 21 2020 20 19 Emerging Re st of Emerging Re st of Emerging Re st of Ma rket s US Europe World To t a l Markets US Europ e Wo rl d T otal Markets US Europ e Wo rl d T otal $m $m $m $m $m $m $m $m $m $m $m $m $m $m $m Oncology: T agrisso 1, 3 3 6 1,7 8 0 986 9 13 5 ,0 15 1, 2 0 8 1 ,566 74 8 80 6 4,328 76 2 1, 2 6 8 4 74 685 3 ,1 8 9 Imfinzi 277 1, 2 45 485 405 2 , 412 15 8 1 ,18 5 370 329 2,0 42 30 1, 0 41 17 9 219 1, 4 6 9 L ynparza 384 1,0 8 7 618 259 2,3 48 26 4 876 435 2 01 1, 77 6 13 3 6 26 287 152 1 ,1 9 8 Calquence 20 1, 0 8 9 111 18 1,2 3 8 6 511 2 3 522 2 16 2 – – 16 4 K oselugo 1 10 4 3 – 10 8 – 38 – – 38 – – – – – Enhertu 12 – 4 1 17 – – – – – – – – – – Orpath ys 16 – – – 16 – – – – – – – – – – Zoladex 6 19 13 147 16 9 948 5 61 5 14 0 18 2 888 492 7 13 5 17 9 813 Faslode x 167 30 113 12 1 4 31 18 0 55 2 21 124 580 19 8 3 28 229 137 892 Iress a 151 11 5 16 18 3 221 14 12 21 268 286 17 70 50 423 Casodex 10 5 – 3 35 14 3 13 3 – 3 36 17 2 127 – 16 57 20 0 Ari midex 106 – 4 29 13 9 147 – 3 35 18 5 152 – 28 45 225 Othe rs 29 – 5 16 50 28 – 4 19 51 29 – 5 60 94 3,223 5,359 2,484 1, 9 82 13 , 04 8 2,9 06 4, 250 1, 9 38 1, 75 6 10 ,8 5 0 2 , 2 11 3,4 49 1, 42 3 1, 5 8 4 8,6 67 Cardiovas cular , Renal & Metabolism: Far xi ga 1 ,19 5 732 810 263 3, 000 686 569 5 07 19 7 1, 9 59 471 537 373 16 2 1, 5 4 3 Brilinta 32 8 73 5 346 63 1, 472 4 61 732 342 58 1, 5 9 3 462 710 351 58 1, 5 81 Bydureon 3 321 55 6 385 4 382 53 9 448 11 459 66 13 549 Onglyza 17 9 88 61 32 360 2 01 16 6 58 45 470 17 6 23 0 70 51 527 Byetta 12 26 11 6 55 8 37 14 9 68 12 68 19 11 11 0 Other Diabetes 18 22 17 2 59 7 25 13 2 47 1 40 9 2 52 Lok elma 3 115 13 44 17 5 5 57 4 10 76 – 13 1 – 14 Roxadustat 174 – – – 174 – – – – – – – – – – Cre stor 775 80 52 18 9 1,0 9 6 74 8 92 12 9 2 11 1 ,18 0 806 10 4 14 8 220 1, 2 78 Seloken / T opro l- XL 928 1 11 11 9 51 782 13 16 10 821 686 37 25 12 760 Atacand 28 4 65 – 97 17 5 10 35 23 24 3 16 0 12 30 19 221 Othe rs 137 – 53 6 19 6 12 6 – 57 8 19 1 19 3 (1) 59 20 271 3 ,780 2 ,1 2 4 1,4 9 4 622 8,0 20 3, 203 2, 083 1, 2 2 8 582 7 ,096 2, 978 2, 209 1 ,15 1 568 6,90 6 Respirator y & Immunology: Symbicort 609 1, 0 65 670 384 2 ,72 8 567 1, 0 22 694 438 2 ,721 5 47 829 678 4 41 2,49 5 Fasenra 20 79 0 286 16 2 1, 2 5 8 12 603 20 3 131 949 5 482 118 99 70 4 Pulmicort 7 70 72 73 47 9 62 79 8 71 73 54 996 1 ,19 0 11 0 81 85 1, 4 6 6 Daliresp / Da xas 4 207 15 1 2 27 4 19 0 22 1 217 4 18 4 26 1 215 Breztri 55 11 5 7 26 203 14 5 – 9 28 – – – 2 2 Beve spi 4 39 11 – 54 1 44 3 – 48 – 42 – – 42 Saphnelo – 8 – – 8 – – – – – – – – – – Othe rs 287 10 8 18 5 14 594 203 6 17 6 13 398 241 6 204 16 467 1, 74 9 2 , 404 1, 247 634 6,03 4 1, 59 9 1 ,9 41 1,1 71 646 5 ,357 1, 9 87 1, 6 5 3 1,1 0 7 644 5,3 91 Rare Disease : Soliris 170 1, 06 8 439 19 7 1 , 8 74 – – – – – – – – – – Ultomiris 9 381 16 9 12 9 688 – – – – – – – – – – Strensiq 10 2 97 36 35 378 – – – – – – – – – – And exxa – 50 18 – 68 – – – – – – – – – – Kanuma 7 32 20 3 62 – – – – – – – – – – 19 6 1,8 2 8 682 364 3,070 – – – – – – – – – – Other: Nexium 705 12 8 62 4 31 1, 3 26 757 16 9 71 495 1, 49 2 74 8 2 18 63 454 1, 4 8 3 Synagis 35 23 203 14 9 410 – 47 325 – 37 2 – 46 312 – 358 FluMis t 2 27 222 2 253 1 70 2 19 5 29 5 – 20 93 – 11 3 Los ec / Pril osec 15 2 1 26 1 18 0 15 2 6 20 5 18 3 17 9 10 49 25 26 3 Seroquel XR /IR 46 12 29 5 92 55 17 29 16 11 7 50 34 88 19 19 1 Othe rs 14 30 54 8 10 6 6 55 56 9 126 12 10 8 64 9 19 3 954 221 596 59 6 2,3 67 971 364 720 530 2, 585 989 436 669 507 2,6 01 C O V I D -19 : Va x zev ri a 2,240 64 1,0 3 5 578 3 , 9 17 – – 2 – 2 – – – – – Evus hel d 19 – 66 – 85 – – – – – – – – – – 2,259 64 1 ,10 1 578 4 ,002 – – 2 – 2 – – – – – Product Sales 1 2 ,1 6 1 1 2 , 000 7, 6 0 4 4 ,77 6 3 6 , 5 41 8, 679 8,638 5,0 59 3 , 514 25 ,89 0 8 ,1 6 5 7, 7 47 4,3 50 3,303 23 ,565 14 5 As tra Ze nec a An nua l Rep or t & Form 2 0 -F I nfor ma tion 2 021 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements SE Rebates and chargebacks in the US Th e major m arket w here e stima tes are s een a s signi ﬁcan t is the US. W hen invoi cing Pr oduc t Sale s in the US, we e stima te the reb ates an d cha rgeb acks we exp ect to pay. The ad justm ent in re spe ct of pr ior yea r net US Pr oduc t Sale s revenue i n 2021 was 1 .5% (2020: 3.5% ; 201 9: 3.6%) . Th e most s igniﬁ cant of th ese re late to the M edic aid an d state p rogra mme s with an a djust ment in r espe ct of p rior ye ar net US Pr oduc t Sale s revenu e in 2021 of 0.4 % ( 2020: 1 . 1 %; 201 9: 1 . 3 %) and Ma nage d Care a nd Medi care o f 0. 7% (2020: 1 . 5 %; 20 19: 1 .9% ). Th e adjus tment i n resp ect of t he prio r year n et US Prod uct sa les reve nue, exclu ding the R are Di sea se dise ase a rea in 2021 was 1.8 %, wi th Medi caid and s tate pr ogra mmes o f 0.5 % a nd Mana ged Ca re and M edic are of 0.8%. Th ese val ues de mons trate the l evel of se nsiti vit y; fur the r mean ingfu l sens itivit y is no t able to be p rovide d due to th e large vo lume of va riab les tha t con tribu te to the overa ll reb ates, ch arge backs , retur ns and ot her reve nue acc rua ls. Collaboration Rev enue 20 21 20 20 20 19 $m $m $m Royalty income 13 8 62 62 Global co-development and commercialisation of Lynparza an d K oselugo with M SD 400 460 6 10 T r ans fer of ri ghts to Zoladex in the US a nd Ca nada to T er Ser a – 35 – Enhertu : sha re of gr oss p rofi ts 19 3 94 – Roxa dust at: sha re of gr oss p rofi ts 6 30 – Nexium : sa le of ri ghts 75 – – Li cenc e agre eme nt for C restor in Spain with Almirall – – 39 Co-development and commercialisation of M EDI8897 with Sanofi – – 34 Gr ant of a utho rise d gen eri c righ ts to var ious m edic ines i n Japa n – – 19 Other collaboration rev enue 64 46 55 876 727 819 Col labo ratio n Revenue i nclud es som e inco me that d oes not a ris e from th e satis facti on of pe rfo rman ce obl igatio ns, in p ar ticula r proﬁ t shar e ent itlem ents a risi ng from p rodu ct sa les ma de by colla bor ators w ho have lic ence d intell ectu al pro per ty to A stra Zen eca . $200 m of Colla bor ation Reven ue in 2021 (2020: $1 28m; 201 9: $ni l) rela tes to suc h inco me. Sub stant ially a ll othe r Colla bora tion Reve nue rel ates to pe rf orma nce ob ligati ons sat isﬁe d in pri or per iods . 2 Ope rati ng prot Op erati ng proﬁ t inclu des th e followi ng sign iﬁca nt items: Cos t of sa les In 2021 , C ost of sa les in clud es a cha rge of $2, 1 9 8m in rel ation to th e rele ase, in li ne with s ale s, of fair va lue upl ift to i nv ento ry t hat was re cog nise d und er IFRS 3 ‘B usine ss Co mbina tions’ up on the ac quis ition of A lexio n (see Note 27 ). Du ring th e year $29 0m (2020: $ nil) of g overnm ent gr ants we re rec ognis ed wit hin Cos t of sale s. Sub stan tiall y all of the g rant s reco gnise d rel ate to funding o f manufactured Va x ze vr ia prod uct for t he US gover nmen t, whic h expire d pri or to bein g acce pted by th e FD A . Histor ical ly , As tra Zene ca did n ot rece ive any su bsta ntial g ov er nmen t gran ts pri or to the co mmen ceme nt of the se pro gram mes in 20 20. Selling, general and administrative e xpe nse In 2021 , S ellin g, gene ral a nd admin istr ative expe nse in clude s a cha rge of $42m (20 20: cred it of $51 m; 201 9: cre dit of $ 5 1 6 m) resul ting fr om cha nge s in the fai r value of c ontin gent c onsid erat ion ar ising f rom the a cqui sition o f the dia betes a llian ce from B MS. Th ese ad justm ents re ﬂec t revi sed e stimate s for fu ture sa les p er forma nce fo r the pro duct s acqui red an d, as a re sult, re vise d estim ates for f uture r oyaltie s payabl e. In 2021 , S ellin g, gene ral a nd admin istr ative expe nse al so inc lude s a charg e of $5m (20 20: cred it of $1 43m; 201 9: c redi t of $58m) re sult ing fro m chan ges in the f air valu e of con tinge nt con side ratio n aris ing fro m the acq uisit ion of Al mira ll’ s re spir ator y bus ines s. The se adju stme nts reﬂ ect rev ised e stim ates for f uture s ales p er form ance f or the pr oduc ts acq uired a nd, as a re sult , revise d esti mates fo r futu re mile stones p ayable. In 2021 , S ellin g, gene ral a nd admin istr ative expe nse al so inc lude s a charg e of $48 m (2020: cre dit of $9 m; 20 1 9: c harg e of $61 0 m ) rel ating to a number of le gal p roce edin gs incl uding s ett leme nts in var ious j uris dicti ons in re latio n to severa l markete d pro duct s. Research and development e xpe nse : Gov er nment grants Du ring th e year $5 3 1m (2020: $222m) of gove rnme nt gra nts were r eco gnise d withi n Rese arch a nd devel opme nt expe nse. Su bsta ntiall y all of the g rants r eco gnise d rela te to fundi ng for re sear ch and d evelop ment a nd rela ted expe nse s for Va x ze vr ia $30 9m; (2020: $1 61 m) an d AZ D 7 442 $222m;( 2020: $61 m). Hi stori cally, Astr aZe neca d id not re ceive a ny subst anti al gover nment g rant s prio r to the com menc eme nt of the se progr ammes in 20 20. No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 1 Reve nue cont inued 14 6 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents Other operating income and expense 20 21 20 20 20 19 $m $m $m Royal ties Income 63 14 9 14 6 Amor tisatio n (1) (2) (4 ) Gains on di sposal of in tangible assets 513 1, 0 3 0 1, 2 4 3 Ga ins on d ispo sal of i nvestm ent s in ass oci ates an d join t ventu res 776 – – Net (losses)/ gains on disposal o f other non -current assets (4) 25 ( 21) Imp air ment of p rop er ty, plan t and eq uipm ent – ( 12) – Other income 1 453 40 6 28 5 Other expense (30 8) (68) (10 8 ) Ot he r op er ati ng i nco me a nd exp en se 1, 49 2 1, 52 8 1, 5 41                              Royal ty am or tisat ion rel ates to int angi ble as sets re cor ded in re spe ct of in come s tream s acqui red wi th MedI mmune. Ga ins on di spos al of int angib le ass ets in 20 2 1 i nclud es $31 7 m o n disp osal of r ight s to Cres tor in over 30 c ountr ies in Eu rope, exce pt in the UK and Spain. Ga ins on di spos al of int angib le ass ets in 20 20 inclu des $3 50m on d ispo sal of gl obal r ights excl uding US , India a nd Japa n to est ablis hed hyp er tens ion me dicin es to Atnah s Phar ma, $ 400 m on disp osal o f right s in over 70 cou ntrie s to A tacand to Ch epla phar m and $1 20 m on the s ale of a n FD A Pri orit y Review V ouc her . Ga ins on di spos al of int angib le ass ets in 201 9 inc lude s $5 15m on dis posa l of US rig hts to Synagis to So bi, $243m on di spos al of ri ghts to Los ec glo bally excl uding C hina, J apan, th e US and M exico to Ch epla phar m, $1 81 m on di spos al of rig hts to Ari midex and Ca sodex in Eur ope an d cer tai n add ition al coun trie s to Juvis é Phar mace utica ls and $ 2 13m on di spos al of com merc ialis atio n right s to Seroquel a nd Seroquel XR i n Europe, R uss ia, US and Canada to Cheplapharm. Ga ins on di spos al of inves tment s in ass ocia tes and j oint ven tures i n 2021 relate s to the dis posa l of the 26.7 % ow ner ship in V iela B io, as par t of th e acq uisit ion of Vi ela by Ho rizon T hera peut ics pl c. Astr aZe neca r ece ived ca sh pro cee ds and p roﬁt of $776m up on clo sing, wi th the pr oﬁt rec orde d as O ther o per ating in come. As p ar t of the tota l cons ider ation r ecei ved in re spec t of the ag ree ment to se ll US ri ghts to Synagis in 2019 , $1 50 m relate d to the ri ghts to pa rti cipate in the f uture c ash ﬂ ows from th e US proﬁ ts or los ses f or nir sevima b. A fur the r $40m wa s rec eived i n 2020 and $20 m in 2021 . Th e total a mount has b een r eco gnise d as a ﬁna ncia l liabi lity a s the Gr oup has n ot full y trans ferr ed the r isks an d reward s of the un derl ying ca sh ﬂows a risi ng from nir sevim ab to Sob i. This li abili ty is p rese nted in O ther p ayable s withi n Non- cur rent lia bilit ies. T he ass ocia ted ca sh ﬂow is pr ese nted wit hin invest ing ac tiviti es as the G roup h as rec eived t he cas h in exchan ge for ag reei ng to tran sfer f uture c ash ﬂows r elati ng to an int angib le as set. In 20 2 1, as a res ult of th e Probab ilit y of T ech nica l/Re gula tor y Succ ess u nwind, an i ncre ase of $1 1 4m to the Pr oﬁt Par tici patio n Liab ility h as be en rec orde d in Other operating expense. Restruc turing costs In conjunction with the acquisition o f Alexion, the enlarged Group has initiat e d a comprehensive P ost Alexion Acquisition Group Review , aimed at inte grati ng syste ms, str uctu re and p roce sse s, optim ising t he glob al footp rint a nd pri oriti sing re sou rce all ocati ons an d investm ents. T hes e activ ities are ex pec ted to be su bsta ntiall y comp lete by the e nd of 2025, with a n umbe r of pla nned ac tivit ies hav ing com menc ed in la te 202 1 . T he Gro up has als o cont inued to p rogr ess oth er le gacy re stru ctur ing pro gram mes, i nclud ing the G lobal Po st-Pand emic N ew W ays of Work ing pr ogra mme tha t was in itiate d in 2020 in re spon se to the ch angin g busi ness e nviro nment , acce ler ated by the C O VID - 1 9 p ande mic. Du ring 2021 , t he Grou p has in curre d $1 ,28 3m of res truc turin g cost s, of whi ch $1 ,030 m res ulted fr om act ivitie s that a re par t of the Po st Alex ion Acq uisit ion Gro up Review. The se inc lude d $449 m withi n Cost of s ale s due to the r ation alisa tion of ou r manu factu ring c apac ity a nd footp rint ac ros s ce rt ain pr oduc tion si tes, $1 61 m w ithin Re sea rch an d develop ment ex pens e and $81 m i n Cost of s ale s due to the de -p rior itisa tion of va rious devel opme nt proj ect s within th e enla rged G roup’s pipel ine, $1 44m w ithin C ost of sa les in r elati on to the re negot iatio n of manu factu ring c apaci ty agr eeme nts wi th third p ar ties a nd $98 m, rec ognis ed pr incip ally in S ellin g, gene ral an d admin istr ative expe nse, of s everan ce paym ents a nd the as soci ated co sts of co mpe nsati ng thos e Alexi on emp loyees w hose ro les we re elimi nated d ue to dupli catio n with exi sting A stra Zene ca ro les. T ota l rest ruct urin g cost s in 2021 inclu ded im pair ments o f prope r ty , p lant a nd equi pmen t ($34 3m) and im pair ment s of sof twar e intan gible s ($1 6m). Th e table s bel ow show the c osts th at have be en cha rged i n resp ect of r estr uctu ring pr ogra mme s by cost c atego ry a nd ty pe. Sever anc e provis ions are d etai led in No te 2 1. 20 21 20 20 20 19 $m $m $m Cost of sales 72 2 53 73 Re sea rch an d develo pme nt expe nse 223 35 10 1 Se lling , gene ral a nd adm inis trati ve expe nse 338 16 2 17 3 Other operating income and e xpense – 1 – T otal charge 1, 2 83 2 51 3 47 147 A st raZ ene ca A nnu al R epo rt & For m 20 - F In for mat ion 2 021 F in anc ial S tat emen ts / Not es to t he Gr oup Fi na nci al S tate ment s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 20 21 20 20 20 19 $m $m $m Sev erance costs 2 17 26 13 7 Accelerated depreciation and impairment charges 1 371 17 (67 ) Othe r 2 695 208 277 T otal charge 1, 2 83 2 51 3 47                                                                                                                            Financial instruments Inc lude d within O per ating p roﬁt ar e the foll owing net g ains a nd los ses o n ﬁnanc ial in strum ents: 20 21 20 20 20 19 $m $m $m Losses on forward foreign e xchange contracts ( 21) (8 6) ( 112 ) (Losses)/ gains on receivables and p ayables (42 ) 89 66 To t a l (63) 3 (4 6) Impairment charges Det ails of i mpair men t charg es for 20 2 1, 2020 and 201 9 are i nclud ed in No t es 7 a nd 1 0. 3 Fi na nce i ncome a nd exp ens e 20 21 20 20 20 19 $m $m $m Finance income Returns on fixed deposits a nd equit y securities 1 1 1 Returns on short-term deposits 11 40 12 2 Fair va lue g ains o n debt a nd inte res t rate swa ps – 4 7 Discount unwind on other long-term assets – 6 20 Interest income on income tax balances 31 36 22 To t a l 43 87 17 2 Finance e xpense Interest on debt and commercial paper ( 700) (6 69) (6 98) Interest on overdrafts, lease liabilities and other financing costs ( 74 ) (67 ) ( 74 ) Net i nter est on p ost- empl oyme nt def ined b ene fit pl an net l iabi litie s (Note2 2) (26) ( 37) (53) Net ex change losses (20) ( 34) (30) Discount unwi nd on contingent consideration arising from busi ness combinations (No te 20 ) (226 ) ( 278) (356) Discount unwind on other long-term liabilit ies 1 (248 ) ( 219 ) ( 213 ) Fair va lue lo sse s on de bt and i ntere st ra te swaps (4) – – Inte res t expe nse on i ncom e ta x bala nce s (2) (2) (8) To t a l (1, 3 0 0) (1, 3 0 6 ) (1, 4 3 2) Net finance expense (1, 2 57 ) (1,219) ( 1, 2 6 0 )                                            Financial instruments Inc lude d within ﬁ nanc e incom e and exp ense a re the fo llowing n et gai ns and lo sse s on ﬁna ncia l instr umen ts: 20 21 20 20 20 19 $m $m $m Inte res t and fa ir valu e adju stme nts in r esp ect of d ebt de sig nated a t fair va lue th roug h prof it or lo ss, n et of de rivat ives (5) (8) (12 ) Inte res t and ch ang es in ca rr yin g value s of deb t des ignat ed as he dge d item s in fai r value h edg es, ne t of der ivati ves (9) ( 6) ( 10) Inte res t and fa ir valu e cha nges o n fixe d and sh or t -ter m dep osit s, eq uit y secu riti es, ot her de riva tives a nd ta x bal anc es 16 42 11 0 Inte res t on deb t, com mer cial p ape r , over draf ts a nd lea se lia bili ties h eld at a mor tis ed co st (73 8) (660) ( 662) Fair va lue los s of $33 m (2020: gai n of $33 m ; 201 9: lo ss of $5 m ) on in teres t rate fai r value he dgin g instr umen ts and $ 29m fai r value ga in (2020: lo ss of $3 2 m; 201 9: gai n of $8m) on t he rela ted hed ged i tems have be en in clude d withi n Intere st and c hang es in ca rr ying va lues o f debt de sign ated as he dge d items , net of de rivati ves. Al l fair val ue hed ge rela tions hips we re ef fecti ve durin g the yea r . Fair va lue los s of $1 9m (20 20: gain of $ 2 m; 201 9: gai n of $4m) on d eriva tives re lated to de bt inst rume nts de signa ted at fa ir value t hroug h proﬁt o r los s and $1 9m fa ir value g ain (2020: l oss of $ 3m; 201 9: los s of $4m) on d ebt in strum ents d esig nated at f air val ue throu gh pro ﬁt or los s have be en inc lude d within I ntere st and fa ir valu e adjus tment s in res pec t of debt de sign ated at f air valu e throu gh proﬁ t or los s, net of d eriva tives. No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 2 Ope rati ng prot c ontinu ed 14 8 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 Financial Statem ents 4 Ta xat ion T a xatio n reco gnise d in the C onso lidate d State ment of C ompr ehen sive Inc ome is a s follows: 20 21 20 20 20 19 $m $m $m Current tax e xpense Current year 1 ,200 9 81 1, 2 4 3 Adj ustm ent to pr ior ye ars (5) ( 10) 66 To t a l 1 ,19 5 971 1, 3 0 9 Deferred tax expense Or igin ation a nd reve rsa l of tem pora ry d if fere nces (1 , 417 ) ( 17 8 ) (8 75) Adj ustm ent to pr ior ye ars (15 8 ) ( 21) ( 11 3 ) To t a l (1, 575 ) ( 19 9) (988) T a xa ti on re cog ni sed i n th e pr ofi t for t he p eri od (3 80) 772 321 T a xatio n relat ing to com pone nts of O ther co mpre hens ive inco me is as f ollows: 20 21 20 20 20 19 $m $m $m Current and deferred ta x Ite ms that w ill not b e rec las sifi ed to pr ofit o r loss: Remeasurement of the defined benefit liability ( 117 ) 36 81 Net losses/(gains ) on equity inv e st ments measured at fair v alue through other comprehensive income 27 (18 0 ) (6 0) De ferr ed ta x (cre dit)/ch arge r elat ing to ch ange o f ta x rates 19 5 63 – To t a l 10 5 ( 81) 21 Ite ms that m ay be re cla ssif ied s ubse que ntly to p rofi t or los s: Foreign e xchange arising on consolidation 57 ( 61) 34 Foreign e xchange arising on designated borrow ings in net in vestment hedges (19) 22 4 De ferr ed ta x cha rge re lati ng to cha nge of t ax r ates 8 – – To t a l 46 (39) 38 T a xa ti on re la tin g to co mp one nt s of ot he r com pr ehe ns ive i nco me 151 (12 0 ) 59 Th e repo rte d tax r ate in the ye ar was 1 4 3 % a nd reﬂ ecte d the favour able o ne- off i mpac ts of the no n-ta xabl e dives tment of t he invest ment in V iela Bio a nd a red uctio n of ta x liab ilitie s aris ing fr om upda tes to est imates o f prio r peri od ta x liab ilitie s follow ing set tle ments w ith ta x auth orit ies an d on expi ry of s tatu te of limit ation s par tiall y off set by a ta x ch arge o n reca lcula tion of de ferr ed ta x bala nce s followi ng subs tant ive enac tmen t of Dutch and U K Corp orat ion T a x rate in crea ses. Th e incom e ta x paid fo r the yea r was $1 , 7 43m. T a xatio n has be en prov ided a t curr ent rate s on the p roﬁts e arn ed for th e peri ods cove red by th e Group F inanc ial St ateme nts. T he 2021 prio r per iod cur rent t ax a djust ment re lates m ainly to t ax a ccru al to ta x retur n adju stme nts. Th e 2020 pri or per iod cu rre nt ta x adjus tmen t relate s mainl y to net re ducti ons in pr ovisio ns for t ax co nting enci es and t ax a ccru al to ta x retur n adju stme nts. Th e 20 1 9 p rior p eri od cur rent t ax ad justm ents re late ma inly to net i ncrea ses i n provis ions fo r ta x contin genc ies a nd ta x accr ual to ta x ret urn ad justm ents. Th e 202 1 pr ior pe riod d efer red ta x adju stme nts re late mai nly to ta x acc rual to t ax re turn ad justm ents a nd upd ates to es timate s of prio r per iod ta x liab ilitie s follow ing set tle ment s with ta x aut horit ies. T he 2020 pr ior pe riod d efer red ta x adj ustme nts re late mai nly to ta x acc rual to t ax r eturn adj ustme nts of fse t by net inc reas es in p rovisio ns for t ax co nting enci es. Th e 20 1 9 p rior p eri od defe rred t ax a djust ment s relate m ainly to t ax ac cru al to r eturn adjustments. T o the ex tent th at divi dend s remit ted f rom over seas s ubsi diari es, jo int ventu res an d ass ocia t es a re expe cted to re sult in a dditi onal t axes , approp riate am ounts h av e be en prov ided fo r . Unre mit ted ea rnin gs or dif fer ence s in the c arr yin g value an d ta x basi s of investm ents m ay be liab le to add it ion al ta x es i f distr ibute d as divi dend s or on a liq uidati on event . Defer red t ax is p rovide d for su ch dif fere nce s in rela tion to Gr oup ent ities w here management is inte nding to r emit e arnin gs in the f ores eea ble fut ure. Th e aggre gate am ount of g ross te mpor ar y dif fere nces a sso ciate d with inve stm ents in sub sidi arie s, par tne rsh ips an d bran ches fo r whic h defer red t ax li abilit ies have no t been r eco gnise d total led ap proxim ately $ 5,597 m at 3 1 Dece mber 2021 (2020: $2, 2 70m; 201 9: $1 ,779m), $3,0 95m of whi ch has a c orre spon ding de duc tible te mpor ar y dif feren ce of the s ame gr oss valu e which i s not re cogni sed a s it is not p robab le of rever sin g in the for esee able f uture b ut on wh ich dif fer ent ta x rate s appl y . Pri or year s’ amou nts have be en adj usted to r eﬂec t only th ose un remit ted e arni ngs tha t would be s ubjec t to addi tiona l taxe s. Factors affecting future t ax charges As a G roup wi th world wide op era tions , Astr aZen eca i s subje ct to sever al fac tors th at may af fec t futu re ta x char ges, p rinci pally t he levels a nd mix of pro ﬁtab ilit y in dif fere nt juri sdic tions , trans fer pr icin g regul ation s, ta x rates i mpos ed and t ax r egime r eform s. In 2021 , th e UK Gover nmen t enac ted le gisla tion to inc reas e the ma in rate of UK s tatuto ry C orp orati on T ax to 25% eff ective 1 A pril 20 23. In De cemb er 2021 , th e OECD iss ued m odel rul es for a n ew globa l minim um ta x fram ework a nd the UK ha s anno unce d the inte ntion to b ring th ese in to effe ct fr om 2023. Wh ilst the ove rarc hing fr amewor k has be en pub lishe d, we are awa iting th e legi slatio n and de tail ed guid ance to a sse ss the f ull impl icati ons up on Astr aZe nec a. 14 9 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements T ax reconciliation to UK statutor y r at e Th e table b elow re conc iles t he UK sta tutor y ta x cha rge to the G roup’ s tota l tax (c redit) / ch arge: 20 21 20 20 20 19 $m $m $m (Loss)/ profit befor e tax (26 5) 3, 916 1, 5 4 8 Not iona l ta xatio n char ge at UK c orp orat ion ta x ra te of 1 9% (50) 74 4 294 Di ffe renc es in e ffe ctive ove rs eas t ax ra tes 1 (4 9) (49 ) De ferr ed ta x cha rge re lati ng to cha nge in t ax r ates 1 54 13 8 39 Unreco gnis ed d eferr ed t ax asset 2 32 3 ( 16) Ite ms not de duc tibl e for ta x pur pos es 208 36 92 Ite ms not c harg eabl e for ta x pu rpos es (16 3) (4) ( 13) Ot her it ems 3 (299 ) (65) 21 Adj ustm ents i n resp ect o f prio r per iod s 4 (16 3) ( 31) ( 47 ) T o ta l ta x (cre di t)/ch arg e fo r the y ear (380) 7 72 321                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         As tra Zene ca is dom icile d in the UK b ut ope rate s in other c ountr ies w here th e tax r ates a nd laws ar e dif feren t to those i n the UK. T he imp act on dif fer ence s in ef fect ive overs eas ta x ra tes on the G roup’s o ver all ta x cha rge is no ted above. Pr oﬁts ar isin g from ou r manu factu ring o pera tion in Pue rto R ico ar e grante d spe cial s tatus a nd are t axed a t a redu ced r ate comp ared w ith the no rma l rate of ta x in th at terr itor y unde r a ta x ince ntive grant continuing until 203 1 . Deferred tax Th e total move ment in t he net de ferr ed ta x bala nce in t he year wa s $2,396 m. The move ment s are as fo llows: Intangibles , Pension and Elimination of Losses and Accrue d pr oper t y ,p lant post-retirement unrealised pro fit Un taxe d tax credits expenses & equipment 1 benefits on inventory reserves 2 carried forward and other T otal $m $m $m $m $m $m $m Ne t de fer re d ta x bal anc e at 1J anu ar y 2 019 (3,368) 495 980 ( 557 ) 1,0 0 8 535 (9 07) Income statement 1, 0 5 5 (9) 312 (6 3) (48 0) 17 3 988 Other comprehensive income 34 79 – – – (30) 83 Equity – – – – – 12 12 Exchange 14 (4) 1 22 18 1 52 Ne t de fer re d ta x bal anc e at 31D ece mb er 2 019 ( 2,26 5) 561 1, 2 9 3 (598) 546 6 91 228 Income statement (226) (6 4) 444 ( 92) 13 6 1 19 9 Other comprehensive income (78) 10 1 – (1) – 72 94 Equity – – – – – ( 16) (16 ) Exchange (58) 58 70 ( 110 ) 32 23 15 Ne t de fer re d ta x bal anc e at 31D ece mb er 2 02 0 (2,6 27) 656 1, 8 0 7 ( 80 1) 714 7 71 52 0 Income statement 782 (16 6) (5 9) (13 9) 307 850 1, 575 Other comprehensive income 52 83 – – – 40 175 Equity – – – – – 14 14 Additions t hrough business combinat ions 3 ( 3 , 74 4 ) 13 16 6 – 5 07 ( 1,11 6 ) ( 4 ,1 74 ) Exchange 57 (33) (53) 78 (10 ) (25 ) 14 Ne t de fer re d ta x bal anc e at 31D ece mb er 2 021 4 (5, 480) 553 1, 8 61 (862) 1,5 18 534 (1, 8 76)                                                                                                                                                                                                                                                                                                                                                                                                                                                                No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 4 Ta xat ion cont inue d 150 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s Th e net defe rre d ta x balan ce, be fore the of fs et of bal ance s withi n coun tries , cons ists of : Intangibles , Pension and Elimination of Losses and Accrued pr oper t y ,p lant post-retirement unrealised pro fit Unt axe d ta x credits expenses & equipment benefits on inventory reserves carried forward and other T otal $m $m $m $m $m $m $m De ferr ed ta x as sets a t 3 1D ece mbe r 201 9 1, 0 91 591 1, 5 4 3 – 608 959 4,7 92 De ferr ed ta x lia bilit ies at 31De cem ber 2019 (3,35 6) (30) (25 0) (598) (6 2) (268) (4,564 ) Ne t de fer re d ta x bal anc e at 31D ece mb er 2 019 ( 2,26 5) 561 1, 2 9 3 (598) 546 6 91 2 28 De ferr ed ta x as sets a t 3 1D ece mbe r 2020 1, 0 6 1 690 2, 286 – 852 1 ,1 3 0 6, 019 De ferr ed ta x lia bilit ies at 31De cem ber 20 20 (3,6 88) (3 4) (47 9) ( 8 01) ( 13 8) (359) (5,499) Ne t de fer re d ta x bal anc e at 31D ece mb er 2 02 0 ( 2,627 ) 6 56 1,8 0 7 (8 0 1) 714 7 71 520 De ferr ed ta x as sets a t 3 1D ece mbe r 2021 1, 476 5 74 1,9 10 – 1, 571 1,73 5 7, 2 6 6 De ferr ed ta x lia bilit ies at 31De cem ber 20 21 (6,9 56) ( 21) (4 9) (862) (53) ( 1, 2 01) (9, 1 42) Ne t de fer re d ta x bal anc e at 31D ece mb er 2 021 (5 ,480) 553 1, 8 61 (862) 1,5 18 534 (1, 8 76) An alys ed in the C onso lidate d State ment of F inanc ial Pos ition, a fter o ff set of ba lanc es with in coun trie s, as fol lows: 20 21 20 20 20 19 $m $m $m De ferr ed ta x as sets 4,330 3,43 8 2, 718 Defer red tax liabilitie s (6,2 06) (2 , 918 ) (2,49 0) Ne t de fer re d ta x bal anc e (1, 87 6) 520 228 Unrecogn ised deferred tax asset s Def erre d ta x ass ets (DT A ) of $7 19m (2020: $ 428m; 20 1 9: $ 44 1m ) have not b een r ecog nise d in res pect o f dedu ctibl e tempo rar y dif fere nce s bec ause it is n ot prob able th at futu re ta xabl e proﬁt w ill be avail able ag ains t which t he Grou p can u tilise th e bene ﬁts the re fro m. 20 21 2 021 2020 2020 2 019 2 019 T emporar y Unrecognised T emporar y Unre cognised T emporar y Unre cognised differences D TA di fferen ces D TA dif ferenc es D TA $m $m $m $m $m $m T rading and capital losses expiring : Wi thin 10 year s 4 1 2 – 33 9 Mo re than 10 yea rs 53 11 – – 1 – Indefinite 300 79 234 63 218 62 357 91 236 63 25 2 71 T a x cre dits a nd St ate ta x los ses ex piri ng: Wi thin 10 year s 101 36 44 Mo re than 10 yea rs 4 41 255 259 Indefinite 86 74 67 628 365 370 To t a l 719 428 4 41 5 Ea rn ing s per $ 0. 25 Or din ar y Sh are 20 21 20 20 20 19 Prof it fo r the yea r att ribu tabl e to equ ity h olde rs ($ m) 112 3 ,1 9 6 1, 3 3 5 Basic earnings per Ordinary Shar e $0 .08 $2. 44 $ 1.0 3 Dilut e d earnings per Ordinary Share $0 .08 $2. 44 $ 1.0 3 Weig hted ave rage n umb er of Or dina ry S hare s in is sue fo r basi c ear ning s (milli ons) 1, 418 1, 312 1, 3 0 1 Dilutive impact of share options outstanding (mil lions) 9 1 – Diluted w eighted av e rage numb er of Ordinary Shares in issue ( millions) 1, 42 7 1, 31 3 1, 3 0 1 Th e earn ings ﬁ gures u sed i n the cal culati ons ab ove are po st-tax . 151 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 6 Se gme nt in for matio n Follow ing the a cquis ition of A lexio n, the Gr oup has r eviewed i ts as sess ment o f repo rt able se gme nts und er IFRS 8 ‘O pera ting Se gme nts’ and con clud ed that t he Gro up conti nues to h av e one r epor ta ble se gmen t. KJ Thi s deter minat ion is c onsid ere d to be a Key Judg emen t and thi s judge ment h as be en take n with re feren ce to the fol lowing f actor s: 1 Th e level of inte grat ion acr oss th e dif feren t func tions of t he Gro up’ s pha rma ceut ical b usine ss: As tra Zene ca is en gage d in a sing le busi nes s activ ity of p harm aceu tica ls and th e Grou p does n ot have mult iple op erat ing se gment s. Ast raZe nec a ’ s pha rma ceuti cals b usin ess c onsis ts of the di scover y a nd develo pmen t of new pro duct s, whic h are the n manu fact ured, m arkete d and so ld. All of t hese fun ctio nal ac tiviti es take pl ace (an d are ma nage d) glob ally on a h ighly i ntegr ated ba sis. T hese i ndivid ual fu nctio nal ar eas a re not ma nage d sepa ratel y . 2 Th e ident iﬁcat ion of the C hief Op era ting De cisi on Maker (C ODM) a nd the na ture an d extent o f the ﬁna ncial i nform ation r eviewed by th e CODM: Th e SET , e stab lishe d and c haire d by the CEO, is the ve hicle t hroug h whic h the CEO exerc ises th e autho rit y dele gate d to him from t he Boa rd for the ma nagem ent, d evelopm ent an d per for manc e of Ast raZe nec a as a who le. It is co nsid ered t hat the S ET is A stra Zene ca’ s C hief Op era ting De cisi on Mak ing bo dy (as deﬁ ned by IFR S 8) . Th e oper ation of t he SE T is prin cipa lly dri ven by the ma nage ment of t he Comm erci al ope ratio ns, R& D , ma nufac turin g and su pply a nd ena bling f uncti ons. A ll sign iﬁca nt ope ratin g deci sions a re und er taken by th e SET . W hile me mber s of the S ET have res pons ibili ty for i mple menta tion of d ecis ions in t heir re spe ctive ar eas, o pera ting de cisi on mak ing is at S ET leve l as a who le. Whe re nec ess ar y , the se are i mple mente d throu gh cro ss-fu nctio nal su b-c ommi ttee s that c onsid er the G roup -wide i mpact o f a new dec ision . For examp le, pro duct la unch de cisio ns would b e initi ally co nsid ered by t he SE T and, on a pproval, p ass ed to an ap prop riate su b team fo r imple ment ation. T he abi lity o f the ente rpr ise to deve lop, prod uce, de liver a nd com merc ialis e a wide ra nge of p harm aceu tica l produ cts a re cent ral to the S ET de cisi on-m akin g proc ess. In as ses sing p er form ance, t he SET r eviews ﬁn anci al info rmati on on an in tegra ted bas is for th e Grou p as a whol e, subs tanti ally in t he form o f , a nd on th e same b asis a s, the Gr oup’ s IFR S Finan cial S tatem ents. T he hig h upfro nt cos t of disc o ver ing and d evelop ing new pr oduc ts, co uple d with the re lative ly ins igniﬁ cant a nd sta ble uni t cost of p rodu ctio n, mean s that the re is no t the cle ar link th at exis ts in many m anuf actur ing bu sines ses bet wee n the reven ue gen erate d on an in dividu al pro duct s ale an d the as soci ated co st and h ence m argi n gene rated o n a prod uct. C onse quen tly , the p roﬁta bilit y of ind ividu al dru gs or cla sse s of dru gs is not c onsi dere d a key meas ure of pe r forma nce fo r the bus ines s and is n ot moni tored by the S ET . Th e focus o f additi onal ﬁ nanci al info rmati on revie wed is at b rand s ales a nd gro ss ma rgin level w ithin s peci ﬁc geo grap hies . Exp endi ture ana lysi s is com pleted f or the sc ienc e units , oper ation s and e nabli ng func tion s; there i s no allo catio n of thes e cent rally m anag ed gro up cos ts to the in divid ual pr oduc t or bra nds. T he bon us of SE T memb ers’ c ontinu es to be de rive d from th e Group s core car d outco me as dis cus sed in o ur Directors’ Remuneration Repor t. 3 How re sour ces ar e allo cated: Re sourc es are a lloc ated on a G roup -wide b asis a ccor ding to ne ed. In pa rt icula r , cap ital ex pend iture, in -lic ensi ng, and R &D res ourc es are all ocate d bet ween ac tivit ies on m erit , base d on overa ll ther ape utic co nsid erati ons an d stra tegy un der the a egis of t he Gro up’ s Ea rly St age Product Commit t e es and Late Stage Product Commit t e es. Geographic areas Th e followin g tabl e shows in forma tion fo r T o tal Reve nue by geo gra phic ar ea and m ateri al cou ntrie s. The a dditi onal t able s show the O per ating p roﬁt and P roﬁt be fore ta x mad e by comp anie s locate d in that a rea , togeth er with N on- curr ent as sets , T o tal as sets , ass ets acq uire d, net ope rati ng ass ets, and P rope rt y , pl ant an d equip ment ow ned by the s ame co mpan ies. Pr oduc t Sale s by geog raph ic mar ket are in clude d in the a rea / cou ntr y whe re the l egal e ntit y resi des an d from w hich th ose sa les we re made. T otal Revenue 20 21 20 20 20 19 $m $m $m UK 3,24 5 1 ,74 1 1, 8 22 Re st of E ur ope France 915 653 578 Ge rmany 1 ,486 9 37 70 4 Italy 577 4 31 396 Spain 578 398 359 Swe den 2,322 1, 0 26 834 Othe rs 1, 9 49 1, 3 91 1, 2 9 1 7, 8 2 7 4,8 36 4 ,1 6 2 The Americas Canada 772 59 6 466 US 12 , 047 8,955 8, 047 Othe rs 1, 20 3 761 8 14 14 , 02 2 10, 312 9,3 27 Asia, Africa & Australasia Australi a 5 47 282 266 China 6,00 2 5,34 5 4,8 67 Japan 3,395 2,56 7 2, 522 Othe rs 2,379 1, 5 3 4 1, 418 12 , 32 3 9,7 28 9,073 T ot al Revenu e 3 7, 4 17 2 6 , 6 17 24, 38 4 T ota l Revenu e outsi de of the UK to talle d $34, 1 72m for th e year en ded 31 De cemb er 2021 (2020: $24,87 6m; 201 9: $2 2 , 562m). No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 152 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s Operating profit / (loss) (L oss) /prof it bef ore ta x 20 21 20 20 20 19 20 21 20 20 2 019 $m $m $m $m $m $m UK (950) 8 24 466 (1, 47 7) 518 93 Re st of Eur ope 2,999 2,8 38 1, 5 0 2 2,6 82 2,356 1, 0 0 6 The Americas (1, 93 6 ) 758 (8) ( 2 ,4 0 1) 297 ( 474 ) As ia, Af ric a & Aust rala sia 943 74 2 964 9 31 74 5 923 Continuing operat ions 1,0 5 6 5 ,1 6 2 2, 924 (2 65) 3, 916 1, 5 4 8 Non-current assets 1 T otal assets 20 21 20 20 20 19 20 21 20 20 2 019 $m $m $m $m $m $m UK 7, 6 9 2 7, 9 0 0 6,87 4 16 , 615 1 7, 8 5 1 15 ,3 0 2 Re st of Eur ope 3 9 ,17 1 15 ,8 21 15, 2 4 5 4 8,383 19,7 38 18 , 18 2 The Americas 26 ,570 18 , 5 01 19, 6 6 3 34 ,3 01 23,64 0 23,38 0 As ia, Af ric a & Aust rala sia 1, 2 54 1, 3 5 4 1, 2 5 3 6,06 4 5,50 0 4 , 513 Continuing operat ions 74 , 6 8 7 43 ,576 43,035 1 05,363 66, 729 61,377 Assets acquired 2 Net operating assets 3 20 21 20 20 20 19 20 21 20 20 2 019 $m $m $m $m $m $m UK 810 1 , 6 11 2, 255 3,239 5 ,24 4 4, 206 Re st of Eur ope 26,5 27 50 5 38 6 4 0 ,1 6 1 10 , 242 9, 201 The Americas 10 ,810 286 236 24 ,78 6 15, 6 97 15 , 92 9 As ia, Af ric a & Aust rala sia 94 11 6 12 0 736 6 07 1, 4 32 Continuing operat ions 3 8 , 2 41 2, 518 2,9 97 68,922 31, 79 0 3 0,7 68                                                                                                                                     Pro per ty, pl ant an d equ ipme nt 20 21 20 20 20 19 $m $m $m UK 2,542 2,227 1, 9 20 Ireland 969 – – Swe den 1 ,593 1,7 5 5 1, 4 8 8 US 2,66 0 2,6 62 2 ,758 Re st of the wo rld 1, 419 1, 6 07 1, 5 2 2 Continuing operat ions 9 ,1 8 3 8 , 251 7, 6 8 8 Geographic markets Th e table b elow sh ows Prod uct Sa les in e ach ge ogra phic m arket in w hich cu stome rs ar e loca ted. 20 21 20 20 20 19 $m $m $m UK 1, 2 06 6 11 458 Re st of Eur ope 6,7 92 4,4 46 3 ,891 The Americas 1 4,893 10, 0 0 4 9,0 32 As ia, Af ric a & Aust rala sia 13 ,6 5 0 10,829 10 ,1 8 4 Continuing operations 3 6 , 5 41 25,89 0 23,565 Pro duct S ales a re rec ognis ed wh en con trol of th e good s has be en tra nsfe rred to a t hird pa rt y . A si gniﬁ cant p ropor tio n of this i s upon de liver y of th e pro duct s to whole sal ers . One who les aler (20 20: one; 201 9: on e) indivi duall y repr esen ted gre ater tha n 1 0% of Pro duct S ales . The val ue of Prod uct Sa les to thi s whole sale r was $4, 862m (2020: $ 3,321 m; 201 9: $3,078m). 153 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 7 P roper t y , pla nt and e qu ipment Assets in T otal propert y , Land and Plant and c our se of plant and buildings equipme nt construction equipment $m $m $m $m Cost At 1Ja nu ar y 2 019 5, 366 7 , 096 2 ,17 7 1 4,639 Capital expendit ure 8 48 940 996 T r ans fer of as set s into us e 403 620 ( 1,0 2 3 ) – Disposals and other mov ements (23 6) (324) ( 11 ) ( 571) Exchange adjustments (9) ( 57) 3 (6 3) At 31D ece mb er 2 019 5,532 7, 3 8 3 2,0 86 15, 0 0 1 Capital expendit ure 10 42 8 74 9 26 T r ans fer of as set s into us e 13 7 462 (59 9) – Disposals and other mov ements (4 8) ( 615 ) (18 ) ( 6 81) Exchange adjustments 220 466 13 5 8 21 At 31D ece mb er 2 02 0 5 ,8 51 7, 7 3 8 2 ,47 8 16 , 06 7 Additions t hrough business combinat ions (Not e27) 542 339 254 1 ,13 5 Capital expendit ure 9 31 1 ,112 1 ,15 2 T r ans fer of as set s into us e 236 6 11 ( 8 47) – Disposals and other mov ements (92) ( 469) (2 00) ( 76 1) Exchange adjustments (16 9 ) ( 347 ) (69) (585 ) At 31D ece mb er 2 021 6,377 7, 9 0 3 2 ,72 8 1 7, 0 0 8 Depreciation and impairment At 1Ja nu ar y 2 019 2,50 4 4 ,7 14 – 7, 2 1 8 De pre ciati on cha rge fo r the yea r 209 438 – 6 47 Impairment (re versal)/charge (67 ) 14 – (53) Disposals and other mov ements (12 0 ) ( 313 ) – (43 3) Exchange adjustments ( 21) (4 5) – (66) At 31D ece mb er 2 019 2, 505 4,808 – 7, 3 1 3 De pre ciati on cha rge fo r the yea r 2 27 462 – 689 Impairment (re versal)/charge (1) 2 12 13 Disposals and other mov ements (4 2) ( 606) ( 12) (660) Exchange adjustments 137 3 24 – 4 61 At 31D ece mb er 2 02 0 2,826 4,990 – 7, 8 1 6 De pre ciati on cha rge fo r the yea r 231 493 – 724 Impairment (re versal)/charge (1) 121 223 343 Disposals and other mov ements ( 74 ) (42 8) (22 3) ( 725) Exchange adjustments (10 5 ) (2 28) – (333) At 31D ece mb er 2 021 2, 877 4,9 48 – 7 ,825 Ne t boo k val ue At 31Dec emb er 201 9 3,0 27 2,575 2,0 86 7, 6 8 8 At 31Dec emb er 2020 3,0 25 2 , 74 8 2, 478 8 , 2 51 At 31D ece mb er 2 021 3,50 0 2 ,955 2 ,72 8 9 ,1 8 3 Imp airm ent cha rge s in 2021 totalli ng $34 3m wer e reco gnise d for Pla nt and e quipm ent an d Ass ets in co urs e of cons truc tion du e to the rat ional isati on of ou r manuf actur ing ca paci ty an d footpr int ac ross c er tain p rodu ction s ites as a r esul t of rest ruc turin g progr amme s, inc ludin g the Post A lexio n Acq uisit ion Gro up Review (s ee Note 2). Th ese ch arge s have bee n rec ognis ed in Co st of sa les. T he revis ed ca rr ying va lue of the i mpac ted as sets is nil , under f air val ue les s cost s to sell. Imp airm ent cha rge s in 201 9 were r eco gnise d for L and an d buildi ngs an d Plant a nd equ ipmen t as a res ult of the a nnou ncem ent of th e closu re of the Wede l manu factu ring si te and th e cess atio n of spec iﬁc op erat ions in A lge ria. T hese c harg es were r eco gnise d in Cos t of sal es in 201 9. Im pair ment rever sal s were re cogn ised i n 20 1 9 of $ 23m in re lation to t he Long mont, C olor ado ma nufac turin g site (sol d in Mar ch 201 9) an d the Boul der , Col orad o ma nufac turin g site of $70m (so ld in May 2020). T hese a sse ts had b een fu lly imp aired d urin g 20 18. Inc lude d within o ther move ment s in 201 9 is a tr ansfe r of $70m fro m Lan d and bu ilding s to Ass ets he ld for sa le in rel ation to t he Boul der manufacturing sit e. 20 21 20 20 20 19 $m $m $m Th e net bo ok valu e of lan d and b uildi ngs co mpr ised: Freeholds 2,98 5 2, 583 2,6 57 Leaseholds 515 4 42 370 No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 154 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s 8 Le ases Right -of-use a ssets T otal right - Land and Moto r of-u se buildings vehicles Other assets $m $m $m $m Cost At 1Ja nu ar y 2 019 – – – – Opening b alance 580 124 18 722 Additions – separ at ely acquired 85 85 3 17 3 Disposals and other mov ements (4 4) (7) 1 (50) Exchange adjustments 6 – – 6 At 31D ece mb er 2 019 6 27 202 22 8 51 Additions – separ at ely acquired 87 89 15 19 1 Disposals and other mov ements – (27 ) (2) (29) Exchange adjustments 21 8 1 30 At 31D ece mb er 2 02 0 73 5 272 36 1 ,043 Additions t hrough business combinat ions (Not e27) 255 8 – 263 Additions – separ at ely acquired 14 5 98 2 245 Disposals and other mov ements 25 (4 4) (4 ) (23) Exchange adjustments (2 7) (13 ) (1) (41 ) At 31D ece mb er 2 021 1 ,13 3 321 33 1, 4 87 Depreciation and impairment At 1Ja nu ar y 2 019 – – – – De pre ciati on cha rge fo r the yea r 13 0 70 7 2 07 Impairment charge 4 – – 4 Disposals and other mov ements (3) (6) 1 (8) Exchange adjustments 1 – – 1 At 31D ece mb er 2 019 13 2 64 8 204 De pre ciati on cha rge fo r the yea r 13 1 75 9 215 Disposals and other mov ements (24 ) (26) (4 ) (54) Exchange adjustments 8 4 – 12 At 31D ece mb er 2 02 0 247 11 7 13 37 7 De pre ciati on cha rge fo r the yea r 14 4 85 6 235 Disposals and other mov ements (54) (42 ) – (9 6) Exchange adjustments ( 11) (6) – (17 ) At 31D ece mb er 2 021 326 15 4 19 499 Ne t boo k val ue At 31Dec emb er 201 9 495 13 8 14 6 47 At 31Dec emb er 2020 488 15 5 23 666 At 31D ece mb er 2 021 807 16 7 14 98 8 Lease Liability 20 21 20 20 20 19 $m $m $m Th e pr ese nt va lu e of le ase l ia bil it ies i s as fo llo ws: Wi thin on e year (233 ) ( 192 ) ( 18 8) La ter th an one ye ar an d not lat er tha n five ye ars (544) (38 9) (36 8) La ter th an five ye ar s (2 10) (10 0 ) ( 119 ) T otal le ase li abilities (987 ) ( 6 81) ( 675) Th e intere st expe nse on l ease l iabil ities i nclud ed wit hin ﬁna nce co sts was $2 2m (2020: $21 m; 201 9: $22m). The ex pens e rela ting to sho rt-ter m lea ses wa s $4m (2020: $ 2 m; 201 9: $1 m). The ex pens e rela ting to le ases o f Low-value a sset s that a re not show n above as s hor t-t er m leas es was $1 m (2020: $1 m; 201 9: $1 m). The ex pens e relat ing to var iable l ease p aymen ts not in clude d in lea se lia biliti es was $ 4m (2020: inc ome of $1 m; 201 9: $n il). Inc ome re cogni sed f rom sub leas ing was $ 3m (2020: $7m ; 2019: $4m). Th e total ca sh out ﬂow for l eas es in 2021 was $26 2 m (2020: $228 m; 20 19: $208m). 155 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 9 Go odwill 20 21 20 20 20 19 $m $m $m Cost At 1Ja nu ar y 1 2 ,1 6 4 11, 9 8 2 12 ,0 2 2 Additions t hrough business combinat ions (Not e27) 8, 287 – – Exchange and other adjustments ( 14 0) 18 2 (40 ) At 31D ece mb er 2 0 , 3 11 1 2 ,16 4 11, 9 8 2 Amor tisation and impairment losses At 1Ja nu ar y 319 3 14 315 Exchange and other adjustments (5) 5 ( 1) At 31D ece mb er 314 3 19 3 14 Ne t boo k val ue At 31D ece mb er 19, 99 7 11 , 8 4 5 11 , 6 6 8 Go odwill i s teste d for impa irme nt at the o per ating s egme nt level, th is bei ng the leve l at whic h good will is mo nitore d for inte rna l manag eme nt purp ose s. As d etail ed in Note 6 , the Gro up doe s not have mul tiple op era ting se gmen ts and i s enga ged in a s ingle b usine ss ac tivit y of pha rmac euti cals . Re covera ble am ount is d eterm ined o n a fair val ue les s cost s to sell ba sis u sing the m arket va lue of the C ompa ny’ s ou tsta ndin g Ordin ar y Shar es. Ou r market c apit alis ation i s compa red to th e book va lue of the G roup’ s net a sse ts and th is indi cates a s igniﬁ cant su rplu s at 3 1 De cemb er 2021 (and 31 De cemb er 2020 an d 3 1 D ece mber 2019). No good will imp airm ent was i denti ﬁed. 10 Inta ngi ble asse ts Product, Soft ware marketing and O ther development distribution rights intangibles costs T otal $m $m $m $m Cost At 1Ja nu ar y 2 019 3 9 ,1 3 6 2, 526 1, 8 3 9 4 3,501 Additions – separ at ely acquired 1, 8 3 5 99 67 2,0 01 Disposals (3 5) – ( 151) ( 186 ) Exchange and other adjustments (282) 24 26 (23 2) At 31D ece mb er 2 019 4 0,654 2,649 1,7 81 45,084 Additions – separ at ely acquired 1 ,454 2 13 6 1, 59 2 Disposals ( 970) (66) (6 36) (1, 6 72 ) Exchange and other adjustments 1, 5 3 9 57 7 1,6 0 3 At 31D ece mb er 2 02 0 4 2,677 2,64 2 1, 2 8 8 46 ,607 Additions t hrough business combinat ions (Not e27) 26,455 430 70 26,955 Additions – separ at ely acquired 587 6 11 9 712 T r ans ferr ed to As sets h eld fo r sal e (Note18) (1, 2 6 6) (47 ) – (1, 313 ) Disposals ( 8 01) (4 02) (23) ( 1,226) Exchange and other adjustments (1, 0 62 ) (18 ) (2 2) ( 1,1 0 2 ) At 31D ece mb er 2 021 6 6,590 2 , 6 11 1,4 3 2 70,6 33 Amor tisation and impairment losses At 1Ja nu ar y 2 019 17, 9 0 7 2,0 35 1, 6 0 0 2 1,5 4 2 Amortisation for year 1, 8 0 8 52 68 1, 9 28 Impairment charges 1, 0 3 4 – 2 1, 0 36 Impairment rev ersals (3) – – (3) Disposals (29) – ( 147 ) ( 17 6 ) Exchange and other adjustments (11 2 ) 10 26 ( 76) At 31D ece mb er 2 019 20,60 5 2,0 97 1 ,549 24 , 251 Amortisation for year 1, 87 2 59 61 1, 9 9 2 Impairment charges 405 – – 405 Impairment rev ersals (16 5 ) – – (16 5 ) Disposals (899) (6 6) (63 6) (1, 6 0 1) Exchange and other adjustments 74 6 38 (6) 778 At 31D ece mb er 2 02 0 22,564 2 ,1 2 8 968 25, 660 Amortisation for year 2,9 08 17 2 63 3 ,1 4 3 Impairment charges 2 ,067 – 18 2 ,085 T r ans ferr ed to As sets h eld fo r sal e (Note18) ( 93 1) ( 14) – (945) Disposals (797) (4 02 ) ( 21) ( 1,2 2 0 ) Exchange and other adjustments (535) ( 21) (26) (582 ) At 31D ece mb er 2 021 2 5,2 76 1, 8 6 3 1, 0 02 2 8 ,1 41 Ne t boo k val ue At 31Dec emb er 201 9 20,049 552 232 20,833 At 31Dec emb er 2020 20, 1 1 3 514 320 20,94 7 At 31D ece mb er 2 021 41, 314 74 8 430 42,492 No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 156 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s 20 21 20 20 20 19 $m $m $m Ne t boo k val ue Current intangible asset s 10 5 – – Non-current intangible assets 42 ,387 20, 94 7 20,833 At 31D ece mb er 42,4 92 20,947 20,8 33 Ot her int angi bles c onsi st main ly of res earc h and dev ice tec hnol ogie s and the A lexio n bran d name. Inc lude d within A dditio ns − sep arate ly acq uired a re amo unts of $1 2 4m (2020: $ 835m; 201 9: $1 ,0 93m), rel ating to de ferr ed paym ents a nd othe r non -ca sh co nside rati on for the a cquis ition o f Produ ct, ma rketing a nd dis tribu tion ri ghts, w hich a re not reﬂ ecte d in the cu rren t year Co nsoli dated St ateme nt of Cash F lows. Di spos als in clude a mount s rela ted to full y depre ciate d ass ets tha t are no l onge r in use by th e Group. Am or tisat ion cha rge s are re cogni sed in p roﬁt a s follows: Product, Soft ware marketing and O ther development distribution rights intangibles costs T otal $m $m $m $m Y e ar e nd ed 31De ce mbe r 20 1 9 Cost of sales 87 – – 87 Re sea rch an d develo pme nt expe nse – 29 – 29 Se lling , gene ral a nd adm inis trati ve expe nse 1,7 21 19 68 1, 8 0 8 Other operating income and e xpense – 4 – 4 To t a l 1, 8 0 8 52 68 1, 9 28 Y e ar e nd ed 31De ce mbe r 20 20 Cost of sales 66 – – 66 Re sea rch an d develo pme nt expe nse – 29 – 29 Se lling , gene ral a nd adm inis trati ve expe nse 1, 8 0 6 28 61 1, 8 9 5 Other operating income and e xpense – 2 – 2 To t a l 1, 87 2 59 61 1, 99 2 Y e ar e nd ed 31De ce mbe r 20 21 Cost of sales 66 – – 66 Re sea rch an d develo pme nt expe nse – 33 – 33 Se lling , gene ral a nd adm inis trati ve expe nse 2, 842 13 8 63 3,04 3 Other operating income and e xpense – 1 – 1 To t a l 2,9 08 17 2 63 3 ,1 4 3 Net i mpair ment c harg es/(rever sal s) are re cogni sed in p roﬁt a s follows: Product, Soft ware marketing and O ther development distribution rights intangibles costs T otal $m $m $m $m Y e ar e nd ed 31De ce mbe r 20 1 9 Re sea rch an d develo pme nt expe nse 609 – – 609 Se lling , gene ral a nd adm inis trati ve expe nse 425 – 2 427 Other operating income and e xpense (3) – – (3) To t a l 1, 0 31 – 2 1, 0 3 3 Y e ar e nd ed 31De ce mbe r 20 20 Re sea rch an d develo pme nt expe nse 55 – – 55 Se lling , gene ral a nd adm inis trati ve expe nse 18 5 – – 18 5 To t a l 24 0 – – 24 0 Y e ar e nd ed 31De ce mbe r 20 21 Re sea rch an d develo pme nt expe nse 1 ,464 – – 1 ,464 Se lling , gene ral a nd adm inis trati ve expe nse 603 – 18 621 To t a l 2 ,067 – 18 2,0 85 157 A st ra Zen eca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 F in anc ia l St ateme nts / No tes to t he G roup F ina nci al S tat emen ts Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Impai rment charges and rev er sal s Int angib le ass ets un der deve lopme nt and n ot availa ble for u se are te sted a nnual ly for imp airm ent an d other i ntan gible a sset s are tes ted whe n ther e is an i ndic ation of i mpair ment l oss or r evers al. Whe re tes ting is re quire d, the re covera ble am ount of t he ass ets is e stima ted in or der to dete rmin e the exte nt of the im pair ment l oss or r evers al. Whe re it is n ot pos sible to e stima te the rec overab le amo unt of an i ndivi dual as set, t he Grou p esti mates the re cover able a mount o f the Cas h Gene ratin g Unit (CG U) to whic h it bel ongs . The Gr oup con side rs th at as the in tang ible as set s are linke d to ind ividu al pro ducts a nd tha t produ ct ca sh ﬂows ar e cons ider ed to be la rgel y indep end ent of oth er pro duct c ash ﬂow s, the CGU f or inta ngibl es is at th e produ ct level. G roup l evel bud gets an d fore cast s inclu de fore cas t capi tal inves tmen t and op erati onal i mpact s rela ted to sus taina bilit y pro ject s, and f orm the b asis f or the val ue in use m odel s use d for impa irme nt tes ting. An a sse t’ s r ecover able a mount i s deter mine d as the hi gher o f an ass et’s or CGU’s fair va lue le ss cos ts to sel l or value i n use, in b oth cas es us ing dis counte d cas h ﬂow cal culati ons wh ere the a sse t’ s ex pec ted pos t -t ax c ash ﬂow s are ris k - adjus ted over the ir es timate d rema ining p erio d of expe cted e con omic be neﬁt . Wher e the value i n use ap proa ch is us ed, the r isk-adju sted ca sh ﬂows a re disc ounte d using A stra Zen eca’s post-ta x weig hted aver age co st of ca pita l (7% for 2021 , 2020 a nd 201 9). The re is no m ateri al dif fere nce in t he app roach t aken to us ing pre -ta x cas h ﬂows and a p re-t ax r ate comp are d to post-ta x cas h ﬂows an d a post-ta x rate, a s requ ired by IA S 36. Whe re fai r value le ss co sts to se ll is use d to dete rmin e recove rabl e value, th e disco unt ra te is ass ess ed with r efere nce to a ma rket pa rti cipa nt; this is n ot usua lly mate ria lly dif fere nt to the As tra Zene ca pos t -t ax we ighted ave rage c ost of c apit al rate of 7%. SE Th e estim ates us ed in ca lcul ating th e recove rabl e amoun t are co nsid ered s igniﬁ cant e stim ates, hi ghly se nsit ive and de pend o n ass umptio ns speci ﬁc to the na ture of the G roup’s activ ities i nclud ing: > ou tcome of R& D acti vitie s > pr obabi lity of te chni cal an d regu lator y suc ces s > ma rket volum e, sha re and pr icin g (to deri ve peak ye ar sa les) > am ount an d timin g of proje cted f uture c ash ﬂow s > sa les e rosio n cur ves foll owing pa tent expi ry. For a sset s held at f air valu e les s cost s to sell, we ma ke appr opri ate adjus tmen ts to reﬂe ct ma rket par tic ipan t asse ssm ents. In 2021 , th e Grou p reco rded i mpair ment c harg es of $6 03m in r espe ct of la unch ed pro duct s, incl uding Bydureon ($ 469m, revised carr ying amount of $5 0m) unde r value i n use mo del, roxa dusta t ($1 21 m, revi sed c arr yin g amou nt of $21 5m) un der valu e in use m odel a nd othe r laun ched p rodu cts tota lling $1 3 m. As the se as sets h av e be en imp aired i n the cur rent ye ar , th ere is li mited h eadro om in the r ecover able a moun t calc ulatio n and they are i nher ently s ensi tive to any cha nge s in ass umptio ns, wh ich cou ld give ri se to futu re impa irme nts. Imp airm ent cha rge s reco rded a gains t prod ucts i n develop ment , base d on fai r value le ss co sts to se ll, totall ed $1 ,46 4m, pri ncipa lly Ar dea ($1 , 1 72m) whi ch was fu lly impa ired f ollowin g the de cisio n to disco ntinu e develop ment of ve rinu rad. Th e rema ining i mpair ment s rela te t o full i mpai rmen ts of various products in development, due to either management’ s decision to discontin ue dev e lopment as part of a Group-wide portfolio prioritisation revi ew , or d ue to the ou tcome of r esea rch ac tiviti es. In 2020, th e Grou p reco rded i mpair ment c harg es of $3 50m in r espe ct of la unche d pro ducts , inclu ding Dua klir ( $200 m, revis ed car r ying am ount of $21 0 m) unde r fair va lue les s cos ts to sell, Bydureon ($1 0 2 m, revi sed c arr yin g amou nt of $581 m) un der val ue in use m odel , and othe r laun ched pro duct s totall ing $4 8m. The f air valu e les s cost s to sell val uatio n mode l for Duaklir was b ase d on disc ounte d cash ﬂ ows, and wa s cate gori sed at Leve l 3 in the fa ir value h iera rchy . Key a ssum ption s in this mo del we re fore cast f uture r evenue a nd cos ts of pro ducti on. Imp airm ent cha rge s recorded against products in dev elopme nt totalled $55m. In 201 9, th e Group r eco rded im pair ment c harg es of $425m i n resp ect of l aunch ed pro duct s B ydureon ($1 54m, r evise d car ry ing amo unt of $7 4 7m) und er valu e in use m odel, Qtern ($89 m, revis ed ca rr ying a mount of $ 233m) und er valu e in use m odel, Eklira / Tu d o r z a ($ 84m, revi sed ca rr yin g amoun t of $1 92m) un der val ue in us e mode l, FluMist ($ 52 m , revise d car ry ing am ount of $1 72m) unde r fair va lue le ss cos ts to sel l and $4 6m rel ating to oth er lau nche d prod ucts. I mpair men t charg es re cord ed aga inst p roduc ts in deve lopme nt rel ated to Ep anova ($5 33m) an d other i ntang ible a sset s ($7 6 m) . Th e Group h as pe rfo rme d an ass ess ment o n ass ets whi ch have had im pair ment s reco rded i n previo us pe riod s to deter mine if a ny revers als of imp airm ents we re requ ired. I mpair ment r evers als of $1 6 5m were r ecor ded in 20 20 in resp ect o f launc hed pr oduc ts, inc ludin g FluMist ( $ 147 m , revi sed ca rr yin g amoun t of $30 0m, dr iven by exp ande d vaccin ation e ffo rt s incre asin g globa l dema nd), and o ther la unch ed pro duct s of $1 8m. No im pair ment reve rsa ls were r eco rded ag ains t launc hed p roduc ts in 2021 or 201 9. No im pair ment reve rsa ls were r eco rded ag ains t prod ucts i n develop ment i n 202 1 (2020: $n il; 201 9: $3m). Sensitivities Whe n laun ched p rodu cts, s uch as th e ones d etai led ab ove, are par ti ally im paire d, the ca rr ying va lues of t hese a sse ts in futu re pe riod s are par ti cular ly se nsiti v e to cha nges i n fore cast a ssum ption s, incl uding th ose as sump tions s et out a bove, as the a sse t is impa ired dow n to its recoverable amount. SE Were th e usef ul eco nomic l ives to be ad juste d to redu ce them a ll by one yea r , the n et boo k value wou ld be re duce d by $868 m. If the us eful ec onomi c lives we re to be exte nde d by one year, the net b ook valu e would in crea se by $4 8 1m. No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 10 Int ang ible as set s cont inued 158 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s Signiﬁcant assets Carrying value Remaining amor tisation $m period C5 f ranc hise ( Solir is /Ultomiris ) intangible assets arising from the acquisit ion of A le xion 17, 7 2 4 6 to 15 year s Intangible assets arising from the acquisition of Acer ta Pharma 5,2 99 1 1 y ear s Strensiq , Kanuma and An dexxa intangible assets arising from the acquisition of Alexion 5, 019 1 1 to 17 year s Intangible asset products in development arising f rom the acquisition o f Alexion 1 2,76 0 Not amor tised Intangible assets arising from the acquisition of ZS Pharma 2, 381 1 0 years Enhertu intangible assets acquired from Daiichi Sank yo 1, 6 8 4 1 2 years Ot her in tan gible a sse ts (DS - 1062) ac quir ed fro m Daii chi S ank yo 1 1, 0 50 Not amortised Far xi ga / For xig a intangible assets acquired from BMS 739 5 y ears Int angi ble as set s ari sing f rom the r est ruc turin g of a his toric al jo int ven ture wi th MSD 666 5 to 8 ye ars Intangible assets arising from the acquisition of Pearl Therapeutics 6 11 7 to 8 ye ars RSV franchise assets arising from the acquisition of Me dI mmune 6 11 4 years Monalizumab intangible a ssets acquir ed from Innat e Pharma 1 340 Not amortised                    Th e acqui sitio n of inta ngibl e asse ts rel ating to DS - 1 0 62 in 2020 wa s ass esse d unde r the opt ional c onc entra tion tes t in IFRS 3 a nd was dete rmin ed to be an a sse t acqui sitio n, as sub stan tiall y all of the va lue of the g ross a sse ts acqu ired wa s conc entr ated in a si ngle a sset . KJ In as ses sing w hethe r the int angib le as sets an d ass ocia t ed p roce sse s acqui red fr om Daii chi Sa nkyo i n 20 1 9 we re a bus ines s, we dete rmine d tha t they were n ot at a sta ge of rea dines s to be ab le to obta in regu lator y app roval an d manu factu re and c omme rcial ise at sc ale. T he tra nsac tion was tr eated a s an as set ac quisi tion. 11 Inves tme n ts i n ass ociat es and joi nt vent ure s 20 21 20 20 20 19 $m $m $m At 1Ja nuar y 39 58 89 Additions 92 8 74 Sh are of af ter t ax l oss es (64) (27 ) ( 11 6 ) Exchange and other adjustments 2 – 11 At 31D ece mb er 69 39 58 On 29 J anua ry 20 2 1, Astr aZen eca e ntere d into an ag reem ent wi th IHP Hol dings L imite d to create a nd run a n onlin e plat form ( iHos pita l) of ferin g con sult ation s with phy sicia ns, re peat p resc ripti ons an d e-p harm acy in Chi na. Th e agre eme nt resu lted in th e form ation of a n ew entit y , IH P HK Hol dings L imite d. Astr aZe neca c ontr ibute d $30 m in initi al fund s and ho lds a 50% inte rest i n the as socia te entit y . On 1 D ece mber 20 20, Astr aZe neca a nd Chin a Inter nation al Cap ital C orpo ratio n (CICC) en t ere d into an a gree ment to s et up a Gl obal He alth care Industrial Fund to driv e healthca re system innovat ion by leveraging local capital and accele rating China-re lat e d innov ation incubation. T he ag reement res ulted i n the for matio n of a new ent ity , Wuxi A stra Zene ca- CICC Ventu re Capi tal Par tn ers hip (Li mited Pa rtn ers hip). Astr aZe neca h olds a 22% inte rest i n the as socia te entit y and c ontr ibute d $ 1m in init ial fun ds in 2020, wi th a fur the r contr ibut ion of $4 5m mad e in 2021 . On 23 S eptemb er 2021 , A stra Zene ca en tered i nto an agr eem ent wit h V a xEqui ty Li mited to c ollab orate a nd develo p self-a mpli fyi ng RNA te chno logy wit h the aim of g ener ating t reatm ents fo r targ et dise ase s. Ast raZe nec a has co ntrib uted $1 4m in i nitia l fund s and hol ds a 40% inter est in t he associate entity . On 23 Fe brua ry 2018, Astr aZe neca e ntere d into an a gree ment w ith a con sor tium of i nvestor s to form a n ew , US -do micil ed sta ndal one co mpany ca lled V iela Bi o. This ag ree ment wa s to divest a n umbe r of ass ets in Me dImmu ne’ s no n-c ore inﬂ amma tion an d autoim munit y por t folio to V iela Bi o, inc ludin g MEDI- 55 1, which i s an advan ced Ph ase IIb/ III as set, a nd a numb er of oth er clin ical a nd pre -cl inica l ass ets. A stra Zene ca co ntribu ted $1 42m in ini tial fu nds an d held a n initi al 45 % inte rest i n the join t venture . Viel a Bio com plete d an IPO on 7 O ctob er 201 9 wit h Astr aZe neca i nv es ting $8 m. Af ter the I PO , A str aZen eca’s holdin g was re duce d to 29 %. In May 2020, V iela B io comp leted a f ollow- on ﬁnan cing re duci ng Ast raZ enec a’ s hol ding to 26.7 % w ith one m embe r on a boa rd size of s even. Give n the sha reho lding a nd boa rd rep rese ntati on, the inve stme nt was tre ated as a n ass ocia te. In Feb rua ry 2021 , A stra Zen eca a gree d to divest i ts 26.7 % own ers hip in V iela Bi o, as par t of the a cqui sitio n of Viel a Bio by Hor izon Th era peuti cs plc . As tra Zene ca rec eived c ash pr oce eds an d proﬁ t of $77 6 m upon c losin g with th e proﬁt r ecor ded as O the r oper ating i ncom e. Prior to d ivestm ent, the G roup pr ovide d tran sitio nal re sear ch and d evelopm ent se rv ices to V iela B io, comp risi ng $nil (20 20: $3m; 201 9: $1 3m) of se rv ice s provid ed dire ctl y b y the G roup a nd $1 m (2020: $1 5m; 201 9: $24m) of pas sed-t hroug h third -par t y cost s incur red by th e Grou p on beh alf of Vi ela Bi o . On 27 Nove mber 201 7 , A stra Zen eca e ntere d into a join t ventur e agree men t with Chi nese Futu re Indu str y Invest ment Fund ( FIIF ) , to d iscover, develop and c omme rcia lise p otentia l new me dicine s to help a ddre ss unm et med ical ne eds g lobal ly , an d to brin g innovati v e new me dici nes to pat ients i n Chin a more q uickl y . Th e agre emen t resul ted in th e forma tion of a jo int ventu re enti ty ba sed i n China , Diza l ( J iang su) Phar mace utic al Co., Limi ted (D izal ) . As traZ enec a cont ribute d $55 m in initi al fund s and he ld an in itial 4 8 % in teres t in the jo int ventu re. An a dditio nal co ntrib ution o f $25m was mad e in 201 9. In Jul y 2020, Diz al com plete d a follow- on ﬁna ncing r educ ing As traZ enec a’ s ho lding to 30%. Di zal co mplete d an IPO i n Dece mbe r 2021 , re duci ng Astr aZe nec a ’ s h oldin g to 2 7% with t wo memb ers o n a boar d size of ele v en. G iven the s hare holdi ng and b oard re pre sent ation, t he inves tment c ontin ues to be t reated a s an as soci ate. 159 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements On 1 D ece mber 201 5, Ast raZ enec a ente red into a j oint vent ure agr eeme nt with Fuj iﬁlm K yowa Kir in Biol ogic s Co., Ltd. to develo p a biosi milar u sing the c ombin ed ca pabili ties of t he two pa rt ies. T he agre eme nt res ulted in t he form ation o f a joint ven ture en tit y base d in the UK , Cent us Bioth era peuti cs Lim ited (Ce ntus). Sin ce its e stab lishm ent, A stra Zene ca ha s contr ibute d $1 30 m in cas h to the join t venture e ntit y and h as a 50% inter est in th e joi nt ventur e. At the en d of the yea r Centu s had ne t asse ts of $4m , of which A stra Zen eca’s share i s $2m, and th e investm ent is he ld at $n il value. On 3 0 Apri l 20 1 4, As tra Zene ca ente red in to a joint ven ture ag reem ent wi th Sams ung Bi ologi cs Co., Ltd. to devel op a bios imila r usin g the com bine d ca pabili ties of t he two pa rt ies. T he agre eme nt res ulted in t he form ation o f a joint ven ture en tity b ase d in the UK , Arc higen B iotec h Limite d (Ar chige n). Sin ce its e stab lishm ent, A stra Zen eca ha s cont ribute d $1 31 m in ca sh to the jo int ventu re enti ty an d has a 50% inte rest i n the joi nt ventur e. At the en d of the yea r Arch igen h ad net as sets o f $3m, of w hich A stra Zene ca’ s s hare i s $2m, and the i nvestme nt is he ld at $n il value. All i nvestme nts ar e acco unted fo r usin g the equ ity m ethod. At 31 De cemb er 2021 , un reco gnis ed los ses i n asso ciate s and jo int ventu res tota lled $73m (2020: $ 56m; 201 9: $3 m) which h ave not bee n rec ognis ed due to t he invest ment c arr yin g value re achin g $nil val ue. Agg rega ted sum mari sed ﬁn anci al infor mati on for the a sso ciate an d joint ve nture e ntitie s is set o ut be low: 20 21 20 20 20 19 $m $m $m Non-current assets 215 3 24 298 Current assets 506 552 4 47 T otal liabili ties (99) (10 5 ) (8 9) Net assets 622 7 71 6 56 Amount attributable to AstraZeneca 65 38 64 Exchange adjustments 4 1 (6) Ca rr yi ng va lu e of inv est me nt s in as soc ia tes a nd jo int v ent ur es 69 39 58 12 O the r inves tment s 20 21 2020 20 19 $m $m $m Non-current investments Equity securities at fair value through O ther c omprehensiv e income 1 ,16 8 1 ,1 0 8 1, 3 3 9 Fixed income securities at fair v a l ue through p ro fit and l oss – – 62 To t a l 1,1 6 8 1 ,10 8 1, 4 01 Current inv estments Fixed income securities at fair v a l ue through p ro fit and l oss 16 11 8 8 11 Fixed de posits 53 42 38 To t a l 69 16 0 849 Ot her inves tmen ts hel d at fair va lue thro ugh O ther c ompre hen sive inc ome inc lude e quit y sec uriti es whi ch are no t held fo r tradi ng and w hich the Gro up has i rrevoc ably e lec ted at ini tial re cogn ition to re cog nise in t his cate gor y . O ther i nvestme nts he ld at fa ir value th roug h proﬁt a nd los s comp rise ﬁxed i ncom e secu ritie s that th e Group h olds to s ell. Th e fair val ue of liste d invest ments i s base d on yea r end qu oted ma rket pri ces . Fixed dep osit s are he ld at am or tise d cost wi th car r ying val ue bein g a rea sona ble ap proxim ation of f air valu e given th eir sh or t -te rm natu re. Fai r v alue hie rarchy Th e table b elow a nalys es eq uity s ecur itie s and bo nds, c onta ined wi thin O ther inve stme nts and c arr ied at f air valu e, by valuat ion met hod. Th e dif fere nt levels have be en deﬁned as follows : > Leve l 1 : quote d pric es (unad juste d) in ac tive mar kets for i denti cal as sets o r liabi litie s > Leve l 2 : i nputs o ther th an quote d pric es inc lude d withi n Level 1 tha t are obs er vable fo r the as set or l iabil ity , eit her dir ectl y (i.e. as pr ice s ) or indirect ly (i .e. deri ved from pri ces) > Leve l 3 : i nput s for the a sset o r liabi lity t hat are n ot base d on ob ser vable m arket d ata (uno bser vab le inpu ts). 20 21 2 021 2020 2020 2 019 2 019 FV PL FVOCI FVPL F VOCI F VPL FVO CI $m $m $m $m $m $m Leve l 1 16 1, 0 6 4 11 8 8 91 873 1,11 2 Leve l 2 – – – – – – Leve l 3 – 10 4 – 2 17 – 227 To t a l 16 1 ,16 8 11 8 1 ,10 8 873 1, 3 3 9 Du ring 2020, A stra Zen eca so ld a pro por tion of i ts equ ity p or tfol io rec eivin g cons ider ation of $1 ,381 m, a l arge p ropo rti on of whi ch rela ted to the dis posa l of its fu ll hold ing in Mo dern a The rape utic s, Inc. Al l relate d gain s were ac coun ted thro ugh Ot her co mpre hens ive inco me. No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 10 Int ang ible as set s cont inued 16 0 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Financi al Stat eme nts Equi ty se curi ties th at are a nalys ed at Leve l 3 inclu de inves tment s in pri vate biote ch comp anie s. In the a bsen ce of sp eciﬁ c market d ata, t hese unli sted inve stme nts are h eld at f air valu e base d on the c ost of inve stmen t and ad justin g as ne ces sar y for im pair ment s and reval uatio ns on new fun ding ro unds, w hich a pproxim ates to fa ir value. M ovemen ts in Level 3 i nvestme nts ar e deta iled b elow: 20 21 2020 2 019 FVOCI FVO CI FVOC I $m $m $m At 1Ja nuar y 2 17 227 166 Additions 1 96 5 Revaluations – 63 56 Net transfers ( out)/in ( 113 ) ( 103 ) 2 Disposals – (86) (5) Impairments and e xchange adjustments (1) 20 3 At 31D ece mb er 104 2 17 227 As sets a re tra nsfer red in o r out of Leve l 3 on the da te of the even t or cha nge in ci rcums tanc es tha t caus ed the tr ansf er . 13 Der ivat ive  na ncia l in str u ments Non-current Current Cur rent Non-current assets assets liabili ties lia bilities T otal $m $m $m $m $m Inte res t rate swa ps rel ated to i nstr ume nts de sign ated at f air va lue thr ough p rofi t and l oss 43 – – – 43 Cro ss cu rre ncy swap s des igna ted in a ne t inves tmen t hedg e 4 – – (1) 3 Cro ss cu rre ncy swap s des igna ted in a ca sh fl ow hed ge 4 – – ( 17 ) (13 ) Cro ss cu rre ncy swap s des igna ted in a fa ir valu e hed ge 1 10 – – – 10 Other deriv atives – 36 (36) – – 31De ce mbe r 20 1 9 61 36 (3 6) ( 18) 43 Non-current Current Cur rent Non-current assets assets liabili ties lia bilities T otal $m $m $m $m $m Inte res t rate swa ps rel ated to i nstr ume nts de sign ated at f air va lue thr ough p rofi t and l oss 45 – – – 45 Cro ss cu rre ncy swap s des igna ted in a ne t inves tmen t hedg e 19 – – (2) 17 Cro ss cu rre ncy swap s des igna ted in a ca sh fl ow hed ge 107 43 – – 150 Cro ss cu rre ncy swap s des igna ted in a fa ir valu e hed ge 1 – 43 – – 43 For war d FX de sign ated i n a cash f low he dge 2 – 8 ( 3) – 5 Other deriv atives – 48 (30) – 18 31De ce mbe r 20 20 17 1 142 (3 3) (2) 278 Non-current Current Current Non-current assets assets liabilities liabilities To t a l $m $m $m $m $m Inte res t rate swa ps rel ated to i nstr ume nts de sign ated at f air va lue thr ough p rofi t and l oss 25 – – – 25 Cro ss cu rre ncy swap s des igna ted in a ne t inves tmen t hedg e 62 – – (2) 60 Cro ss cu rre ncy swap s des igna ted in a ca sh fl ow hed ge – – – (4 3) (43 ) For war d FX de sign ated i n a cash f low he dge 2 – 13 – – 13 Other deriv atives 15 70 (79) – 6 31De ce mbe r 20 21 10 2 83 ( 79) (4 5) 61                                                                                                                      All d eriva tives a re held a t fair val ue and f all with in Level 2 of th e fair va lue hie rarc hy as deﬁ ned in No te 1 2, except fo r an equ ity wa rran t whic h falls wit hin Level 3 (va lued a t $ 15m, hel d withi n Non- curr ent as sets). No ne of the d eriva tives have be en re clas siﬁe d in the yea r . Th e fair val ue of inte rest r ate swaps an d cros s cur rency swa ps is e stimate d usin g appr opri ate zero c oupon c ur ve valuati on tech nique s to disc ount fut ure con trac tual ca sh ﬂows b ased o n rates a t the cur rent ye ar en d. Th e fair val ue of for ward f oreig n ex cha nge co ntrac ts an d curre ncy opt ions a re esti mated by c ash ﬂow a ccou nting mo dels u sing a ppro priate y ield cur ves b ase d on mar k et fo rwa rd fore ign exchan ge rate s at the yea r end. T he maj orit y of for ward f orei gn exchang e cont ract s for exis ting tra nsac tion s had m aturi ties of l ess th an one m onth fr om year e nd. Th e intere st rate s use d to disco unt fu ture ca sh ﬂows fo r fair val ue adju stme nts, whe re app lica ble, ar e base d on mar ket swap cu rve s at the re por ting date, a nd were a s follows: 20 21 20 20 20 19 Derivatives (0. 5)% to 3 .6% (0 .5)% to 2.4 % (0. 5)% to 2 .7 % 161 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ents Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 14 Non- cur rent ot her re ceiva bles 20 21 20 20 20 19 $m $m $m Prepayments 391 395 392 Accrued income 61 56 10 Other receivables 443 269 338 Non-current other receiv ables 895 72 0 74 0 Pre payme nts inc lude $9 2 m (2020: $1 21 m; 201 9: $1 25m) in re latio n to our res earc h coll abor ation wi th Mod erna . Oth er rec eivab les in clude $ni l (2020: $nil; 201 9: $1 18m) of outs tan ding pay ments r elati ng to the ou t - lice nce of Duak lir a nd Tu d o r z a to C ircas sia in 201 7 a nd $44 m (2020: $ 56m; 201 9: $5 3m) owed by Fib roGe n for pro motio nal ac tivit y in Chin a pur suant to t he roxadu stat c ollab orati on. 15 Inventorie s 20 21 20 20 20 19 $m $m $m Raw mat er ials and consumables 1,75 5 1, 2 6 2 830 Inv entories in process 5 ,2 16 1, 3 31 1, 2 7 2 Fin ishe d goo ds and g ood s for re sale 2 , 012 1, 4 31 1, 0 91 Inven tories 8,983 4,0 2 4 3 ,1 9 3 Th e Group r eco gnise d $9,640 m (2020: $3, 1 1 0 m; 20 1 9: $ 2 ,708m) of inve ntori es as an ex pens e withi n Cost of s ale s durin g the yea r . Invento ry w rite -of fs in th e year a mounte d to $552m (2020: $1 49 m; 20 1 9: $231 m). 16 Cur rent t rade a nd othe r rece ivable s 20 21 20 20 20 19 $m $m $m Am ou nts d ue w it hin o ne ye ar T rade receivables 6,05 4 3,829 3,60 6 Le ss: Am ount s provi ded fo r doub tfu l debt s (Note28) (23) (23) ( 21) 6, 031 3,80 6 3,58 5 Other receivable s 1 ,808 1, 2 78 1, 0 8 3 Prepayments 1, 512 1,7 3 5 865 Government grants receivable – 53 – Accrued income 293 15 0 2 28 T rade and other receiv ables 9,64 4 7, 0 2 2 5 ,761 T ra de rec eivab les inc lude s $ 1 ,8 65m (2020: $1 , 250m; 201 9: $ 892m) mea sure d at FVO CI clas siﬁe d ‘hold to c olle ct and s ell’ as th ey are du e from cus tomer s that t he Grou p has th e option to f actor . All o ther ﬁn anci al as sets in clude d withi n curr ent T r ade and o ther re cei vable s are he ld at amo rt ised c ost wi th car ry ing valu e bein g a reas onab le approximat ion of fair value. No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 16 2 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Financi al Stat eme nts 1 7 Cas h and c ash e qu ivale n ts 20 21 20 20 20 19 $m $m $m Cas h at ba nk and i n hand 1, 4 61 1,1 8 2 755 Short-term deposits 4,868 6,65 0 4,61 4 Cash and cash equi valents 6,329 7, 8 3 2 5,36 9 Unsecure d ba nk overdraf ts ( 29 1) (286) ( 14 6 ) Ca sh a nd ca sh e qui val en ts in t he c as h flo w sta te men t 6,03 8 7, 5 4 6 5, 223 Th e Group h olds $ nil (2020: $n il; 20 1 9: $1 m) of Cas h and ca sh equ ivale nts whi ch is re quire d to meet in sura nce s olvenc y , cap ital a nd secur ity requirements. As tra Zene ca invest s in con stan t net as set valu e fund s and low vol atilit y net a sse t value fu nds wit h same d ay acce ss for s ubsc riptio n and re demp tion. Th ese inves tmen ts fail th e ‘sole ly paym ents of p rinc ipal an d intere st’ te st cri teria u nder I FRS 9. They a re ther efore m easu red at fa ir valu e throu gh pro ﬁt and l oss, a lthou gh the fa ir value w ill be mate ria lly the s ame as a mor tise d cos t. Non -ca sh an d other m ov em ents, w ithin op era ting ac tiviti es in the C onso lidate d State ment of C ash Flow s, incl udes: 20 21 20 20 20 19 $m $m $m Cha nge s in fai r value o f put op tion ( Acer ta P harm a) – – 17 2 Share-base d payments charge f or the period 615 27 7 259 Se ttle men t of sha re pla n award s (570 ) (3 49) (323) Pension contribut ions ( 174 ) ( 17 2) (175) Pen sion c harg es re cor ded in o per ating p rofi t 13 6 84 59 Long-term prov ision charges recorded in operating profit 270 66 506 Non-cash intangible additions – (12 0 ) – Foreign e xchange and other (18 2) (6 2) (12 0 ) T o ta l ope ra tin g ac ti vit ie s non -c ash a nd ot he r move me nt s 95 (276) 378 18 As set s held for sa le As sets h eld for s ale of $ 368m ( 2020: $nil; 201 9: $70m) c ompr ise int angi ble as sets re latin g to the rig hts to ce rt ain re spira tor y ass ets acq uire d from Al miral l and Ac tavis (i nclud ing Tu d o r z a and D uaklir ). As tra Zene ca agre ed to dis pose o f the glob al rig hts to Tu d o r z a a nd Duaklir to Cov is Pha rma Gmb H on 1 Novem ber 2021 wit h comp letio n of the tra nsac tion su bjec t to cer ta in clos ing co nditio ns and r egul ator y clea ranc es. T he ass ocia ted con tinge nt con side ratio n liabi lity o f $ 126m is he ld with in cur rent O ther p ayable s at 3 1 De cemb er 2021 (see N ote 20). The tr ansa ctio n close d and con trol of th e ass ets tra nsfe rred o n 4 Janu ar y 2022. In 201 9, A sset s held fo r sale c ompr ise d tangi ble as sets r elati ng to the Bou lder M anufa ctur ing Ce ntre, wh ich was s ubse quent ly sold i n May 2020. 16 3 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 1 9 In ter est -be aring l oans an d bo rrowin gs Repayment 20 21 20 20 20 19 dates $m $m $m Current liabilities Bank ov e rdrafts On de man d 2 91 28 6 14 6 Other shor t -term borrowings e xcluding ov e rdrafts 3 84 8 Bank collateral 93 28 8 71 Lease liab ilities 233 19 2 18 8 2.3 75 % Callable bond US dollars 2020 – – 1, 5 97 0.25 % Callable bond euros 20 21 – 6 14 – 0.8 75 % Non-callable bond euros 2 021 – 9 19 – Floating rat e notes US dollars 20 22 250 – – 2.3 75 % Callable bond US dollars 2022 999 – – Other loans (including commercial paper) With in one ye ar 24 3 – To t a l 1, 89 3 2, 38 6 2 ,010 Non-current liabilities Lease liab ilities 75 4 48 9 487 0.25 % Callable bond euros 20 21 – – 559 0.8 75 % Non-callable bond euros 2 021 – – 8 37 Floating rat e notes US dollars 20 22 – 25 0 25 0 2.3 75 % Callable bond US dollars 2022 – 99 6 996 0.3 % Callable bond US dollars 20 23 1, 3 97 – – 2023 Floating bank loan US dollar s 20 23 1, 9 9 8 – – Floating rat e notes US dollars 2023 400 40 0 40 0 3.5 % Callable bond US dollars 2023 848 8 47 8 46 7 % Guarant e ed debentures US dollars 2023 320 339 335 0. 75 % Callable bond euros 20 24 1 ,0 14 1 ,10 2 1, 0 0 3 0. 7% Callable bond US dollars 20 24 1, 59 8 – – 202 4 Floating bank loan US dollar s 20 24 1, 9 97 – – 3.37 5 % Callable bond US dollars 2025 1, 98 8 1, 9 8 5 1, 9 8 3 0. 7% Callable bond US dollars 2026 1 ,19 3 1,1 9 2 – 1 .2% Callable bond US dollars 2026 1, 24 5 – – 3. 1 25 % Callable bond US dollars 20 27 74 5 74 4 74 3 1 .25 % Callable bond euros 20 28 896 973 885 1 .7 5% Callable bond US dollars 20 28 1, 2 4 4 – – 4 % Callable bond US dollar s 20 29 994 993 992 0.3 75 % Cal lable bond euros 2029 898 – – 1 .37 5% C allable bond US dollars 20 30 1, 2 9 2 1, 2 91 – 2.25 % Callable bond US dollars 2 031 74 6 – – 5. 75 % Non-callable bond pounds sterling 2 031 47 0 475 4 57 6.45 % Callable bond US dollars 20 37 2 ,724 2 ,722 2 ,721 4 % Callable bond US dollar s 20 42 988 988 9 87 4.3 7 5 % Callable bond US dollars 20 45 980 980 980 4.3 7 5 % Callable bond US dollars 20 48 737 737 7 37 2. 1 25 % Callable b ond US dollars 2050 486 486 – 3 % Callable bond US dollars 2 0 51 73 4 – – Other loans US dollars 202 5 19 To t a l 28,888 17, 9 9 4 1 6 , 2 17 T otal interest-bearing loans a nd borr o wi ngs 1, 2 3 0,781 20,380 18, 2 27                                                                                                                                                     16 4 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Financi al Stat eme nts No tes to t h e Grou p F ina n cia l Statem ents c ont inue d To t a l T otal T otal loans and loa ns an d loans and borrowings borrowings bor ro wings 20 21 20 20 20 19 $m $m $m At 1Ja nu ar y 20,380 18 , 2 27 1 9 ,113 Adoption of new accounting standards – Lease liabilities – – 720 Changes from financing cash flo ws Is sue of l oans a nd bo rrowi ngs 12,929 2, 96 8 500 Repayment of loans and borrowings (4,7 59 ) ( 1,6 0 9 ) (1, 5 0 0 ) Movement in shor t -term borrowings ( 276) 28 8 (51 6) Repayment of obligations under leases (240 ) ( 207) ( 18 6) T otal changes in cash flo ws arising on financing activities from borrowings 7, 6 5 4 1, 4 4 0 (1, 702) Move ment in ove rdr aft s 31 13 8 ( 13) New lease liabili ties 503 1 74 17 3 Additions t hrough business combinat ions 2,52 3 – – Exchange (378 ) 363 (6 2) Ot her move ment s 68 38 ( 2) At 31D ece mb er 3 0,781 20,38 0 18, 2 2 7 Set o ut bel ow is a com pari son by cate gor y of ca rr ying va lues a nd fai r values o f all the G roup’ s inte rest-b eari ng loan s and bo rrowi ngs: Instruments in a Instruments Instruments T otal fair v alue hedge designated designated in Amor tised carr ying Fa ir relationship 1 at fa ir val ue 2 ca sh fl ow hed ge cost valu e value $m $m $m $m $m $m 2 019 Overdrafts – – – 14 6 14 6 14 6 Le ase li abili ties d ue wit hin on e year – – – 18 8 18 8 18 8 Le ase li abili ties d ue af ter mo re tha n one ye ar – – – 4 87 4 87 487 Loa ns du e withi n one yea r – – – 1, 67 6 1, 6 76 1 ,684 Loa ns du e afte r mor e than o ne year 339 3 35 2 ,4 47 12, 6 0 9 15 ,73 0 18, 0 4 4 T o ta l at 31De cem be r 2019 339 335 2, 4 47 1 5 ,1 0 6 18 , 22 7 20,549 2020 Overdrafts – – – 28 6 28 6 28 6 Le ase li abili ties d ue wit hin on e year – – – 19 2 19 2 19 2 Le ase li abili ties d ue af ter mo re tha n one ye ar – – – 489 489 48 9 Loa ns du e withi n one yea r 371 – 6 14 9 23 1, 9 0 8 1, 9 2 2 Loa ns du e afte r mor e than o ne year – 339 2,075 15 ,0 9 1 1 7, 5 0 5 20 ,936 T o ta l at 31De cem be r 20 20 371 339 2,6 89 16 ,9 81 20,3 80 23,825 20 21 Overdrafts – – – 2 91 291 2 91 Le ase li abili ties d ue wit hin on e year – – – 233 233 233 Le ase li abili ties d ue af ter mo re tha n one ye ar – – – 75 4 75 4 75 4 Loa ns du e withi n one yea r – – – 1, 36 9 1,3 6 9 1,378 Loa ns du e afte r mor e than o ne year – 32 0 1,9 10 25,904 28, 1 34 30, 596 T o ta l at 31De cem be r 20 21 – 32 0 1,9 10 2 8 ,5 51 30 ,781 33,252                                                                                         Th e fair val ue of ﬁxed -rate pu blicl y trad ed deb t is base d on yea r end qu oted ma rket pr ices; th e fair val ue of ﬂoa ting ra te debt is n omina l value, as m ark-to-m arket di ffe renc es woul d be minim al give n the fre quen cy of res ets. T he car ry ing valu e of loan s desi gnate d at fair va lue thr ough p roﬁt or lo ss is th e fair val ue; this fa lls wit hin the Leve l 1 valuat ion met hod as d eﬁned i n Note 1 2. For l oans d esig nated in a f air valu e hedg e relat ions hip, ca rr ying va lue is ini tiall y meas ured a t fair val ue and r emea sure d for fai r value ch ange s in res pec t of the he dged r isk at e ach re por ting da te. All oth er loa ns are h eld at a mor tise d cos t. Fair valu es, as d isclo sed in t he tab le above, a re all de t er mine d using t he Level 1 val uatio n metho d as deﬁn ed in Note 12 , with t he excepti on of overd raf ts and l ease l iabil ities , where f air val ue app roximate s to car ry ing valu es. Du ring th e year , c hang es to cre dit ris k caus ed min imal ch ange s to the fai r value of b onds d esig nated at f air valu e throu gh proﬁ t or los s. A gai n of $29 m has be en ma de on the se bon ds sinc e des ignati on due to in crea sed c redit r isk. U nder I FRS 9, the Gr oup rec ords t he com pone nt of fair va lue cha nges r elati ng to the co mpone nt of own c redit r isk thr ough O ther c ompr ehen sive inc ome. Ch ange s in cre dit ris k had no m ateria l ef fect o n any othe r ﬁnan cial a sset s and li abilit ies re cogn ised a t fair val ue in the G roup Fi nanci al Sta temen ts. Th e chang e in fai r value at trib utab le to cha nges i n cre dit ri sk is ca lcula ted as th e chan ge in fai r value not a ttr ibut able to ma rket ri sk. Th e amou nt payabl e at matu rit y on bon ds des ignate d at fai r value thr ough pr oﬁt or lo ss is $287m. Th e intere st rate s use d to disco unt fut ure ca sh ﬂows for f air val ue adju stmen ts, whe re app lica ble, ar e base d on mar ket swap cu rves a t the rep or ting date, a nd were a s follows: 20 21 20 20 20 19 Loans and borrowings 0.1 % to 0 .6% (0. 5)% to 0. 1 % (0.5 ) % to 1 . 6 % 16 5 A st ra Ze neca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 F in anc ia l St ateme nts / No tes t o the G roup F in anc ial S tat emen ts Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 20 T rade a nd other paya bles 20 21 20 20 20 19 $m $m $m Current liabilities T rade payables 2,8 24 2,350 1 ,7 74 V alue-added and payroll ta x es and social s ecurity 463 39 0 323 Rebates, chargebacks, ret urns and other revenue accruals 5, 298 4,77 2 4,4 1 0 Clinical trial accruals 1,0 47 699 736 Other accruals 5,6 49 3,90 5 4,026 Collaboration Rev enue contract liabilit ies 12 12 28 V accine contract liabilit ies 1, 0 0 3 1, 616 – Deferred gov ernment grant income 67 25 3 – Contingent consideration 8 49 6 47 897 Ace r ta Pha rma sh are pu rch ase li abili ty (N ote26) 920 – – Other payables 806 1 ,141 1, 79 3 To t a l 1 8,938 15, 78 5 1 3,987 Non-current liabilities Accrual s 25 56 34 Collaboration Rev enue contract liabilit ies 26 38 50 Contingent consideration 2 ,0 16 2,676 3 ,24 2 Ace r ta Pha rma sh are pu rch ase/p ut opt ion lia bili ty (N ote26) 1, 5 38 2, 297 2 ,1 4 6 Other payables 1, 32 8 1, 0 17 819 To t a l 4,933 6 ,084 6 ,2 91 Inc lude d within R ebate s, cha rgeba cks, re turns a nd othe r revenu e accr uals a re cont ract l iabili ties of $ 99m (20 20: $77 m; 201 9: $ 9 7 m). The reve nue re cogni sed in t he year fo r cont ract li abili ties is $70 m, comp risin g $58 m relati ng to othe r revenue a ccru als an d $ 1 2m C ollab orati on Revenu e cont ract liabilities. Signiﬁcant markets where Rebates, chargebacks, returns and other rev e nue ac cruals are seen relat e to the US where the liability at 31 Dec embe r 2021 amoun ted to $3, 1 72m (2020: $ 3, 126m; 201 9: $ 3,385 m) and Chi na wher e the lia bilit y at 31 Dece mbe r 2021 amoun ted to $81 4m (20 20: $7 40 m; 20 1 9: $ 452m). T ra de payab les inc lude s $44m ( 2020: $248m; 201 9: $ 492m) due to sup plie rs tha t have sign ed up to a sup ply ch ain ﬁna ncing p rogr amme , under whi ch the su pplie rs ca n ele ct on an i n voic e-by- invoice b asis to re ceive a d isco unted e arly p aymen t from th e relati onsh ip bank r ather t han be ing pai d in line w ith the ag ree d paymen t term s. If the opt ion is t aken, the G roup’ s lia bilit y is as signe d by the su pplie r to be due to th e relat ionsh ip bank rat her tha n the sup plie r . The va lue of the l iabili ty paya ble by the G roup r emain s unch ange d. The G roup a sses ses t he arr ange ment a gains t indi cator s to as ses s if debt s, whic h vendo rs have so ld to the fu nder un der th e suppl ier ﬁn ancin g sche me, con tinue to me et the d eﬁniti on of tra de payabl es or sh ould b e clas siﬁe d as bor rowin gs. At 31 Dece mbe r 2021 , the paya bles m et the cr iter ia of T rad e payabl es. Vaccin e contr act li abili ties re late to amo unts re cei v ed f rom cus tomer s, pr imar ily gover nmen t bodi es, in ad vance of s uppl y of prod uct. S ubst antia lly all of t he V acc ine co ntrac t liabi litie s are exp ecte d t o be re cog nise d as revenu e duri ng the nex t ﬁnan cial ye ar . T he revenu e reco gnise d in the ye ar rel ated to Vacci ne cont ract li abili ties he ld at the b egin ning of th e year wa s $ 1,389 m. Def erre d govern ment g rant i ncome r elate s to govern ment gr ants r ecei ved or re ceiva ble bu t for whi ch the re lated exp ens es have not b een in curr ed. Inc lude d within c urre nt Oth er payab les ar e liabi litie s to Daiic hi San kyo tota lling $ nil (2020: $1 4 6m; 201 9: $795m) re sultin g from th e coll abor ation agr eeme nt in re lation to Enher tu ente red in to in Marc h 20 1 9 a nd $324m (2020: $ 324m; 20 19: $nil ) in rela tion to DS - 1 0 62 en tered i nto in July 20 20. Add itiona lly , i nclud ed with in non -cur rent O the r payable s are li abilit ies tota lling $100m (20 20: $1 0 0m; 201 9: $24 1 m) as a re sult of th e E nher t u col labo ratio n agre emen t and $n il (2020: $3 23m; 20 1 9: $ nil) a s a resu lt of the DS - 1 06 2 colla bora tion ag reem ent. In Nove mber 20 20, Calqu ence rece ived ma rketin g approva l in the EU, whi ch remove d all re maini ng con dition alit y in res pec t of the Ace r ta Phar ma put a nd ca ll optio ns reg ardin g the non -co ntroll ing inte rest; th e option wa s exerci sed in A pril 20 2 1 (s ee Note 26). Ba sed o n the late st ass ess ment of the ex pec ted timi ng and a mount of t he Ace rt a Pharm a put op tion re dempt ion, no re mea sure ment wa s requi red in 20 2 1 o r in 2020. In 201 9, rem eas ureme nt of the li abili ty re sulte d in an inc reas e in the li abilit y for th e year b efore th e effe ct of in teres t cost s, with th e reme asur emen t taken to Sel ling, ge ner al and ad minis trati ve e xpe nse (se e Note 2). In Oc tober 2019 , an am endm ent to the s hare p urcha se an d option a gree ment (S POA) wit h the sell ers o f Acer ta Ph arma (o rigin ally en tered i nto in De cemb er 201 5) c ame into e ffe ct, ch angin g cer tai n term s of the SPOA o n both the ti ming and a lso re duci ng the ma xim um con side ratio n that woul d be req uired to b e made to a cquir e the rem ainin g outst andi ng sha res of Ac er ta Phar ma if th e option s were exerc ised. T he pay ments w ill be ma de in sim ilar an nual in stal ment s comm encin g at the ea rlie st fro m 2022 thr ough to 2024. Th e chang es to the te rms have b een re ﬂecte d in the a ssum ption s used to c alcu late the am or tise d cost o f the liab ilit y as at 31 Dec embe r 2021 of $2,458 m (2020: $2, 29 7m; 201 9: $2, 1 46 m ). Inter est ar isin g from a mor tisin g the lia bilit y is inc lude d within F inanc e expe nse (se e Note 3). The a sso ciated ca sh ﬂows wil l be disc lose d as ﬁna ncin g activ ities w ithin th e Cons olida ted Sta temen t of Cash Fl ows. Wit h the except ion of Co ntinge nt con side ratio n payabl es of $2,86 5m (2020: $ 3,323m; 201 9: $4, 1 39 m ) whi ch are he ld at fa ir value w ithin Leve l 3 of the f air valu e hier archy a s deﬁne d in Note 12 , all ot her ﬁn ancia l liab ilitie s are he ld at amo rt ised c ost wi th car ry ing valu e bein g a reas onab le approximat ion of fair value. 16 6 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Statem en ts No tes to t h e Grou p F ina n cia l Statem ents c ont inue d Contingent consideration 20 21 20 20 20 19 $m $m $m At 1Ja nuar y 3,323 4 ,1 3 9 5 ,1 0 6 Settlements (643) (8 22) (70 9) Revaluations 14 (272 ) ( 6 14) Reclassific at ion to O ther payables (55) – – Di scou nt unwi nd (No te3) 226 278 356 At 31D ece mb er 2,865 3,323 4 ,13 9 Contingent consideration ar isi ng from business combinations is fair valued using de cisi on-tree analysis, with ke y inputs including the probabi lity of su cces s, co nside rati on of pote ntial de lays an d the expe cted l evels of fu ture reve nues. Reval uatio ns of Con tinge nt con sider ation a re rec ogni sed in S ellin g, gene ral a nd admin istr ative expe nse a nd incl ude an in crea se of $42m in 20 2 1 (2020: a d ecre ase of $ 5 1 m; 201 9: a de crea se of $51 6m) ba sed o n revise d mile stone p robab ilitie s, and r evenue a nd royalt y fore cas ts, re lating to the a cquis ition of B MS’ s s hare of t he Glob al Dia betes A llia nce. Di scou nt unwin d on the lia bilit y is in clude d withi n Finan ce expe nse (se e Note 3). Th e disco unt rate u sed fo r the Con tinge nt con side ratio n bala nces r ange f rom 3% to 9 %. T he mos t signi ﬁcan t Conti ngent c onsi dera tion ba lanc e is th e Globa l Diab etes A llian ce and th is is dis coun ted at 8%. Management has identiﬁed that reasonably possible changes in cer tain k ey assumptions, including the l ikelihood o f achieving su ccessful trial res ults , obtai ning re gulato ry a pproval, t he proj ecte d marke t share o f the the rapy are a and ex pecte d pri cing fo r launc hed pr oduc ts, may c ause the c alcul ated fa ir value o f the above c onting ent co nsid erati on to var y mate riall y in futu re year s. SE Th e contin gent c onsi dera tion ba lanc e relat ing to BMS’s shar e of Glob al Dia betes A llia nce of $2,5 44m (2020: $ 2 , 932m; 201 9: $3, 30 0m) woul d incre ase / de crea se by $254m w ith an in crea se/dec reas e in sale s of 1 0% a s compa red wi th the cu rren t estim ates. The maximum dev e lopment and sales milestones pa yable und er outstanding Cont ingent consideration a rrangements arising on business combinations are as follo ws: Nature of Maximum future milest ones Acquisitions Y ear contingent consideration $m Spirogen 20 13 Milestones 180 Amplimmune 2 013 Miles t one s 15 0 Almirall 1 2 014 Milestones and ro yalties 420                                                                                                         Th e amoun t of royalti es payab le und er the a rran geme nts is in here ntly un cer ta in and di fﬁc ult to pre dict , given th e direc t link to fu ture sa les an d the r ange of o utcom es. Th e ma ximum a mount o f royaltie s payabl e in eac h year is w ith refe renc e to net sa les. 21 P rov isio ns Empl oyee Other Severance Environmental benefits Legal provisions T otal $m $m $m $m $m $m At 1Ja nu ar y 2 019 226 97 11 9 19 8 2 51 8 91 Charge for year 15 8 31 18 618 236 1, 0 6 1 Cash paid ( 11 5 ) (39) (13 ) (14 7 ) ( 24) (338) Reversals (30) ( 1) – (28) ( 17 ) ( 76) Exchange and other mo vements 2 8 6 1 9 26 At 31D ece mb er 2 019 241 96 13 0 6 42 455 1,5 6 4 T ransfers in – – – – 258 258 Charge for year 11 6 34 15 16 95 276 Cash paid ( 62) (30) (4 8) (2 95) (56) (4 9 1) Reversals (89) – (2) ( 14) (27 ) ( 132 ) Exchange and other mo vements 8 – 33 (1) 45 85 At 31D ece mb er 2 02 0 2 14 10 0 12 8 348 770 1, 5 6 0 Additions t hrough business combinat ions (Not e27) – – 41 73 27 141 Charge for year 238 23 46 10 9 456 872 Cash paid ( 172 ) (32) (4 9) (28 5) (8 4) (62 2) Reversals (6 2) – – (5) ( 175 ) (242) Exchange and other mo vements (6) (1) 29 (1) (6) 15 At 31D ece mb er 2 021 2 12 90 19 5 239 988 1,7 24 20 21 20 20 20 19 $m $m $m Du e withi n one ye ar 768 976 723 Du e afte r mor e than o ne yea r 956 584 8 41 To t a l 1,7 24 1, 5 6 0 1, 5 6 4 167 A st ra Zen eca A n nua l Repo rt & For m 2 0- F In for mat ion 2 021 F in anc ia l Sta teme nts / No tes to t he Gr oup F ina nci al S tat ement s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Severance provisions arise predominantly in c onnection with globa l re structuring initiat ives which inv olve rationalisation of the globa l supp ly c hain , the s ales a nd mar keting o rgani satio n, IT and b usin ess su ppor t in fras truc ture, an d R&D. During 202 1, in conjunction with the acquisition of Alexion, the enlarged Group has initiat e d a comp r ehensive Post Alexion Acquisition Group Re view, aim ed at in tegra ting syste ms, st ruc ture an d proc esse s, opti misin g the glob al foot print a nd pr iorit ising r esou rce all ocat ions an d investm ents . The Gr oup has a lso co ntinu ed to pro gres s other l egac y restr uctu ring p rogr amme s, incl uding th e Glob al Post-Pa ndem ic New Ways of Work ing pr ogra mme tha t was initi ated in 20 20 in resp onse to t he chan ging bu sine ss envi ronme nt, ac cele rated by t he COVID - 1 9 p ande mic. Emp loyee co sts in co nnec tion w ith the in itiati v es a re rec ognis ed in se v er ance p rovisi ons whe n a deta iled f orma l plan h as bee n com munic ated to tho se emp loyees a ffe cted. Fi nal seve ranc e cost s are of ten su bjec t to the com pletio n of the re quisi te cons ultat ions on t he are as impa cted, w ith the maj orit y of the c ost exp ecte d to be pai d within o ne year. Astr aZen eca e ndeavou rs to su ppor t em ployee s affe cted by r estr uctu ring in itiati v es to s eek alte rnat ive role s within t he orga nisa tion. W here th e employe e is suc ces sful, a ny severa nce p rovisio ns will b e rele ased . Det ails of t he Enviro nmen tal an d Lega l provis ions tot allin g $90 m (2020: $1 0 0m; 201 9: $ 96 m ) and $ 239m (20 20: $348 m; 20 1 9: $ 642m), resp ecti vely , and o ngoi ng mat ters a re provi ded in N ote 30. Th e lega l issu es ar e ofte n subje ct to sub stan tial un cer tai nties w ith reg ard to th e timing a nd ﬁna l am ounts of a ny payme nts. A s such, o nce es tabl ishe d thes e provis ions re main i n Provisi ons unt il set tleme nt is re ache d and un cer tai nty r esolve d, wit h no tran sfer to T r ade an d other p ayable s prio r to payme nt. A sig niﬁca nt pro por tion of t he total l egal p rovis ion rel ates to mat ter s set tled, b ut not p aid, in pr eviou s peri ods. T hese u ncer t aintie s can a lso ca use rever sa l in previ ously e sta blish ed prov ision s once ﬁ nal se ttle ment i s reach ed. The majority of Employ ee beneﬁt provisions relat e to E x e cutiv e Defer red Compensation Plans. Other provisions c omprise a moun ts relati ng t o speciﬁc contractual or constructive obligat ions and d isputes. I ncluded withi n Other pro visions are am ounts a sso ciated w ith lon g-st andin g prod uct li abilit y set tle ments t hat ar ose pr ior to the m erge r of Astr a and Ze neca , whic h given th e nature of the p rovisi on, the a mount s are exp ecte d to be set tled ove r many yea rs. A lso in clude d in Ot her pr o vis ions is a n amou nt of $1 85 m (2020: $258 m ; 201 9: $ nil), in rel ation to th ird- par ty li abili ty an d other r isks ( inclu ding inc urre d but n ot yet rep or ted cla ims) ari sing on t he Gro up’ s ca ptive ins uran ce ar rang emen ts. Th e Group r evise d its pr esen tatio n of thes e provis ions i n 2020; pri or to this, t he bala nce ha d bee n pres ented w ithin cu rre nt Othe r payab les. T he cla ims ar e consi dere d to be unc er tai n as to timin g and am ount an d ther efore tr eatme nt as a pr ovisio n was de emed m ore ap prop riate. Cha rges to O the r provis ions in 20 2 1 i nclud e $2 43m i n relat ion to the Pos t Alex ion Acq uisit ion Gro up Revie w restr uctu ring p rogr amme. No p rovisio n has be en re leas ed or ap plie d for any pu rpo se othe r than th at for whi ch it was e sta blish ed. 2 2 Po st-ret irem ent a nd othe r de ned be net sche mes Background Thi s sec tion pr edom inant ly cover s deﬁne d ben eﬁt ar rang eme nts like po st-retir emen t pens ion an d medi cal pl ans whi ch make up t he vast b ulk of the G roup’ s lia biliti es. However, it als o inco rpor ates oth er ben eﬁts w hich fa ll unde r IAS 19 rule s and whi ch req uire an a ctua rial va luatio n, inclu ding but n ot limite d to: Lump Su m plan s, Long S er vice Awa rds an d deﬁne d cont ribut ion pe nsion p lans w hich have s ome deﬁ ned be neﬁt cha rac teris tics (e.g. a min imum gu aran teed le v el of b eneﬁ t) . Th e Group a nd mos t of its su bsid iarie s of fer reti reme nt pla ns whic h cover the m ajor ity of e mploye es. T he Grou p ’ s p olicy i s to provid e deﬁne d con tribu tion ( DC) ori enta t ed p ensi on provi sion to it s empl oyees un les s other wis e comp elle d by loca l regul ation. A s a res ult, ma ny of thes e retire ment pla ns are D C, wher e the Gro up cont ribu tion an d resul ting ch arge i s ﬁxed at a se t level or i s a set pe rcen tage of e mploye es’ pay . H owev er , seve ral pla ns, ma inly in th e UK, th e US and S weden, a re deﬁ ned be neﬁt ( DB), wher e bene ﬁts are b ase d on emp loyees’ le ngth of s er vice a nd linke d to the ir sal ar y . Th e major D B plan s are la rgel y lega cy arr ange ment s as they have b een cl ose d to new entr ants s ince 20 00, a par t from t he coll ecti vely bar gain ed Swed ish pla n (whic h is still o pen to e mployee s bor n befor e 1 979). Dur ing 201 0, fo llowing c onsu ltati on with it s UK emp loyees’ re pre sent atives, the G roup in trodu ced a f reeze on p ens ionab le pay at 3 0 June 201 0 l evels for D B memb ers o f the UK Pen sion Fund . The num ber of a ctive me mber s in the Fun d conti nues to d eclin e and is n ow 49 7 emp loyees . In Novemb er 201 7 , th e Group c lose d the qua liﬁe d and no n-qu aliﬁ ed US DB p ensi on pla ns to futu re acc rual (a nd rem ov ed a ny sala ry l ink) fr om 3 1 D ece mbe r 20 1 7 . Th e major D B plan s are fu nded th roug h sepa rate, ﬁdu ciar y-a dmini stere d ass ets. Th e cas h fundi ng of the pl ans, w hich may f rom tim e to time involve s peci al Gro up paym ents, i s desi gned, i n cons ultat ion with i ndep ende nt qua liﬁed a ctua ries , to ensu re that th e asse ts are s ufﬁ cien t to meet fut ure obl igatio ns as a nd when t hey fall d ue. The f undin g level is m onitore d by the Gr oup an d loca l ﬁduci arie s, who t ake into ac count t he stre ngth of the G roup’s covenan t, loc al reg ulatio n, cas h ﬂows, an d the sol vency an d matur ity o f the pen sion s chem e. Financing P rinciples and F unding F r amew or k Nin ety p er cen t of the Gr oup’ s tot al DB ob ligat ions (or 71 % of net ob ligat ions) at 31 De cemb er 2021 are in s chem es wit hin the UK , the US a nd Swe den. In th ese co untri es, th e pens ion obl igatio ns are f unde d in line w ith the G roup’ s ﬁ nanc ing pri ncipl es, as d iscl osed i n prio r year s. The re were n o fund amen tal cha nge s to these p rinc iple s durin g 2021 . Th e Group h as devel oped a l ong-te rm fun ding fr amewor k to imple ment t hese p rinc iples . This f ramewo rk ta rgets e ithe r full fu nding o n a low-ri sk fun ding me asur e or buy- out wi th an ex terna l insu rer as th e pen sion fu nds ma ture, wit h affo rdab le long -term d e-r iski ng of invest ment s trateg y alo ng the way. Unles s loca l regu latio n dict ates othe rw ise, thi s fram ework de termi nes th e cash c ontri butio ns payab le. UK Th e UK Pensi on Fund re pres ents a pproxim ately 61 % of the G roup’ s DB ob ligat ions at 31 De cemb er 2021 . T he ﬁna ncing p rinc iples a re mod iﬁed in lig ht of the UK r egul ator y requ ireme nts (su mmar ised b elow) an d resu lting di scus sion s with th e T rus tee. 21 Pr ovis ions co ntinue d 16 8 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Financi al Stat eme nts No tes to t h e Grou p F ina n cia l Statem ents c ont inue d Role of T rus t e e and Regulation Th e UK Pensi on Fund is g ov er ned an d admin istere d by a cor pora te T rus tee whi ch is le gally s epar ate fro m the Gro up. The T r uste e Dire ctor s are c ompr ise d of repr esen tative s appo inted by bo th the em ployer a nd empl oyees a nd incl ude an in depe nde nt profe ssio nal T r uste e Dire ctor . Th e T rus tee Dir ector s are r equir ed by law to ac t in the inte rest o f all rel evant be neﬁci arie s and a re resp onsi ble in pa rt icula r for inves tment s trate gy and t he day-to- day adm inist ratio n of the be neﬁt s. They a re also r espo nsib le for joi ntly ag reei ng with th e empl oy er th e level of co ntrib ution s due to the UK Pe nsio n F und. Th e UK pen sions m arket i s regul ated by T he Pensi ons Re gulato r whos e statu tor y objec tives a nd reg ulator y powe rs ar e desc ribe d on its we bsite, ww w .thepensionsregulator .go v .uk. Th e P en sion Sc heme A ct 2021 bec ame ef fe ctive in th e UK from 1 O ctob er 2021 . A se ctio n of this Ac t plac es add itiona l leg al requ irem ents on com pani es who s pons or UK deﬁ ned be neﬁt p ensi on sch emes , with a fo cus on th e ongoi ng sec urit y of the se ben eﬁts . The Gr oup ha s cons idere d the im plic ation s of the Act a nd devel oped a f ramewo rk to ens ure it m eets i ts res ponsi biliti es on an o ngoi ng basi s. Th ere have be en t wo UK High C our t Rulin gs rel ating to Gu ara nteed M inimum Pe nsio ns (GMP) e quali satio n in 201 8 an d 2020. Follow ing the pub licat ion of gui danc e arou nd impl emen tatio n in 2021 , the T ru stee, wi th inpu t from th e Group, ha s beg un the pr oce ss of eq ualis ing be neﬁts , wit h imple ment ation li k ely to b e in 2023. A n estim ate of the im pact o f these c hang es has a lrea dy bee n rec ognis ed in 201 8 a nd 2020. Funding requirements UK le gisl ation re quir es that D B pen sion sc heme s are fu nded p rud ently. On a tri ennia l basi s, the T r uste e and the G roup mu st agr ee on a se t of as sumpt ions us ed to valu e the lia biliti es as a pa rt o f an actu aria l valua tion. T o gethe r with the a sse t valuat ion, thi s facili tates th e calc ulati on of a fun ding leve l and of th e contr ibuti ons re quire d (if any) to e nsur e the UK Pen sion Fun d is fully f unde d over an ap prop riate ti me per iod an d on a sui tabl y prud ent me asur e. The te chnic al provi sion s assu mptio ns use d to value th e liabi litie s for the tr ienni al act uari al valua tion a re usua lly set m ore pr uden tly than t he ass umpti ons us ed to pre pare a n acco unting va luatio n of the lia bilit ies, wh ich ar e set und er IAS 19 rule s to be a ‘be st es timate’ . Th e last f ull actu aria l valua tion of the U K Pensi on Fund was c arr ied ou t by a quali ﬁed ac tuar y as a t 3 1 M arch 201 9. It was ﬁn alis ed in Jun e 2020 and i n ear ly 2021 , the Pe nsio ns Reg ulator a cknowl edge d the ou tcome a nd no is sues we re rai sed. T he fund ing as sumpt ions us ed in th is actu aria l valu ation we re set ou t in the G roup’ s p rior ye ar rep or t. The n ext ac tuar ial valu ation i s due to ta k e pla ce as at 31 Mar ch 2022, wit h a likely tim esc ale for c omple tion in e arl y t o mid -2023. As pec ts of the tr ienni al act uari al valua tion ar e govern ed by a lon g-term f undin g agre emen t, ef fecti ve since O ctob er 201 6 an d whic h sets ou t a path to full f undin g on a low-r isk me asur e. Unde r this ag reem ent, if a d eﬁcit ex ists , the Gro up will gr ant a ch arge i n favour of the Truste e over lan d and bui lding s on the Cam brid ge Bio medi cal Cam pus, e ffe ctive up on pra ctic al com pletio n of the si te, or fro m 30 Septe mbe r 2022 (whi chever is e arli er). Thi s char ge is not c urre ntly in fo rce. W hen ef fec tive, the ch arge wo uld onl y cr ysta llise in t he event of th e Grou p ’s ins olvenc y . Thi s char ge will p rovide lon g-ter m secu rit y in resp ect o f futur e UK Pensi on Fund co ntrib ution s and wil l be wor th up to £3 50m. In re lation to d eﬁci t recove ry c ontri butio ns, a lum p sum co ntrib ution of £ 39m wa s made in M arch 20 2 1, with a fu rth er £3 9m con tribu tion du e befor e 31 Marc h 2022. In addi tion, a c ontri butio n of £29 m was als o made i n March 20 2 1 , wi th a ﬁnal c ontr ibuti on of £30 m due be fore 31 Marc h 2022, in re latio n t o par t pay ment o f the defe rre d contr ibuti on expla ined b elow. Du ring 201 7 , th e Grou p provid ed a let ter of c redit to t he T ru stee, to un der wri t e the d eferr al of an a dditio nal de ﬁcit re cover y co ntrib ution of app roxima tely £1 26 m whic h was due in 201 7 . This c ontr ibuti on will be p aid in ﬁ v e ins talm ents (wi th inter est) fr om Mar ch 201 8 to Ma rch 2022 a nd to date, fo ur ins talme nts have b een pa id. The l ette r of cre dit und er writi ng the se payme nts wil l redu ce in valu e as eac h annu al payme nt is ma de. Und er the g o ver ning do cume ntatio n of the UK Pe nsion Fun d, any fu ture sur plus i n the Fund woul d be retu rnab le to the G roup by ref und as sumi ng gra dual s ettl emen t of the lia biliti es over th e lifetim e of the Fund. In p ar ticul ar , th e T rus tee has n o unila teral r ight to wi nd up the Fund w ithou t Comp any con sent n or doe s it have the p ower to unil atera lly use s urpl us to augm ent be neﬁt s prio r to wind- up. As su ch, the re are no a djust ment s requi red in res pec t of IFRIC1 4 ‘ IAS 1 9 – T he Lim it on a Deﬁ ned Be neﬁt A sse t, Minim um Fundin g Requi reme nts an d their In terac tion’ . On c urre nt bas es, it is ex pec ted that o ngoi ng cont ribut ions (exclu ding tho se in re spec t of pas t ser vic e deﬁci t contr ibut ions) dur ing the ye ar en ding 31 Dec embe r 2022 for th e UK sch eme wil l be app roximate ly $1 9m . Unit ed States and Swed en Th e US and Swe den pl ans ac coun t for 1 1 % a nd 1 8%, res pect ively , o f the Gro up’ s de ﬁned b eneﬁ t obliga tions . The US a nd Swed en pe nsion p lans are g overne d by Fiduc iar y Bod ies wi th resp onsi bilit y for the i nv es tment p olici es of the a sse ts. The se pla ns are f unde d in line w ith the G roup’ s ﬁnancing principles and local regulations. Th e US deﬁn ed ben eﬁt pe nsio n plan s were ac tuari ally reva lued a t 3 1 D ece mber 20 2 1, when p lan ob ligati ons wer e $ 1,257 m a nd pla n asse ts were $1 , 1 9 8m. Th is incl udes o bliga tions in r espe ct of th e non- qual iﬁed p lan whi ch is unf unde d. The qu aliﬁe d US pe nsion p lan is f ully fu nded o n an IAS 19 bas is and h as a pos itive fu nding b alan ce on the l ocal s tatuto ry m easu re. As su ch, no c ontri butio ns are re quire d, and t he investm ent st rateg y is largely de-risked. Th e Swedis h deﬁne d ben eﬁt pe nsio n plans we re act uari ally val ued at 31 De cemb er 2021 , w hen pla n oblig ation s were e stimate d to amou nt to $2,373m an d plan a sset s were $1 , 234m. It s hould b e noted th at the Swe dish p lans have a f undin g surp lus on the l oca l GA AP ac coun ting ba sis and t his inﬂu enc es con tribu tion po licy . A deﬁ cit re cover y cont ribu tion of $ 39m is ex pec ted to be pa id in 2022. On c urre nt bas es, it is ex pec ted that o ngoi ng cont ribut ions (exclu ding tho se in re spec t of pas t ser vic e deﬁci t contr ibut ions) dur ing the ye ar en ding 31 Dec embe r 2022 for th e Unite d State s and Swe den wil l be app roximate ly $1 0 m. 16 9 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Other deﬁned beneﬁt plans Th e Group p rovide s ben eﬁt pla ns othe r than p ensi ons whi ch have to be re por ted u nder I AS 1 9. Th ese in clude L ump Su m plan s, Long S er vice Awa rds and deﬁned contribution pension plans which ha ve a gua rant eed minimum beneﬁt. How ev er , the largest categor y of these ‘other’ non-pension plans are healthcare beneﬁts. In the U S, and to a le sse r exte nt in cer ta in othe r coun trie s, the Gr oup’ s e mploym ent pr acti ces in clude t he provi sion of h ealth care a nd life a ssur anc e be neﬁts f or elig ible ret ired e mploye es. As a t 3 1 D ece mber 20 2 1, some 2,8 3 1 r etire d employe es an d covere d depe ndan ts cur rentl y bene ﬁt from t hese prov ision s and so me 1 ,6 9 1 c urre nt emp loyees w ill be el igible o n their r etire ment. T he Gr oup acc rue s for the p rese nt value of s uch re tiree o bliga tions over th e workin g life of th e employe e. In pr actic e, thes e bene ﬁts will b e fund ed wit h refere nce to th e ﬁnanc ing pr incip les. In the U S, ther e was a cha nge to the l evel of be neﬁt pr ovisio n for mem ber s age d 65 and ove r within th e Grou p ’ s h ealt hcar e plan s, ef fecti ve from 1 Jan uar y 2021 . T he chan ges we re comm unica ted to the m embe rshi p in Septe mbe r 2020 and re sulte d in an es timate d liab ilit y redu ction of $ 64m whi ch was re cogn ised a s a past s er vice c redi t for the ye ar end ing 31 Dece mbe r 2020. Followi ng the se cha nges, t he pla ns bec ame fu lly fun ded on an I AS 1 9 b asis a nd are p rojec ted to have a sm all su rplus . As a res ult, th e investm ent str ategy h as be en full y de- riske d. Th e cost of p ost-re tirem ent be neﬁts o ther th an pen sion s for the G roup in 20 2 1 wa s $1 m (2020: $1 m; 201 9: $3 m ). Plan a sset s were $21 5 m and pl an obl igatio ns were $1 70m a t 3 1 D ece mber 20 2 1. The se ben eﬁt pla ns have be en inc lude d in the dis clos ure of po st-reti reme nt ben eﬁts un der IA S 1 9. Financial assumptions Qualiﬁed independe nt ac tuaries ha ve u pdated the actuarial v aluations under IAS 1 9 for the major deﬁned beneﬁt schemes operated by the Gr oup to 3 1 De cemb er 2021 . T he as sumpti ons us ed may no t nece ssa rily b e born e out in p racti ce, due to th e inhe rent ﬁn anci al and d emog raph ic uncer tainty associated with making long-term projections. These assumptions reﬂect the changes which ha ve the most mat erial impact on the res ults of t he Grou p and wer e as foll ows: 2020 UK US Sweden R est o f Grou p 4 Inflation assumption 2.9% – 1. 5% 1. 6% Rat e of incr eas e in sal ari es – 1 – 3. 0% 3 .1% Rat e of incr eas e in pen sion s in pay ment 2.8% – 1. 5% 1. 6% Discount rate – define d be nefit obligation 1. 4% 2 . 5% 1. 2% 0 .7% Di scou nt rate – i ntere st co st 1.1 % 1. 8% 1. 0% 0 .5% Di scou nt rate – s er vic e cost 1. 4% 1.7 % 1. 2 % 0. 8% 20 21 UK US Sweden Re st of G ro up 4 Inflation assumption 3. 3% – 2 .3% 2 .2% Rat e of incr eas e in sal ari es – 1 – 3. 8% 3 .7% Rat e of incr eas e in pen sion s in pay ment 3 .1% – 2 .3% 2 .2% Discount rate – define d be nefit obligation 2 1. 9% 2 .8% 1.8 % 1. 2 % Di scou nt rate – i ntere st co st 3 1. 9% 2. 2% 1. 6% 1.0 % Di scou nt rate – s er vic e cost 3 1. 9% n /a 1.9 % 1.4%                                                                                                  Th e weighte d averag e durat ion of the p ost-re tirem ent sc heme ob ligat ions is a pproxi matel y 1 6 yea rs in th e UK, 1 1 yea rs in the U S, 1 9 ye ars in Swe den an d 1 7 ye ars fo r the Re st of the G roup ( inclu ding Ge rma ny). Demogra phic assumptions Th e mor tali ty as sump tions a re bas ed on co untr y-sp eci ﬁc mor ta lity t able s. The se are c ompa red to ac tual ex peri ence a nd adju sted w here su fﬁ cient dat a are avail able. A dditio nal al lowance f or futu re impr ovemen ts in life ex pect ancy i s inclu ded fo r all maj or sch emes w here th ere is c redib le dat a to suppor t a co nt inuing trend. Th e table b elow ill ustr ates life ex pec tancy a ssu mption s at age 6 5 for mal e and fe male me mbe rs ret iring i n 2021 and mal e and fe male m embe rs expe cted to r etire in 20 4 1 (2020: 20 20 and 204 0 resp ecti v ely ) . Li fe expe cta ncy a ssu mptio n for a m ale me mbe r reti ring a t age 6 5 L ife ex pec tan cy ass umpt ion fo r a fema le me mbe r reti ring a t age 65 Countr y 20 21 2 0 41 2020 2040 20 21 2 0 41 20 20 2040 UK 22.5 2 3.7 22.4 23 .7 23.9 25.2 23.9 2 5 .1 US 21. 9 23.2 21. 8 24. 5 2 3.3 24.9 23. 2 2 6 .1 Swe den 21. 9 23.6 21. 9 23.6 24.5 25 .6 24 .5 25.6 In the U K, the G roup a dopted t he CMI 2020 M or talit y Proj ecti ons Mo del wit h a 1 % lo ng-ter m impr ov eme nt rate. N o other d emo grap hic as sumpti ons have ch ange d sinc e they were u pdate d in 201 9 foll owing the a ctua rial va luatio n. The G roup ha s cont inued to a ssu me that 3 0 % o f memb ers (2020: 3 0 % ) will tr ans fer out of t he deﬁn ed be neﬁt se ctio n of the As tra Zene ca Pens ion Fund at t he poin t of retir emen t. 2 2 Po st-ret irem ent a nd othe r de ned be net sche mes cont inued 17 0 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Statem en ts No tes to t h e Grou p F ina n cia l Statem ents c ont inue d Th e assu mptio n used fo r the US pl ans was u pdate d in 2021 to use th e mor tali ty ta ble s (MP-2021 ) tha t were pu blish ed dur ing the ye ar . Risks associated with the G roup ’s deﬁne d b eneﬁt pe nsion s chemes Th e UK deﬁn ed ben eﬁt pl an acc ounts f or 61 % of th e Grou p ’s deﬁn ed be neﬁt ob ligat ions an d expos es the G roup to a nu mber o f risks , the mos t signiﬁcant of which are: Risk De scri ption Mitigation V olatile asset returns The Deﬁned Beneﬁt Obligation (DBO) is calculated using a discount rat e se t with re fere nce to A A- rate d cor pora te bon d yiel ds; as set re turn s that dif fe r from th e disc ount r ate wil l crea te an el emen t of vola tilit y in the solvency ratio . The UK Pension Fund hold s a signiﬁcant propor tion of as set s (arou nd 72.5% ) in a g row th por t folio. A ltho ugh th ese g rowt h as sets a re exp ecte d to outp er for m A A-ra ted co rpo rate bo nds in t he long term, they can lead to volatility and mismatching r isk in the sh or t term. T he all oca tion to gr owt h ass ets is m onito red to e nsur e it remains appropriate giv e n the UK Pension F und’s long-term objectives. In or der to m itiga te inves tmen t risk , the T ru stee inve sts i n a suit ably dive rsi ﬁed r ange o f ass et cla sse s, ret urn dr iver s and i nvestm ent ma nage rs. T he inve stme nt str ateg y will evol ve to fur the r impr ove the expected risk / return proﬁle a s opp ortunities arise. Th e T ru stee h as he dged a ppr o xim atel y 7 5% of un inten ded no n-s terl ing, over sea s cur renc y risk w ithin t he UK Pe nsio n F und a sse ts. Changes in bond yields A de crea se in c orpo rate b ond yi elds w ill in crea se the p res ent val ue pla ced on th e DBO fo r acc ounti ng pur pos es. The interest rat e hedge of the UK Pension Fund is impleme nt e d via holding gil ts and s waps of a ppro pri ate dur ation a nd se t at app roxim ately 9 6% of tota l ass ets a nd pro tect s to some d egr ee aga inst f alls i n long -term i ntere st ra tes (app roxim ately 91 % h edg ed at th e end of 20 20). Th ere ar e some d if fere nces i n the bo nds a nd ins trum ents h eld by th e UK Pen sion Fu nd to hed ge inte res t rate ri sk on th e stat utor y an d long -term fun ding b asi s (gilt s and swa ps) and t he bon ds ana lyse d to set t he DBO dis cou nt rate o n an acc ount ing ba sis (A A c orp orate b ond s). As suc h, there remains some mismatching risk on an accounting basis should yie lds o n gilts a nd swap s dive rge co mpar ed to A A co rpor ate bo nds. Inflation risk T he majo rit y of the D BO is in dexed in l ine wi th pri ce inﬂ ation (m ainl y inﬂ atio n as mea sur ed by the U K Reta il Pri ce Ind ex (RPI) b ut al so for s ome me mber s a com pon ent of p ensi ons is i ndexed b y the UK Co nsu mer Pr ice Index ( CPI)) and higher inﬂation will lead t o higher liabilities ( a lt hough, in mo st cas es, t his is c appe d at an a nnua l incr eas e of 5 %). It was c onﬁr med in Nove mbe r 2020, th e inten tion to a lign R PI with C onsu mer Pr ice In dex inc ludi ng Hou sing (C PIH) fr om 203 0. Oth er thi ngs be ing e qual, t his wil l lead to lower liability valuations. Th e UK Pens ion Fun d hold s RPI ind ex -li nked gil ts an d deri vative ins tru ment s such a s swaps . The i nﬂati on hed ge of th e UK Pens ion Fun d is s et at ap proxim atel y 7 6% of tota l ass ets an d prote cts to s ome d egre e against higher -than-expec t e d inﬂation increases on the DBO (appro ximately 83% he dge d at the e nd of 2020 ). Ther e is a fra mewor k in pl ace to gr adua lly inc rea se the l evel of in ﬂatio n hed ging to 100% of a sse ts over ti me, via a combination o f liabil ity management ex ercise s and additional market - based hedging. Life exp ect ancy Th e majo rit y of the U K Pensi on Fund’s obl igat ions a re to prov ide be neﬁ ts for t he life o f the me mber, so in crea ses i n life exp ect ancy w ill re sult i n an increa se in the liabilities. Th e UK Pens ion Fun d ente red in to a long evit y swap du ring 2013 whi ch provides hedging against the longevity risk of increasing life e xp ectancy over t he nex t 7 5 yea rs for a rou nd 1 0 ,00 0 of the UK Pe nsi on Fund’s cu rren t pen sion ers a nd cove rs $2.4b n of the UK P ensi on Fund’s lia bili ties . A one -year in cre ase in l ife exp ect ancy wo uld re sult i n a $39 0m increase in pension fund obligations, which would be partially offset by a $20 3m inc rea se in the v alue of t he lon gevit y swap a nd he nce th e pens ion fund assets. The impact of the COVID- 1 9 pandemic on long-t erm mort ality as sump tion s is not ye t known . The Gr oup wi ll con duct a m or tali ty re view once robust data is available. Other risks Th ere are a n umbe r of othe r risks of a dmini steri ng the UK Pe nsion Fun d inclu ding c ounter par ty r isks f rom usi ng der ivative s ( mit igated by u sing a spe cia list inves tmen t mana ger to over see a di vers iﬁed r ange of c ounte rpar tie s of high s tand ing and e nsur ing po sitio ns are c ollate rali sed da ily). Fur ther more, t here a re ope ratio nal ri sks (such a s payin g out the w rong b eneﬁt s) and le gisla tive ris ks (such a s the gover nmen t incre asin g the bur den on c ompa nies th roug h new legi slati on). Thes e are mi tigate d so far a s pos sible v ia the gover nan ce str uctur e in plac e whic h o ver see s and administ e rs t he pension funds . Th e Group’s pens ion pl ans in th e US and Swe den a lso ma nage th ese key ri sks, whe re they a re releva nt, in a si milar way, with the l ocal ﬁ ducia r y bo dies inve sting in a d iver siﬁe d manne r and e mployi ng a fra mework to h edge i nteres t rate ri sk. Loc al ﬁdu ciar y bo ards a re aware of E n vir onmen tal, So cial a nd Gover nan ce (ESG) r isks as t hey per ta in to invest ment po licy , a nd whe re loc al re gulati on allow s, have poli cies i n place to m onitor a nd ma nage su ch ris ks and co mply w ith loc al leg islat ion an d discl osure r equi reme nts. Assets and obligations of deﬁned beneﬁt schemes Th e asse ts and o bliga tions of t he deﬁn ed be neﬁt sc heme s ope rated by th e Grou p at 3 1 D ece mbe r 202 1 , a s calc ulate d in acco rdan ce with I AS 1 9, are s hown be low . T he fair va lues o f the sch emes’ a sset s are not i ntende d to be re alise d in the sh or t term a nd may be s ubjec t to sign iﬁca nt chan ge bef ore they a re rea lised . The pre sen t value of th e sche mes’ obl igati ons is de rive d from ca sh ﬂow pr ojec tions ove r long p erio ds and i s there fore inherently unce rtain. 171 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Scheme assets 2020 UK US Sweden Re st of Gr oup T otal Quo ted Unquoted Q uoted Unquoted Q uoted Unquoted Q uoted Unquoted Q uoted Unquoted T otal $m $m $m $m $m $m $m $m $m $m $m Government bonds 1 1 ,929 – 321 – – – 52 – 2, 302 – 2, 302 Corporate bonds 2 – – 878 – – – 30 – 908 – 908 Derivatives 3 – ( 170 ) – – – 333 1 – 1 16 3 16 4 Inv estment funds: Listed Equities 4 – 1,7 71 93 90 – 11 9 72 5 16 5 1, 9 8 5 2 ,15 0 Inv estment funds: Ab solu te Retu rn/ Mult iStra tegy 4 – 2, 463 – 72 – 668 12 – 12 3, 203 3 , 215 Inv estment funds: Cor porat e Bonds/Cr edit 4 – 969 – 80 – 2 11 39 12 39 1, 27 2 1, 3 11 Cash and cash equivalents 64 15 3 31 – – 7 – 4 95 16 4 259 Othe r – – – 5 – – (1) 355 ( 1) 360 359 T o ta l fai r val ue of s ch eme a ss ets 5 1, 9 9 3 5 ,18 6 1, 3 2 3 2 47 – 1 ,338 205 376 3 ,521 7,1 4 7 10 ,6 6 8 20 21 UK US Sweden R es t of Gr oup To t a l Quoted Unquoted Quote d Unquoted Quote d Unquote d Quot ed Unquot ed Q uoted Unq uoted To t a l $m $m $m $m $m $m $m $m $m $m $m Government bonds 1 2,50 0 – 303 – – – 75 – 2 ,878 – 2, 878 Corporate bonds 2 – – 877 – – – 16 – 8 93 – 893 Derivatives 3 – (237 ) 2 (1) – 259 (1) – 1 21 22 Inv estment funds: Listed Equities 4 – 1, 42 7 – – – 13 4 55 6 55 1, 56 7 1, 6 22 Inv estment funds: Absolute Return/Multi Strategy 4 – 2 ,342 – – – 6 47 8 – 8 2 , 989 2 ,997 Inv estment funds: Cor porat e Bonds/Cr edit 4 – 1, 0 0 6 – – – 19 2 53 11 53 1, 2 0 9 1, 2 6 2 Cash and cash equivalents 34 2 61 2 27 – – 2 – 2 261 265 52 6 Othe r – – – 5 – – 1 358 1 363 364 T o ta l fai r val ue of s ch eme a ss ets 5 2,534 4,7 99 1, 4 0 9 4 – 1, 2 3 4 2 07 377 4 ,1 5 0 6 , 414 10, 56 4                                                                                                                                                                                                                                                                                                                  Scheme obligations 2020 UK US Sweden Re st of Gr oup T otal $m $m $m $m $m Pre sen t value of s che me obl igati ons in r esp ect of : Active membership (598) (99) (9 53) (4 68) ( 2 ,11 8 ) Deferre d m embership (1, 8 8 7 ) ( 787) ( 783) (5 04) (3,961 ) Pensioners ( 5,940) ( 715 ) ( 789) ( 3 47 ) ( 7, 7 9 1 ) T o ta l valu e of s che me o bli gat io ns (8,425) (1, 6 01) (2, 525) (1, 3 19) ( 13, 87 0 ) 20 21 UK US Sweden R est o f Gr oup To t a l $m $m $m $m $m Pre sen t value of s che me obl igati ons in r esp ect of : Active membership (532) ( 81) (92 6) (523) (2 ,062) Deferre d m embership (1,7 0 9) (6 93) ( 718 ) (46 5) (3,585) Pensioners ( 5,70 0 ) (63 0) ( 729) ( 312 ) ( 7, 3 7 1 ) T o ta l valu e of s che me o bli gat io ns ( 7, 9 4 1) ( 1, 404) (2 ,373) (1, 3 0 0) (13 ,018 ) 2 2 Po st-ret irem ent a nd othe r de ned be net sche mes cont inued 17 2 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Statem en ts No tes to t h e Grou p F ina n cia l Statem ents c ont inue d Net deﬁcit in the scheme 2020 UK US Sweden Re st of Gr oup T otal $m $m $m $m $m T ot al fa ir valu e of sch eme as set s 7,1 7 9 1, 5 70 1 ,338 5 81 10, 6 6 8 T otal value of scheme obligations (8,425) ( 1,6 01 ) (2, 525) (1, 3 19) (13 , 87 0 ) De fic it i n th e sch em e as re cog ni sed i n th e Consolidated Statement of Financial Position (1, 2 46 ) ( 31) ( 1,1 8 7 ) ( 738) ( 3, 202) 20 21 UK US Sweden R est o f Gr oup To t a l $m $m $m $m $m T ot al fa ir valu e of sch eme as set s 7 ,333 1, 413 1, 2 3 4 584 10 ,5 64 T otal value of scheme obligations ( 7, 9 4 1 ) (1 ,404 ) ( 2,373 ) (1, 3 0 0) (13 ,0 18) De fic it i n th e sch em e as re cog ni sed i n th e Consolidated Statement of Financial Position (60 8) 9 ( 1,1 3 9 ) ( 716) (2,4 54) Fair va lue of sc heme a sset s 20 21 20 20 UK US Sweden Res t of G rou p To t a l UK US Sw eden R est of G rou p T otal $m $m $m $m $m $m $m $m $m $m At be ginn ing of ye ar 7,1 7 9 1, 5 70 1,3 3 8 5 81 1 0,668 6,4 64 1, 5 0 6 1 ,12 3 512 9,6 05 Interest income on scheme assets 75 27 12 4 11 8 111 39 14 5 16 9 Expenses (7) – – – (7) (6) ( 2) – ( 1) (9) Actuarial gains/ (losse s ) 372 (22) 62 3 415 501 14 8 84 27 76 0 Exchange and other adjustme nts (77) (5) ( 1 32) 1 ( 213 ) 29 9 – 16 2 38 499 Employ er contributions 12 2 19 5 28 174 13 1 14 2 25 17 2 Participant contributions 2 – – 2 4 2 – – 2 4 Benefits paid (333) ( 176 ) (5 1) (35 ) (595) (323) ( 135 ) (47 ) (27 ) (53 2) Sc he me as se ts’ f air v alu e at e nd of ye ar 7 ,333 1, 413 1, 2 3 4 584 10, 5 64 7,1 7 9 1, 5 70 1 ,338 5 81 10, 6 68 Th e actua l retur n on the pl an as sets wa s a gain of $ 533m ( 2020: gain o f $929 m ). Movement in post -retirement sche me obligations 20 21 20 20 UK US Sweden Res t of G rou p To t a l UK US Sw eden R est of G rou p T otal $m $m $m $m $m $m $m $m $m $m Pre sen t value of o blig atio ns in sc heme a t beg innin g of yea r (8,425) (1, 6 01) (2, 525) (1, 319 ) ( 13, 87 0) ( 7 ,580) (1, 5 9 2) ( 2 ,1 6 0 ) (1, 0 8 0 ) (12 , 4 12 ) Current service cost (18 ) (2) (6 9) ( 34) (12 3) (18 ) (1) (59) (26) (10 4) Past service ( c ost )/credit (4) – ( 1) – (5) (9) 64 ( 2) (24 ) 29 Participant contributions (2) – – (2) (4) (2) – – (2) (4) Benefits paid 333 17 6 51 35 595 323 135 47 27 532 Interest e xp ense on post -retirement scheme obligations (87) (2 8) (2 2) (8) ( 14 5) ( 130 ) (4 0) (26) ( 10) (20 6) Actuarial gains/ (losse s ) 19 9 46 (4 3) 9 2 11 (6 37 ) ( 167 ) (28) (96) (9 28) Exchange and other adjustme nts 63 5 236 19 323 ( 372) – (297 ) (10 8 ) (777 ) Pr ese nt va lu e of ob lig at ion s in s che me a t end o f yea r ( 7, 9 4 1) ( 1 ,404) (2 ,373) ( 1,3 0 0 ) ( 13, 018 ) (8,425) ( 1, 6 01) (2,5 25) (1, 31 9) ( 13, 87 0 ) The obligations arise from the following plans: 20 21 20 20 UK US Sweden Res t of G rou p To t a l UK US Sweden R est o f Grou p T otal $m $m $m $m $m $m $m $m $m $m Funded – pe nsion s chemes (7 ,927) ( 1 ,17 8 ) (2 , 3 71) ( 1,1 6 0 ) (12 , 63 6 ) (8,4 05) (1 ,335) (2, 525) (603) (1 2, 868) Funded – post - r etirement healthcare – ( 14 3 ) – – ( 143 ) – ( 169 ) – – (16 9 ) Unfunded – pension schemes – (8 3) (2 ) (12 7) ( 212 ) – ( 97) – (69 6) (79 3) Unfunded – post-retir ement healthcare (14 ) – – (13 ) (2 7) (20 ) – – (20) (40) To t a l ( 7, 9 4 1) ( 1, 404) (2 ,373) (1, 3 00 ) ( 13, 018 ) (8,425) ( 1, 6 01) ( 2,525 ) ( 1,3 19 ) (13 ,8 70 ) 17 3 As tra Z enec a An nua l Rep or t & Form 2 0 -F I nfo rm atio n 202 1 Fi na ncia l St ate ment s / Note s to th e Group F in anc ia l St ateme nts Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Consolidated Statement of Comprehensive Inco me disclosure s Th e amoun ts that h ave been c harg ed to the C onsol idate d Statem ent of C ompre hens ive Inco me, in re spe ct of deﬁ ned be neﬁt s chem es for th e yea r ende d 3 1 D ece mber 20 2 1, are se t out be low . 20 21 20 20 UK US Sweden Res t of G rou p To t a l UK US Sweden R est o f Grou p T otal $m $m $m $m $m $m $m $m $m $m Operating profit Current service cost (18 ) (2) (6 9) (3 5) (12 4) ( 18) (1) (59) (26) ( 104 ) Past service ( c ost )/credit (4) – ( 1) – (5) (9) 64 ( 2) (24 ) 29 Expenses (7) – – – (7) (6) ( 2) – ( 1) (9) T o ta l (cha rg e)/cre di t to Op er at ing p rof it (29) (2) (70 ) (35) (13 6 ) (33) 61 ( 61) ( 51) (84) Finance e xpense Interest income on scheme assets 75 27 12 5 11 9 111 39 14 5 16 9 Interest e xp ense on post -retirement scheme obligations (87) (2 8) (2 2) (8) ( 14 5) ( 130 ) (4 0) (26) ( 10) (20 6) Net in terest o n po st-emplo y ment defined benefit plan liabilities (12 ) ( 1) (10 ) (3) (26 ) ( 19) ( 1) (12) (5) ( 37) (Charge )/ credit before taxation ( 41) (3) (8 0) (38 ) (16 2 ) (5 2) 60 (73) (56) (121) Other comprehensive income Di ffe renc e bet wee n the ac tual re turn a nd the expected return on the post -retirement scheme assets 372 (22) 62 3 415 501 14 8 84 27 76 0 Experie nce (losses)/ gains arising on the post-retir ement scheme obligat ions (43 ) (9) – 74 22 43 ( 19) (24) (17 ) (17 ) Changes in financial assumptions underlying the present value of the post -retirement scheme obligations 239 59 (43 ) ( 61) 19 4 (6 49) (16 0 ) (4) (79) (8 92) Changes in demographic assumptions 3 (4) – (4 ) (5) ( 31) 12 – – ( 19) Remeasurement of the defined benefit liability 571 24 19 12 62 6 (13 6 ) (19) 56 ( 69) ( 168 ) Pas t ser vice c ost s inclu de gra nting ea rly re tirem ent in th e UK and S weden. Pa st se rvi ce co st in 2020 in clude s a cre dit of $6 4m rela ting to the ch ange i n covera ge of the US h ealt hcar e plan s. In addi tion, th e free ze of the Net herl ands p ensi on pla n effe ctive f rom 1 Jan uar y 2021 yie lded a pas t ser vice cr edit, t aken in 2020 , of $7 m. Th e past s er vice c ost in 20 20 also in clud es cos ts pre domin antly r elate d to enha nced p ensi ons in e arly reti reme nt in the U K and Swe den. T ota l Grou p pens ion co sts in re spe ct of deﬁ ned c ontri butio n and deﬁ ned be neﬁt s chem es dur ing the ye ar are s et out b elow (se e Note 29). 20 21 20 20 $m $m Defined contribution schemes 428 3 51 De fine d ben efit s che mes − cu rre nt ser vi ce cos ts an d expe nses 131 11 3 De fine d ben efit s che mes − pa st se rv ice cr edit 5 (29) Pension costs 564 435 SE Rate sensitiviti es The following ta ble shows t he US dol lar effect of a change in t he signiﬁcant actuarial assumptions used to det e rmine t he retirement beneﬁts obligations in our three main deﬁne d beneﬁt pension obligation countries. 20 21 2020 Discount rate + 0.5% - 0. 5% + 0. 5% - 0 .5% UK ( $m) 565 (6 34) 6 10 (6 87) US ( $m) 79 (8 4) 93 (99) Swe den ( $m) 197 (226) 2 14 ( 246 ) To t a l ( $ m ) 8 41 (9 44) 9 17 (1, 0 3 2) 20 21 2020 Inflation rate 1 +0 .5% - 0. 5% + 0 .5% - 0 .5% UK ( $m) (386) 3 75 (3 96) 37 8 US ( $m) n/a n /a n /a n /a Swe den ( $m) (207 ) 19 6 (24 5) 216 To t a l ( $ m ) (5 93) 571 ( 6 41 ) 594 20 21 2020 Rate of increase in salaries +0. 5% - 0. 5% + 0. 5% - 0 .5% UK ( $m) n /a n /a n /a n /a US ( $m) n/a n /a n /a n /a Swe den ( $m) (90) 82 ( 62) 70 To t a l ( $ m ) (90) 82 (62) 70 2 2 Po st-ret irem ent a nd othe r de ned be net sche mes cont inued 174 As tra Z enec a An nua l Re por t & Form 2 0 -F I nfo rm atio n 202 1 Finan cial Sta temen ts No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 20 21 2020 Mort ality rate +1 y e a r −1 ye a r + 1 year − 1 year UK ( $m) (390 ) 2 388 3 (396) 395 US ( $m) (29) 29 ( 32) 32 Swe den ( $m) (94) 93 (10 6 ) 96 To t a l ( $ m ) (513 ) 51 0 (5 34) 523                                              Th e sens itivit y to the ﬁn anci al as sumpti ons sh own above ha s bee n estim ated ta king i nto acco unt the a pproxi mate dur ation of t he liab ilitie s and the ove rall pr oﬁle of th e plan me mbe rshi p. Th e inﬂati on sen sitiv ity a llows for th e impac t of a cha nge in inﬂ ation o n sala ry i ncre ases a nd pe nsion i ncre ase s (where t hese a ssum ption s are inﬂation-linked). Th e sala ry i ncrea se se nsiti vit y reﬂec ts the im pact o f an incr ease o f only s alar y rel ative to inﬂ ation. Th e sens itivit y to the li fe expe ctan cy ass umptio n is es timate d base d on a revis ed mo rt alit y ass umpti on that ex tends /redu ces th e curr ent lif e expe cta ncy by one ye ar for a p ar ticul ar age. 23 Reser ves Retained earnings Th e cumul ative amo unt of go odwil l writ ten of f dire ctly to re ser ves re sult ing fro m acqui sitio ns, net o f dispo sals , amou nted to $61 5m (2020: $ 636 m; 201 9: $ 6 14m) using ye ar -e nd rate s of exchan ge. At 31 Dec embe r 2021 , 3,922, 1 2 2 share s, at a co st of $23 9m, have be en de ducte d from R etain ed ea rnin gs (2020: 55 6, 108 sha res, a t a cost o f $5 1m ; 201 9: 9 07 ,23 9 shar es, at a c ost of $37m) t o sat isf y futu re vestin g of emp loyee sha re pla ns. Th ere are n o signi ﬁcan t statu tor y or con trac tual re stri ction s on the di strib ution o f curr ent pro ﬁts of su bsidi arie s; undis trib uted pr oﬁts of p rior ye ars are, i n the ma in, per mane ntly e mployed i n the bus ines ses of t hese c ompa nies. T he und istri buted i ncom e of Astr aZe neca c ompa nies ove rse as migh t be li able to over sea s ta x es a nd/or UK ta xat ion (af ter all owing for d ouble t ax ation re lief ) if th ey were to be di stri buted a s divid ends (s ee Note 4). 20 21 20 20 20 19 $m $m $m Cumulative t ranslation dif ferences included within R etained earnin gs At 1Ja nuar y ( 1,1 4 3 ) ( 2 ,1 8 9 ) (2,0 07) Foreign e xchange arising o n con solidat ion (4 83) 443 40 Exc hang e adju stme nts o n good will (re cor ded ag ains t othe r res er ves) ( 21) 22 (5) Foreign e xchange arising o n de signat e d b orro wings in net in vestment hedges 1 ( 32 1) 573 (2 52) Fair va lue m ovemen ts on de riva tives d esig nate d in net i nvestm ent he dge s 34 8 35 Net e xchange mo vement in Retained earnings ( 79 1) 1, 04 6 (18 2) At 31D ece mb er (1, 93 4 ) ( 1 ,14 3 ) ( 2 ,1 8 9 )                                                                                                        Th e cumul ative gai n with re spec t to cos ts of hed ging is $ 4m (2020: $ 9m; 201 9: $n il) and t he los s durin g the yea r was $6 m (2020: gai n of $9m; 201 9: lo ss of $ 4 7m ). The balance remaining in the foreign currency translation reserve from net in vestment hedging relationships for which hedge accounting no lon ger ap plie d is a gain o f $527 m. Other reserves Th e Othe r rese rve s aros e from th e canc ella tion of £1 , 255m of sh are pr emium a ccou nt by the Co mpany in 1993 a nd the re den ominat ion of sh are ca pita l of $ 1 57m in 1 9 99. The r eser ves a re availa ble for w ritin g off g oodw ill ari sing on c onso lidati on and, s ubje ct to gua rante es give n to pres er ve cre ditor s at the d ate of the co ur t orde r , are avai labl e for dist ribu tion. 175 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 2 4 Sha re capit al Al lot ted,ca lle d-up a nd fu lly pa id 20 21 20 20 20 19 $m $m $m Issued Ordinar y Shares ($0.25 each ) 387 3 28 328 Re dee mabl e Prefe renc e Sha res (£1 e ach – £5 0,00 0) – – – At 31D ece mb er 387 3 28 3 28 Th e Rede emab le Prefe renc e Sha res ca rr y limite d clas s voting r ights a nd no div iden d right s. Thi s clas s of sha res is c apabl e of red emptio n at par at th e option of t he Com pany on th e giving o f seven days’ w rit ten notic e to the re gister ed hol der of th e shar es. Th e Compa ny does n ot have a limi ted amo unt of au thori sed s hare ca pita l. Th e movemen ts in the n umbe r of Ordi nar y Sha res dur ing the ye ar ca n be sum mari sed a s follows: No. of s har es 20 21 20 20 20 19 At 1Ja nuar y 1 ,31 2,668, 724 1, 312,137 , 97 6 1 , 26 7 ,0 39,436 Issue of shares ( sha r e placing) – – 4 4 , 3 8 6 , 214 Issue of share capital (business combinat ions) 236,321 ,41 1 – – Is sue of s hare s (sha re sch eme s) 410, 5 3 0 5 3 0 , 74 8 7 12, 3 26 At 31D ece mb er 1 ,549,400,665 1, 312 ,6 6 8 ,7 24 1, 312 , 13 7 , 976 Share i ssues Is sue of sh are ca pita l (bus ines s comb inatio ns) rep rese nts sha re cap ital i ssue d as pa rt of t he acqu isiti on of Al exion (se e Note 27). Share repurchases No O rdina ry S hare s were re purch ase d by the Com pany in 2021 (2020:n il; 20 1 9:ni l). Shares held by subsidiaries No sh ares i n the Com pany wer e held by su bsid iarie s in any ye ar . 25 D ivide nds to sh are holders 20 21 20 20 20 19 2 021 2020 2 019 Per share P er sha re Pe r sha re $m $m $m Se cond i nter im (Ma rch 20 2 1) $1. 9 0 $ 1. 9 0 $ 1. 9 0 2,49 0 2,4 89 2,4 03 Fir st in terim ( Septe mbe r 2021 ) $ 0.90 $ 0.90 $0. 90 1, 3 92 1,1 8 0 1 ,1 8 0 To t a l $2 .80 $2.80 $2.80 3,8 82 3 ,669 3,583 Th e Compa ny has exerc ise d its aut horit y in ac cord ance w ith the p rovisi ons set o ut in the C ompa ny’ s A rt icle s of Ass ociat ion, tha t the bal ance of unc laime d divi dend s outs tandi ng pas t 1 2 yea rs be fo rfe ited. $ nil (2020: $1 m; 201 9: $4m) of u ncla imed di vide nds have be en adj usted f or in Ret aine d ear nings i n 2021 . Th e 2020 sec ond inte rim di viden d of $1 .90 p er sh are was pa id on 29 M arch 20 2 1. The 2021 ﬁr st inte rim div idend o f $0.9 0 per sh are was p aid on 1 3 S eptem ber 2021 . Re conc iliatio n of divi dend s charg ed to eq uity to c ash ﬂow s tatem ent: 20 21 20 20 20 19 $m $m $m Dividends charged to equity 3,8 82 3 ,669 3,583 Exc hang e los ses o n payme nt of di vide nd 3 4 5 He dge co ntra cts re lati ng to pay ment of d ivid ends (c ash f low st ateme nt) (2 9) (10 1) 4 Dividends paid (cash flo w statement) 3,856 3, 572 3,592 176 A st ra Zen eca A n nual R epo rt & For m 2 0- F In for mat ion 2 021 Financial Statem ents No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 26 Non- control ling i n te rests Th e Group F inanc ial St ateme nts at 31 Dec emb er 2021 reﬂe ct eq uity o f $ 19m (2020 : $ 16m; 201 9: $1 3m) an d total co mpre hens ive inco me of $3 m (2020: $3 m ; 201 9: $ 4m) att ribut able to th e non- con trollin g intere sts in A stra Zen eca Ph arma I ndia Li mited, P . T . As tra Zene ca Indo nesi a and Beijing F alikang Pharmaceutical (China) Co. Limit e d . In ad dition to t he non- con trolli ng inter ests i n Astr aZen eca Ph arma I ndia Li mited, P . T . Ast raZ enec a Indon esia a nd Bei jing Falik ang Pha rma ceuti cal (Chi na) Co. Lim ited, the G roup F inanc ial St ateme nts at 31 Dec embe r 2021 also r eﬂec t equi ty of $ nil (2020: $ nil; 201 9: $1 ,45 6m) and tot al com preh ensi ve loss es of $n il (2020: $5 5m; 20 1 9: $1 1 1 m) at tribu tabl e to the non -co ntroll ing inte rest i n Acer ta Ph arma , resu lting i n repor te d total com preh ensi ve incom e of $3m (20 20: los ses of $ 52 m; 201 9: lo sse s of $ 107 m). In Feb rua ry 201 6, As tra Zene ca acq uired a 5 5 % co ntrol ling st ake in Ace rt a Pharm a wher e the non -co ntroll ing inte rest wa s subje ct to pu t and ca ll optio ns. Th e put opti on gave ri se to a liab ilit y ( se e Note 20). The a bilit y of the p ar ties to exer cise th eir res pec tive put a nd cal l option s, as wel l as th e timing a nd amo unt of exerc ise, wa s depe ndent o n cer ta in con dition s, the la st of whi ch was ba sed o n regul ator y outc omes of Calquence (aca labr utini b ) i n the EU. In Novem ber 2020, Calquence rec eived m arketi ng app roval in the EU, wh ich rem oved all r emai ning co nditio nalit y in res pec t of the opt ions. Fro m Novemb er 2020, the m inor ity s hare holde rs wer e cons ider ed to have no fu rth er sub stan tive vari abili ty in r isk and rewar d rela ted to thei r share s as it wa s cons ider ed hig hly likely t hat one o f the opti ons woul d be exerci sed, a nd the pr ice of th e option s was ﬁxed. T here fore, fr om Novem ber 2020, n o fur ther a moun ts of the c onsol idate d Astr aZen eca re sult we re at tribu ted to the mi nori ty sh areh olde rs of Ace rt a Phar ma. T he Non -co ntrolli ng inter ests r ese rve re lating to t he mino rit y share hold ers o f Acer ta Ph arma , totall ing $1 ,401 m , was rec lass iﬁed into Re tain ed ea rning s (see Co nsol idated S tatem ent of Ch ange s in Equit y) in 20 20. Astr aZe neca exer cise d its op tion to acq uire th e remai ning 45% of shar es in Ac er ta Phar ma in A pril 20 2 1. Th e followin g summ aris ed ﬁna ncia l infor matio n, for Ace rt a Phar ma and i ts subs idia ries , prio r to full co nsoli datio n in 2020, is p rese nted on a st andal one ba sis sin ce the a cquis ition d ate, and b efore th e impac t of Grou p-r elate d adjus tment s, som e of whic h are inc orpo rate d into the calculation of the loss at t ributable to the non-controlling interests: 20 19 $m To t a l R e v e n u e – Lo ss af ter ta x (42 2) Other comprehensive i ncome – T otal comprehensiv e lo ss (42 2) 20 19 $m Non-current assets 157 Current assets 475 T otal assets 632 Curre nt liabilities ( 310) Non-current liabilities (267 ) T otal liabili ties (577) Net assets 55 20 19 $m Net cash outflow from operating activities (13 ) Ne t cash i nflow f rom inve stin g acti viti es 7 Ne t cash i nflow f rom f inan cing a ctivi ties 7 Increase in cash and cash equiv alents in the year 1 As p ar t of the acq uisit ion of A lexion i n July 2021 , a p re- exist ing non -co ntroll ing inte rest in C aelum B iosc ienc es was re cog nised ( Note 27). Thi s was valu ed at $1 5 0m, the a gree d upon exer cise p rice f or the exclu sive opti on to acqu ire the re main ing equ ity. The op tion was exe rcise d on 28 Se ptemb er 2021 and th e acqui sitio n of Caelu m Bios cien ces cl ose d shor tly th erea fte r on 5 Octo ber 2021 . 17 7 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 27 A cqu isit ion of busi nes s operat ions On 21 Jul y 2021 , Ast raZ enec a comp leted th e acqu isitio n of 1 0 0% of the is sued s hare s of Alex ion Pha rmac eutic als, I nc. (A lexion), bas ed in Bos ton, Ma ssac huse tts, U S. Alex ion is a gl obal b iopha rmac euti cal co mpany fo cuse d on se rvi ng pati ents a nd fami lies af fec ted by ra re dise ase s and devastating conditions through the discovery , development and commercialisation of l ife-changing medicine s. At clo sing, A lexio n share hold ers r ecei ved 2. 12 4 3 Astr aZe neca A mer ican D epo sitor y Sha res ( ADSs) a nd $60 i n cash f or eac h of their A lexio n sha res. U nvested A lexio n empl oy ee s hare awa rds were c onver ted to e quival ent As tra Zene ca sha re awards . The fa ir value o f the pur chas e con side rati on was $41 ,058 m, comp risi ng Ast raZ enec a ADS s of $27 , 1 9 6m, ca sh of $1 3, 349m a nd repl acem ent em ployee s hare awa rds of $51 3m . Th e Group h as fun ded th e cash e leme nt of the ac quis ition wi th $8b n of new lon g-ter m debt, i ssue d in May an d June 20 2 1, $4bn of te rm loa ns draw n in July 20 2 1 u nder t he $1 7 .5b n commi tte d bank fa ciliti es ente red in t o in De cem ber 2020 to s ecur e the acq uisit ion ﬁna ncing , and exis ting ca sh bala nce s. The G roup c ance lled th e rema ining $1 3 .5bn of th e facil ities i n June, Ju ly and O ctobe r 2021 . Loa ns and b orrow ings of $ 2 . 3bn acquired with Alexion w e re repa id in full shor tly followi ng completion of the acquisition. Th e acqui sitio n has be en ac counte d for as a b usine ss co mbina tion us ing the a cquis ition m ethod o f acco unting i n acco rdan ce with IF RS 3 ‘Bu sine ss Com binati ons’ and c ons eque ntly the A lexio n ass ets acq uire d, and lia biliti es as sume d, have bee n rec orde d by Astr aZe neca a t fair valu e, with any exc ess of th e purc hase p rice ove r the fai r value of th e ident iﬁab le ass ets an d liabil ities b eing r ecog nise d as goo dwill. KJ As p ar t of the Al exion ac quisi tion in 20 2 1, we iden tiﬁed t he ass ets (com pris ing pr incip ally la unche d pro duct s and po st pre -cl inica l stag e) and lia biliti es acq uired. At tri butin g fair val ues to as sets a cquir ed an d liabil ities a ssu med as p ar t of bus ines s comb inatio ns is co nside red to b e a k ey jud geme nt. Th e purch ase p rice a lloca tion was p er form ed wit h assi stan ce fro m an ind epen dent va luer to ad vise o n the valua tion te chniq ues an d key as sumpti ons in th e valuat ion, in pa rt icula r in res pec t of the valu ation of t he inta ngibl e asse ts and i nv ento ry. Th e fair val ues as sign ed to the A lexion b usin ess c ombin ation in 20 2 1 were: Fai r value $m Non-current assets Proper ty , plant and equipment 1 ,13 5 Right - o f-use assets 263 Intangible assets 26,855 Other non-current assets 301 28,554 Current assets Inven torie s 6,7 69 T rade and other r eceivables 2,096 Intangible assets 10 0 Cash and cash equivalents 4,08 6 13 ,0 51 Current liabilities Interest -bearing loans and borrowings (2, 336) T rade and other pa yables ( 1,1 9 2 ) Othe r c urrent liabilities (4 0) (3,56 8) Non-current liabilities Lease liab ilities (22 8) Defer red tax liabilitie s ( 4 ,1 9 1) Othe r n on-curre nt liabilities ( 697) ( 5 ,11 6 ) T otal ne t asse ts acquired 32,921 Less: non-controlling interests (15 0 ) Goodw ill 8, 287 T otal f air v alue of consideration 41, 0 5 8 Less: fair value of equity consideration ( 2 7,1 9 6 ) Le ss: fa ir valu e of repl ace ment e mplo yee sha re awar ds ( 513) Less: cash and cash equivalents acquired (4, 08 6) Net cash outflow 9, 263 17 8 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Statem en ts No tes to t h e Grou p F ina n cia l Statem ents c ont inue d Th e estim ated fa ir value a nd use ful live s of inta ngibl e asse ts were a s follows: Fai r value Useful lives $m Y ears La unch ed pr oduc ts – C5 f ranc hise ( Soliris / Ult om iris ) 1 8,480 6 to 15 La unch ed pr oduc ts – Strensiq , Kan uma , Andex xa 5 , 215 1 1 to 1 7 Products in development 2 ,76 0 Not amortised Other intangibles 500 5 to 10 26,955 Th e fair val ue att ribu ted to inta ngibl e ass ets was $26 ,955m a nd pri mari ly rep rese nts inte llec tual pr oper t y righ ts over lau nche d prod ucts $23,6 95m an d prod ucts u nder de v elo pmen t $2, 760 m. The se were f air valu ed us ing the mu lti-p eri od exces s ear nings m ethod, w hich u ses a num ber of e stima tes reg ardin g the am ount an d timing o f futur e cash ﬂ ows. The key a ssum ption s in the ca sh ﬂows ar e PTRS , peak ye ar sa les an d reven ue ero sion cu rve s. In acc orda nce wi th the Gr oup’ s p olicy on i mpai rmen t asse ssm ents a s set ou t on page 144, the as sets we re as ses sed for im pair ment i n Q4 2021 . Futur e miles tones h ave been i nclu ded in th e valuat ion of the i ntang ible a sset s ( as a de duc tion of c ash ﬂows). Th e fair val ue of invento ry, which i nclud es raw ma teria ls, wor k in prog res s and ﬁni shed g oods r elate d to the laun ched p rodu cts wa s estim ated at $6,769m , an upli ft of $ 5,635m o n the ca rr ying val ue pri or to the ac quisi tion. T he fair va lue adj ustme nt rel ates onl y to work in p rogre ss an d ﬁnish ed goo ds an d was cal culate d as the e stima ted sel ling pr ice le ss co sts to co mplete a nd sell t he inventor y , as soci ated ma rgins o n thes e activ ities a nd hol ding co sts. T he fair va lue ad justm ent is exp ecte d to amor ti se over app roxima tely the ﬁ rst 18 month s post-ac quis ition, i n line wit h revenue s. Prop er ty, plant a nd equ ipmen t prin cipal ly com pris es the ma nufa cturi ng faci litie s in Dubl in and Ath lone, Ir elan d and was f air valu ed usi ng a cos t app roac h. The e stimate d fair va lue of $1 , 1 3 5m rep rese nts an u plif t of $1 1 1 m ove r carr yi ng value. Th e estim ated fa ir value o f contin gent l iabili ties wa s $ 76m, re lating to va riou s claim s and di spute s in each c ase w here th ere is a p ossi ble, but n ot pro babl e, futur e ﬁnanc ial exp osur e, and invol v e an a sses sme nt of the like lihoo d of a numb er of sc enar ios in re latio n to those m atte rs. T his am ount has b een i nclud ed wit hin othe r non- cur rent li abili ties of $ 697 m. Th e estim ated fa ir value o f trade a nd othe r rece ivabl es was $2,0 96m, w hich a pproxim ated th e contr actua l cas h ﬂows. Th e net defe rre d ta x posit ion reﬂ ecte d an adju stme nt of $5, 2 1 5 m relate d to the defe rre d ta x impac t of the fa ir value u plif ts on in tangi ble as sets , invento rie s, prop er ty , pla nt and e quipm ent an d conti ngen t liabil ities a s des crib ed above. Go odwill a moun ting to $8, 287 m was r eco gnise d on acq uisit ion an d is unde rpin ned by a nu mber of e leme nts, w hich in dividu ally c ould no t be qua ntiﬁe d. Most s igniﬁ cant a mong st the se is the p remiu m att ribut able to a p re- exist ing, well p ositi oned b usin ess in th e innovati on inte nsive, hig h grow th rare d isea ses ma rket wi th a highl y skill ed work for ce and e sta blish ed rep utati on. Ot her imp or tant e leme nts inc lude th e potent ial uni denti ﬁed pr oduc ts that f uture r esea rch an d develop ment m ay yiel d and the c ore tec hnol ogica l capa bilit ies an d knowle dge ba se of the com pany . Go odwill i s not expe cted to b e dedu ctibl e for ta x pur pose s. Non -co ntrol ling inte rest s reﬂe ct Alex ion’ s p re- exist ing mino rit y equi ty in teres t in Caelu m Bios cien ces a nd have bee n value d at $1 50 m, the ag reed upo n ex er cise pr ice fo r the exclus ive optio n to acqui re the re maini ng equi ty. The opti on was exer cise d on 28 Septe mber 20 2 1 and t he acqu isiti on of Cae lum Bio scie nce s close d sho rtl y there af ter on 5 Oc tober 20 2 1 (No te 26) . Al exion’ s res ults have b een c onso lidate d into the G roup’ s r esul ts from 21 Jul y 2021 . For th e peri od fro m acqui sitio n to 3 1 D ece mber 20 2 1, bef ore reﬂ ectin g the fai r value ad justm ents a risi ng on the a cquis ition, A lexio n ’ s T ota l Revenue s were $ 3,07 1m and Proﬁ t afte r ta x was $8 89m. If the a cquis ition h ad take n effe ct at th e begi nning of t he rep or ting pe riod i n which th e acqu isitio n occ urre d ( 1 J anua ry 20 2 1) , on a pr o form a bas is, af ter re ﬂect ing the fa ir valu e adjus tment s aris ing on th e acqui sitio n, the T ot al Revenu e of the co mbine d Grou p for the ye ar end ed 31 Dec embe r 2021 would have b een $ 4 1 , 1 32m a nd the Lo ss af ter ta x woul d have bee n $ 1 , 1 52m. Thi s pro for ma info rmati on doe s not pu rpor t to rep rese nt the re sult s of the co mbine d Grou p that ac tuall y would have o ccur red ha d the acq uisiti on take n plac e on 1 Janu ar y 2021 and sho uld not b e taken to b e repre sent ative of f uture re sult s. T ota l acqu isiti on-re lated c osts o f $ 1 71 m have be en inc urre d by the Gro up, whic h inclu de advi sor y , le gal an d other p rofes sion al fee s. The se co sts are p rese nted in t he State ment o f Comp rehen sive Inc ome wi thin Se lling, ge ner al and a dminis trati ve expen se. Th e terms of t he acqu isiti on incl ude a rete ntion b onus p lan for l egac y Alexi on empl oyees w here by up to $50 m may be us ed for re tentio n bonu s award s to empl oyees at t he level of V ice Pre side nt or be low . T hese b onus es will ve st and b e payabl e six mon ths af ter the a cquis ition , or ear lier . In the p eri od sinc e acqu isiti on, a cos t of $2 4m ha s bee n reco rded i n the Sta temen t of Comp rehe nsive In come ($ 2m in Cost o f sale s, $9 m in Re sear ch and d evelopm ent exp ense a nd $1 3m i n Sellin g, gene ral a nd admi nistr ative exp ense). Upo n comp letio n of the acq uisit ion, all u nvested A lexio n empl oyee sha re award s were co n ver ted in to Astr aZe neca r estr icted s tock awar ds that con tinue to have, a nd sha ll be sub ject to, th e same te rms a nd con ditio ns as ap plied i n the cor res pondi ng Alex ion awar ds imme diatel y prio r to com pleti on. Al exion Per fo rman ce Stoc k Plan (PS U) award s that inc lude d per for manc e-b ase d vestin g condi tions we re conve rte d usin g the gre ater of the o rigin al ta rget leve l and Al exion’s asse ssm ent of the l evel of ach ieveme nt imme diatel y prio r to comp letio n (subje ct to a limi t of 1 7 5 pe r cent. for th e awards g rante d in 201 9 an d a limit of 150 per c ent. fo r the awar ds gra nted in 2020 ). In the pe riod s ince ac quis ition, a c ost of $257m has be en rec orde d in the S tateme nt of Co mpreh ensi ve Incom e ($9m i n Cost o f sale s, $73m in Re sear ch and d evelopm ent exp ense a nd $1 7 5m in Se lling, ge ner al and a dminis trati ve expen se). Paymen ts made to th e Employe e Bene ﬁt T ru st upo n vestin g of shar e awards r ecog nise d as par t of the c onsi dera tion fo r the acq uisiti on of Al exion ar e reco gnis ed with in invest ing act ivitie s in the G roup’ s C onso lidate d State ment o f Cash Flow s. 17 9 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 28 F in anc ial r isk m an agement objec tiv es and p olicie s The Group’ s principal ﬁnancial instruments, other than derivatives, comprise bank o verdraf ts, loans and other borrowings, lease liabilit ies, current and n on- curr ent inves tmen ts, ca sh and s hor t -ter m depo sits. T he mai n purp ose of th ese ﬁn anci al inst rume nts is to ma nage t he Grou p ’ s f undin g and l iquid ity re quir emen ts. The G roup h as othe r ﬁnan cial a sset s and lia bilit ies su ch as tr ade rec eivab les an d trade p ayable s, whi ch ari se dire ctly from its o perations. Th e princ ipal ﬁ nanci al ris ks to whic h the Gro up is exp osed a re thos e of liqui dit y , inter est ra te, forei gn cur rency a nd cre dit. E ach of the se is ma nage d in ac cord ance w ith Boa rd-a pprove d polic ies. T hese p olici es, tog ethe r with the G roup’ s app roac h to capi tal ma nage ment, a re set o ut bel ow . Hedge accounting Th e Group u ses fo reign c urre ncy bo rrowin gs, for eign c urre ncy for ward s and swa ps, cur renc y option s, inter est r ate swaps an d cros s-c urre ncy inte rest r ate swaps fo r the pur pos e of hedg ing its fo reig n curr ency an d intere st ra te risks . The Gr oup may de sign ate cer ta in ﬁnan cial i nstr ument s as fa ir valu e hedg es, ca sh ﬂow he dges o r net inve stmen t hedg es in ac cord ance w ith IFRS 9. He dge ef fe ctiven ess i s deter mined a t the inc eptio n of the h edge r elati onshi p , and t hroug h per iodic p rosp ecti ve effe ctive nes s asse ssm ents to e nsure t hat an e cono mic rel ation ship exi sts bet wee n the h edge d item an d hedg ing ins trum ent. S ource s of hed ge ef fect ivene ss will d epen d on the he dge re latio nship d esig nation b ut may in clude: > a sig niﬁc ant cha nge in th e cred it ris k of eithe r par t y to the hed ging re latio nship > a tim ing mis match be twee n the he dging i nstr ument a nd the h edge d item > movem ents i n forei gn cur rency b asis s pread f or der ivative s in a fair va lue he dge > a sig niﬁc ant cha nge in th e value of t he fore ign cur renc y denom inate d net as sets of t he Grou p in a net inve stme nt hed ge. Th e hedg e ratio fo r each d esig natio n will be e stab lishe d by comp arin g the qua ntit y of the he dging i nstr ument a nd the qu antit y of the h edge d item to determine their relativ e weighting; for all of the Group ’s existing hedge relationships the hedge ratio has been determined as 1 : 1 . De signat e d hedges are ex pec ted to be ef fec tive and t heref ore the i mpact o f inef fect ivene ss on pr oﬁt is not ex pec ted to be ma teria l. The ac coun ting tre atme nt for fa ir valu e hedg es and d ebt de sign ated as f air valu e throu gh proﬁ t or los s is disc lose d in the G roup Ac coun ting Polic ies se ctio n from p age 1 3 8. The following ta ble re presents the Group’ s continuing designated hedge relationships under IFRS 9: 2 019 Other comprehensive income Fai r value loss Opening Fa ir val ue recy cled Clos ing Nominal balance (gain)/loss to th e balance Aver age amounts Carr ying 1Janu ar y deferred income 31De cem ber Ave rag e Av era ge pay in local value 2 019 to O CI stat ement 2 019 matur ity USD F X interest currency $m $m $m $m $m year ra te ra te Fai r val ue h edg e – for ei gn cu rr enc y an d int ere st r ate r is k 1 USD LIBOR + 1. 27 % Cro ss cu rre ncy inte res t rate swa p – Euro bo nd EUR 3 00 m 10 – – – – 20 21 1. 0 9 Ca sh f low he dg es – fo rei gn c urr en cy an d int er est r at e ris k 2, 4 Cro ss cu rre ncy inte res t rate swa ps – Euro b ond s EU R 2,20 0 m (13 ) (9 2) 11 4 (52) (30) 20 25 1 .14 U SD 2. 69% Net in vestment hedge – foreign exchange risk 3, 4 T ransactions matured pre 2 01 9 – (356) – – (356) – – – Cro ss cu rre ncy inte res t rate swa p – JPY inve stme nt 5 JPY 58.5bn – ( 213 ) 4 – (20 9) 20 19 78.01 JPY 0.35 % Cro ss cu rre ncy inte res t rate swa p – JPY inve stme nt JPY 58.3bn 4 – (4) – (4) 20 29 108 .03 J PY 1. 5 3% Cro ss cu rre ncy inte res t rate swa p – CNY inve stme nt CNY 4 58m (1) 4 (3) – 1 2026 6.68 CNY 4 .80% For eign c urre ncy bo rrow ing – GB P invest ment GB P 350 m (4 57 ) (26 5) 14 – ( 251) 2 031 n /a G B P 5 .75% For eign c urre ncy bo rrow ing – EUR i nvestm ent EUR 45 0m (4 98 ) 44 (10 ) – 34 20 21 n /a EU R 0 .8 8% Contingent consideration liabilities and Acerta Pharma pu toptio n liab ilit y – AZ UK and A Z AB US D invest ment s USD 5,583m (5,58 3) 1 ,805 24 8 – 2,0 53 – – – No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 18 0 A st ra Zene ca A nn ual R epo rt & For m 20 - F In for mat ion 2 021 Financial State men ts 2020 Other comprehensive income Fai r value loss Opening Fa ir val ue recy cled Clos ing Nominal balance (gain)/loss to th e balance Aver age amounts Carr ying 1Janu ar y deferred income 31De cem ber Ave rag e Av era ge pay in local value 2020 to O CI sta tement 2020 ma turity US D FX interest currency $m $m $m $m $m year ra te ra te Fai r val ue h edg e – for ei gn cu rr enc y an d int ere st r ate r is k 1 Cro ss cu rre ncy inte res t rate swa p – Euro bo nd EUR 3 00 m 43 – – – – 20 21 1. 0 9 USD LIBOR + 1. 27 % Ca sh f low he dg es – fo rei gn c urr en cy an d int er est r at e ris k 2, 4 , 6 Cro ss cu rre ncy inte res t rate swa ps – Euro b ond s EU R 2,20 0 m 15 0 (30 ) (16 3 ) 239 46 20 25 1 .14 U SD 2.6 9% F X Forw ards − s hor t ter m FX ri sk U S D 6 18 m 5 – (20) 15 (5) 2 021 – – Net in vestment hedge – foreign exchange risk 3, 4 T ransactions matured pre 2 020 – (565) – – (565) – – – Cro ss cu rre ncy inte res t rate swa p – JPY inve stme nt JPY 58.5bn 19 (4) ( 15) – ( 19) 2029 1 08.03 J P Y 1. 5 3% Cro ss cu rre ncy inte res t rate swa p – CNY inve stme nt CNY 4 58m (2) 1 1 – 2 2026 6.68 C NY 4 .80% For eign c urre ncy bo rrow ing – GB P invest ment GB P 350 m ( 475) ( 251) 18 – (233) 20 31 n /a G B P 5 .75% For eign c urre ncy bo rrow ing – EUR i nvestm ent EUR 45 0m (548) 34 51 – 85 2 021 n/a EU R 0. 8 8% Contingent consideration liabilities and Acerta Pharma pu toptio n liab ilit y – AZ UK and A Z AB US D invest ment s US D 5,25 2m ( 5,252) 2, 053 ( 642) – 1, 4 11 – – – 2 021 Other comprehensive income Fair value gain Opening Fair value recycled Closing Nominal balance (gain)/loss t o th e balance Av erage amounts Carrying 1 January deferred income 31 December Average Averag e pay in lo cal va lue 2 021 to OCI statement 2021 maturity U SD F X interest currency $m $m $m $m $m yea r rate rate Fai r val ue h edg e – for ei gn cu rr enc y an d int ere st r ate r is k 1 Cro ss cu rre ncy inte res t rate swa p – Euro bo nd – – – – – – – – – Ca sh f low he dg es – fo rei gn c urr en cy an d int er est r at e ris k 2, 4 , 6 Cro ss cu rre ncy inte res t rate swa ps – Euro b ond s E UR 1,70 0 m (43 ) 46 18 2 ( 2 01) 27 2026 1 .14 US D 2 . 85% F X Forw ards − s hor t ter m FX ri sk USD 1 ,220m 12 (5) – (7) ( 12) 2022 – – Net in vestment hedge – foreign exchange risk 3, 4 T ransactions matured pre 2 021 – (565) – – (565) – – – Cro ss cu rre ncy inte res t rate swa p – JPY inve stme nt J PY 58 .3 bn 62 (19 ) (4 3) – (62) 2029 1 08.03 J PY 1.5 3% Cro ss cu rre ncy inte res t rate swa p – CNY inve stme nt CNY 458m (2) 2 – – 2 2026 6.68 C NY 4 .8 0% For eign c urre ncy bo rrow ing – GB P invest ment G BP 35 0 m 470 (2 33) (5) – (23 8) 2 031 n /a G BP 5 .75% For eign c urre ncy bo rrow ing – EUR i nvestm ent 7 EU R 45 0m – 85 (47 ) – 38 20 21 n /a EU R 0.8 8% For eign c urre ncy bo rrow ing – EUR i nvestm ent 8 EUR 800m 898 – (50) – (50) 2029 n /a EU R 0. 38% Contingent consideration liabilities and Acerta Pharma sh arepu rcha se lia bili ty – A ZUK an d AZ AB U SD inves tme nts U SD 2 ,6 58 m (2 ,658) 1 , 411 421 – 1, 83 2 – – –                                                                                                                                                                                                                                                                                                                                                                                                            Key con trols a pplie d to tran sact ions in d eriva tive ﬁnan cial i nstr ument s are to us e only in stru ments w here g ood ma rket liq uidit y exis ts, to revalu e all ﬁ nanci al ins trum ents re gula rly us ing cur rent m arket r ates an d to sell op tions o nly to of fset p revio usly pu rcha sed op tions o r as par t of a r isk ma nagem ent st rateg y . Th e Group i s not a net s elle r of optio ns, an d does n ot use de rivati ve ﬁnanc ial in strum ents f or spe culat ive purp oses . The Group held no opt ions during the repor ting p eriod. Capital management Th e capi tal str uctu re of the G roup co nsis ts of Sha reho lder s’ equi ty (N ote 2 4), De bt (Note 19) , Ot her cu rrent i nvestme nts (N ote 1 2) and C ash (No te 1 7 ). For the fo rese eabl e futu re, the Boa rd will m aint ain a ca pital s truc ture th at supp or ts the G roup’ s str ategic o bjec tives th rough: > managing funding and liquidit y r isk > optimising shareholder ret urn > maintaining a strong, investment-grade credit rating. 181 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Th e Group u tilis es fac toring a rra ngem ents fo r sele cted t rade re ceiva bles . Thes e facto ring a rran geme nts qu alif y for fu ll dere cog nition o f the as soci ated tr ade rec eivab les un der IFR S 9. Amou nts due o n invoice s that have n ot bee n facto red at yea r end, f rom cu stome rs that a re sub ject to fac torin g arra ngem ents , are dis clos ed in Note 16. Fundi ng and li quidi ty ri sk are rev iewed re gula rly by the B oard a nd man aged i n acco rdanc e with p olici es des crib ed be low . Th e Board ’ s dis tribu tion p olicy c ompr ises a re gula r cas h divide nd an d, subje ct to bus ines s nee ds, a sh are rep urch ase co mpon ent. T he Boa rd re gular ly revie ws its sh areh olde rs’ retu rn str ategy , and , in 20 1 2, de cide d to susp end s hare re purc hase s in orde r to reta in str ategic ﬂ exibili ty . Th e Group’s net de bt posi tion (l oans a nd bor rowing s net of Ca sh and c ash e quival ents , Othe r investm ents a nd Der ivative ﬁn anci al ins trume nts) has i ncre ase d from a ne t debt p ositi on of $1 2, 1 10m at th e begi nning of th e year to a ne t debt p ositi on of $24,322m at 31 Dec embe r 2021 . Th e incre ase in n et debt wa s prin cipa lly due to th e acqui sitio n of Alexi on. Liquidity risk Th e Board r eviews th e Grou p ’s ongo ing liq uidit y ris ks annu ally a s par t of the pl annin g proc ess a nd on an a d hoc ba sis. T he Boar d cons ider s sho rt-ter m requ ireme nts ag ains t availab le sour ces of f undin g, taki ng into ac count f orec ast ca sh ﬂows . The Gr oup ma nages l iquid ity r isk by mai ntai ning ac ces s to a numbe r of sour ces of f undin g which a re suf ﬁci ent to me et anti cipate d fund ing req uirem ents . Spec iﬁca lly , th e Grou p use s US an d Europe an co mmerc ial pa per , ban k loans , comm itte d bank fa ciliti es and c ash r esou rces to m anage s hor t-term li quidit y an d manag es lon g-ter m liquid ity by r aisin g fund s throu gh the ca pita l marke ts. At 31 Dece mbe r 2021 , the G roup was a ssig ned s hor t -ter m credi t ratin gs of P-2 by Moo dy’s and A-2 by St anda rd and Po or’ s. Th e Grou p ’ s l ong-te rm cre dit ra ting was A 3 Nega tive outl ook by Mo ody’s and A- S tabl e outlo ok by Standard and Poor’ s. In ad dition to C ash an d cash e quiva lents o f $6,32 9m, sho rt-ter m ﬁxed inc ome inve stme nts of $1 6 m, ﬁxed de posi ts of $53 m, les s overdr aft s of $291 m a t 3 1 D ece mber 20 2 1, the Gr oup has c ommi tted b ank fac ilitie s of $4,875m avail able to ma nage l iquidi ty . Th e commi tment s matur e in Ap ril 2025. No ne of the a bove facil ities c onta in any ﬁna ncia l covena nts. T he Grou p regu larl y monito rs the c redi t stan ding of th e banki ng grou p and c urre ntly do es not a ntici pate any is sue wi th drawin g on the c ommit ted fa ciliti es sho uld this b e nec ess ar y . Adva nce s unde r these f acilit ies cur rent ly bea r an inte rest r ate per a nnum ba sed o n US dolla r LIBOR (o r other re levant b ench mark r ate) plus a m argi n. The fa ciliti es con tain ar rang emen ts to switch to a ltern ative ri sk fre e rate be nchm arks be fore Ju ne 2023. At 31 Dec embe r 2021 , the G roup ha s $3, 2 78m ou tsta nding f rom deb t issu ed und er a Euro M ediu m T e rm Note p rogr amme a nd $21 ,9 08m u nder a SEC -reg ister ed pro gram me. Th e funds m ade avail able u nder th ese fa cilit y agre eme nts may be u sed fo r the ge nera l corp orate p urpo ses of t he Grou p. Th e matur ity p roﬁle of th e antic ipate d futur e contr actua l cas h ﬂows inc luding i ntere st in rel ation to th e Grou p ’s ﬁna ncial l iabil ities , on an un disco unted bas is and w hich, th erefo re, dif fer s from b oth the c arr yin g value an d fair va lue, is a s follows: Bank T otal Derivative Derivativ e T otal overdrafts T r ade non- derivat ive ﬁnancial ﬁnancial der iv ative and other Lease and other ﬁna ncial instruments instruments ﬁnancial loans Bonds liabilit y payables instruments re ceiva ble 1 payable instruments T otal $m $m $m $m $m $m $m $m $m Wi thin on e year 234 2, 207 205 1 4,0 54 16, 70 0 ( 11, 9 5 6 ) 11 , 9 8 5 29 16 ,7 29 In on e to two ye ars 14 1,9 70 15 8 1,7 6 9 3,91 1 (955) 976 21 3,932 In t wo to thre e year s – 1,8 10 11 7 1 , 8 11 3 ,73 8 ( 54) 67 13 3 ,751 In th ree to fo ur yea rs – 2,0 68 79 1, 5 9 2 3,7 39 (54) 67 13 3 ,752 In fo ur to five ye ar s – 1,4 79 50 1, 65 2 3 ,1 8 1 (1, 0 51) 1, 0 79 28 3, 209 In mo re tha n five ye ars – 15 ,9 0 6 128 1, 0 52 1 7, 0 8 6 ( 1,6 4 8 ) 1, 6 5 4 6 17, 0 9 2 24 8 25,44 0 7 37 21 ,930 48,355 ( 15,7 18) 15, 8 28 11 0 48,465 Ef fec t of inter est (1) (8,0 38) – – (8,0 39) 409 (4 88 ) ( 79) ( 8 ,11 8 ) Ef fec t of disc ount ing, fa ir valu es an d iss ue cos ts (3) ( 94) (6 2) ( 1,6 19 ) ( 1,7 78 ) (20) (54) ( 74 ) ( 1, 85 2 ) 31De ce mbe r2019 24 4 1 7, 3 0 8 675 2 0 , 3 11 38,538 ( 15, 3 29 ) 15 , 28 6 (4 3) 38,495 Bank T otal Derivative Derivativ e T otal overdrafts T r ade non- derivat ive ﬁnancial ﬁnancial der iv ative and other Lease and other ﬁna ncial instruments instruments ﬁnancial loans Bonds liabilit y payables instruments re ceivab le payable instrume nts T otal $m $m $m $m $m $m $m $m $m Wi thin on e year 6 67 2 ,1 3 6 2 07 15 ,8 12 1 8,822 ( 9, 719) 9,620 (99) 18, 72 3 In on e to two ye ars – 1, 8 3 9 16 8 2, 584 4, 591 (60) 67 7 4,5 98 In t wo to thre e year s – 2 ,1 0 1 12 0 1, 65 8 3 ,879 (59) 67 8 3, 887 In th ree to fo ur yea rs – 1 , 617 82 1,7 2 8 3 ,42 7 ( 1, 151) 1, 0 8 0 ( 7 1) 3,356 In fo ur to five ye ar s – 2, 502 53 72 2 3, 277 (3 6) 40 4 3 , 281 In mo re tha n five ye ars – 16 ,9 21 10 8 1, 4 3 5 18, 4 6 4 ( 1,7 07 ) 1, 6 5 2 (5 5) 18 , 40 9 667 2 7,1 16 738 23,939 52,4 60 (12 ,7 32 ) 12 , 52 6 (206) 52, 254 Ef fec t of inter est – ( 7, 9 74 ) – – ( 7, 9 7 4 ) 379 (4 05 ) (26) (8, 000) Ef fec t of disc ount ing, fa ir valu es an d iss ue cos ts (1) (10 9 ) ( 57) (2, 070) (2, 237 ) ( 70) 24 (46) ( 2,28 3) 31De ce mbe r20 20 666 19 ,0 3 3 681 2 1, 8 6 9 42, 24 9 (1 2,423) 1 2 ,14 5 (278) 41, 9 71 No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 28 F in anc ial r isk m an agement objec tiv es and p olicie s cont inued 182 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat emen ts Bank To t a l Derivative Derivative To t a l ov erdrafts T rade non-derivative ﬁnancial ﬁnancial derivative and o ther Lease and other ﬁnancial instruments instruments ﬁ nancial loans Bond s liabilit y payables instruments receivable paya ble instruments To t a l $m $m $m $m $m $m $m $m $m Wi thin on e year 3 87 1, 9 81 256 19, 0 07 2 1,6 31 ( 11, 7 6 6 ) 11, 7 74 8 21 ,639 In on e to two ye ars – 5, 647 210 2, 521 8 ,378 (55) 66 11 8,38 9 In t wo to thre e year s – 5, 242 16 3 1,6 6 9 7, 0 7 4 (1, 0 60 ) 1 ,079 19 7, 0 9 3 In th ree to fo ur yea rs – 2 ,5 91 13 0 862 3,583 (35) 39 4 3 ,587 In fo ur to five ye ar s – 2 ,970 96 23 3 3,299 ( 118 ) 111 (7) 3, 292 In mo re tha n five ye ars – 19 ,727 2 21 2 , 212 2 2 ,1 6 0 ( 1,5 2 1) 1 ,480 ( 41) 2 2 ,11 9 387 3 8 ,1 5 8 1,0 76 26,504 6 6 ,1 2 5 (1 4,555) 1 4,549 (6) 6 6 ,11 9 Ef fec t of inter est – (8,609 ) – – (8, 609) 299 (3 25) (26) (8,63 5) Ef fec t of disc ount ing, fa ir valu es an d iss ue cos ts – ( 142 ) (89) (2,63 3) (2, 864) (3 6) 7 (29 ) (2 ,89 3) 31De ce mbe r20 21 387 29,4 07 9 87 2 3, 871 54,65 2 (1 4,2 92) 14 , 2 31 (6 1) 54, 591                                                        Whe re inte rest p ayment s are on a ﬂ oating r ate bas is, it is a ssu med tha t rates w ill rem ain unc hang ed fro m the las t busi nes s day of eac h year en ded 31 Dec embe r . Th e Group h as $2bn of b ank loa ns that m ature i n July 2023 a nd $2bn of b ank loa ns that m ature i n July 2024, whic h the Gr oup ca n repay bef ore matu rit y at fac e value. O ther t han tha t, it is not ex pec ted that t he cas h ﬂows in the m atur ity p roﬁle co uld oc cur sig niﬁc antly e arli er or at sig niﬁc antly di ffe rent a mount s, with th e excepti on of $2,86 5m of con tinge nt con side ratio n held wi thin T r ade and o ther paya bles (s ee Note 20). Market risk Interest rate risk Th e Group m aint ains a Bo ard ap proved m ix of ﬁxed a nd ﬂoati ng rate de bt and u ses un der lying d ebt, inte res t rate swaps a nd for war d rate agr eeme nts to ma nage th is mix. At 31 Dec embe r 2021 , inte rest r ate swaps wi th a notio nal valu e of $288m a re fai r value d throu gh proﬁ t or los s and thi s has ef fec tively c onver ted the 7% gua rante ed de bentu res paya ble in 2023 to ﬂ oatin g rates. N o new inte rest r ate swaps we re enter ed into du ring 20 2 1. Th e major ity o f surp lus ca sh is cur rent ly investe d in US dol lar liq uidit y fun ds and i n ves tment-g rade ﬁ x ed in come s ecur itie s. Th e intere st rate p roﬁle of th e Grou p ’s inte rest-be ari ng ﬁnan cial i nstru ment s are se t out be low . In th e cas e of curr ent an d non- cur rent ﬁn anci al lia biliti es, the c las siﬁca tion in clude s the imp act of in teres t rate swap s which c onver t the de bt to ﬂoat ing rate. 20 21 2020 20 19 Fixed rate Float ing r ate To t a l Fi xed ra te Floating rate T otal F ixed r ate Floating rate T otal $m $m $m $m $m $m $m $m $m Financial liabilities Interest -bearing loans and borrowings Current 1, 2 32 6 61 1, 8 93 1 ,357 1, 0 29 2,3 86 1, 78 5 225 2, 010 Non-current 23,985 4,903 28, 888 17, 0 0 5 989 17, 9 9 4 14 , 8 9 3 1, 3 24 16 , 2 17 To t a l 2 5 , 2 17 5,5 64 3 0,78 1 18, 3 6 2 2, 018 20,380 16 ,6 78 1, 5 4 9 18 , 22 7 Financial asse ts Fixed de posits 53 – 53 42 – 42 38 – 38 Cash and cash equivalents – 6,329 6, 329 – 7, 8 3 2 7, 8 3 2 – 5,3 69 5,369 To t a l 53 6,32 9 6,3 82 42 7, 8 3 2 7, 8 74 38 5,36 9 5 ,407 In ad dition to t he ﬁnan cial a sset s above, the re are $ 8,7 6 5m (2020: $ 6,328m; 201 9: $ 6, 765m) of oth er cur rent a nd non -cur rent a sse t investme nts and o ther ﬁn anci al as sets. O f thes e, $nil r ecei ve ﬂoatin g rate inte rest (20 20: $nil; 201 9: $1 1 1 m). Th e Group i s also ex pose d to mar k et ri sk on eq uit y secu ritie s, whi ch rep rese nt non- con trolli ng inter ests i n third- par ty b iotec h comp anies . 20 21 20 20 20 19 $m $m $m Equi ty s ecur itie s at fa ir valu e throu gh Ot her c ompr ehen sive in com e (Note12) 1 ,16 8 1 ,10 8 1, 3 3 9 To t a l 1,1 6 8 1 ,10 8 1, 3 3 9 18 3 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 F ina nci al S tat ement s / Not es to t he Gro up Fi na nci al St ate ment s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Foreign currency risk Th e US dolla r is the G roup’ s mos t signi ﬁcan t curr ency. As a con sequ ence, t he Gro up resu lts ar e pres ented i n US dolla rs an d expos ures a re managed against US dollars accordingly . T ranslational Ap proxim ately 6 8 % of G roup ex tern al sal es in 2021 wer e denom inate d in cur renci es othe r than t he US doll ar , wh ile a sig niﬁca nt pro por tion of ma nufac turin g, and re sea rch an d develop ment c osts we re den omina ted in pou nds ste rling a nd Swe dish kr ona. S urpl us cas h gene rate d by bus ines s unit s is subs tant ially c onver ted to, and h eld ce ntra lly in, US d ollar s. As a r esult , oper ating p roﬁt an d total c ash ﬂow i n US dolla rs wil l be af fec ted by move ments i n ex cha nge ra tes. Thi s cur rency ex posu re is man aged c entr ally , b ase d on fore cas t cash ﬂ ows. The i mpac t of moveme nts in excha nge ra tes is mi tigate d signi ﬁcan tly by the c orre latio ns whic h exist b etwe en the ma jor cu rren cies to w hich the G roup i s expos ed and t he US dol lar . M onitor ing of cu rren cy expos ures and c orr elati ons is un der take n on a reg ular ba sis an d hed ging is su bjec t to pre -execu tion ap proval. As a t 3 1 D ecem ber 20 2 1, befor e the impa ct of de rivati v es, 2% of in teres t - bea ring lo ans an d bor rowings we re den omina ted in po unds s terlin g and 9% we re deno minate d in eur os. Whe re the re is non -US d ollar d ebt and a n unde rlyi ng net inve stme nt of that a mount i n the sa me cur rency, the G roup ap plie s net inves tment h edgi ng. Exch ange d iffe renc es on th e retra nsla tion of de bt des ignate d as net i nvestme nt he dges a re re cogni sed in O the r comp rehe nsive inc ome to th e extent t hat the he dge i s effe ctive. A ny inef fec tivene ss is t aken to pro ﬁt. Th e Group h olds c ross -cu rren cy swaps to he dge ag ains t the impa ct of ﬂu ctuat ions in fo reig n ex c hang e rates . F air va lue movem ents o n the reval uatio n of the cro ss- cur rency swa ps are r ecog nise d in Oth er com preh ensi v e inc ome to the ex tent th at the he dge is e ffe ctive, wi th any ine ffe ctiven ess t aken to pro ﬁt. Fore ign cur ren cy risk a rise s when t he Gro up has in ter - com pany fun ding a nd investm ents i n cer tai n subs idiar ies op erat ing in co untri es wit h ex c hang e con trols o r wher e there i s risk of s igniﬁ cant f uture c urre ncy deval uatio n. One in dicato r of poten tial fo reign c urre ncy ris k is whe re a cou ntr y is of ﬁcial ly designated as hyperinﬂationary. A s at 3 1 Decemb er 2 021 , the Group operates in t wo c ount ries designated as hyperinﬂationary , being Argentina and V enezuela . Th e foreig n exchang e risk to th e Grou p from A rgen tina an d V e nezue la has b een a sses sed a nd de emed to b e immate rial . T ransactional Th e Group a ims to he dge al l its fore cas t majo r trans acti onal c urre ncy expo sure s on work ing ca pita l bala nces , which t ypi call y exten d for up to thre e mon ths. Wh ere pr actic able, t hese a re hed ged us ing for war d forei gn exchan ge. In add ition, t he Gro up’ s ex terna l divid end, whi ch is pa id pr incip ally in p ounds s terli ng and Swe dish k rona , is full y hedg ed fr om anno unce ment to p ayment d ate. Fore ign excha nge gai ns and l osse s on for war d contr acts t rans acted f or tra nsac tiona l hedg ing are t aken to pr oﬁt. Fore ign excha nge ga ins an d loss es on for war d cont ract s trans acte d for tr ans actio nal he dging a re take n to proﬁt o r to Othe r comp rehe nsive in come i f the con trac t is in a des ignate d cas h ﬂow hed ge. Sensitivit y a nalysis Th e sens itivit y ana lysi s set ou t below su mmar ises t he sen sitiv ity of t he mar k et val ue of our ﬁ nanci al ins trume nts to hyp otheti cal ch ange s in ma rket rate s and pr ice s. The r ange of va riab les ch osen fo r the se nsiti vit y anal ysis reﬂ ect s our view o f chan ges whi ch are r easo nabl y poss ible over a one -year p eri od. Mar ket value s are the p res ent valu e of futu re cas h ﬂows bas ed on ma rket ra tes and p rice s at the va luatio n date. For l ong-te rm deb t, an inc reas e in inte rest r ates re sults i n a decli ne in the fa ir valu e of debt. Th e sens itivit y ana lysi s assu mes a n insta ntan eous 100 b asis p oint ch ange in i ntere st rate s in all cu rren cies f rom the ir level s at 3 1 D ece mber 20 2 1 , wit h all othe r varia bles h eld co nsta nt. Ba sed on t he comp osit ion of our l ong-te rm de bt por tf olio as a t 3 1 D ece mber 20 2 1, a 1 % in crea se in inte rest rate s would re sult i n an addi tiona l $54m i n intere st expe nse be ing in curre d per ye ar due to n ew ﬂoati ng rate de bt iss ued du ring th e year . T he excha nge rate s ensi tivit y ana lysis a ssu mes an i nsta ntan eous 10% chang e in fore ign cur ren cy exchang e rates f rom the ir level s at 3 1 D ece mber 2021 , wi th all oth er var iable s held c onst ant. T he + 10% case a ssu mes a 10 % s treng then ing of the U S dolla r again st all ot her cu rren cies a nd the - 10 % c ase a ssum es a 1 0% wea kening o f the US dol lar . Eac h incr emen tal 1 0% moveme nt in for eign cu rren cy exchan ge rate s would have a pproxim ately th e same e ffe ct as t he initi al 1 0% de taile d in the ta ble bel ow and ea ch inc reme ntal 1 % ch ange in i ntere st rate s would have ap proxim ately th e same e ffe ct as th e 1 % d etail ed in the t able b elow. Interest rates Exchange rates 31De cemb er2019 +1% -1% +10 % -10 % Inc rea se/(de crea se) in fa ir valu e of fin anci al ins tru ment s ($m) 1, 417 (1,5 21 ) (4) (36) Imp act o n prof it: (lo ss)/gai n ($m) – – ( 174 ) 17 2 Imp act o n equi ty: g ain / ( los s) ($m) – – 17 0 (208) Interest rates Exchange rates 31De cemb er20 20 +1% -1% +1 0% -1 0% Inc rea se/(de crea se) in fa ir valu e of fin anci al ins tru ment s ($m) 1, 6 9 6 (1,758) 114 ( 132 ) Imp act o n prof it: (lo ss)/gai n ($m) – – (57 ) 74 Imp act o n equi ty: g ain / ( los s) ($m) – – 17 1 (206) No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 28 F in anc ial r isk m an agement objec tiv es and p olicie s cont inued 18 4 A st ra Zene ca A nn ual R epo rt & For m 20 - F In for mat ion 2 021 Financial State men ts Interest rates E x cha nge rates 31De ce mbe r20 21 +1% -1% +1 0% -10 % Inc rea se/(de crea se) in fa ir valu e of fin anci al ins tru ment s ($m) 1,9 78 ( 2 ,1 0 6 ) 82 (85) Imp act o n prof it: gai n/(lo ss) ($ m) – – 24 (9) Imp act o n equi ty: g ain / ( los s) ($m) – – 58 ( 76) Cr edit r isk Th e Group i s expos ed to cre dit ri sk on ﬁna ncia l ass ets, su ch as c ash inves tmen ts, der ivative in stru ment s, and T r ade an d other r ecei vable s. Th e Group i s also ex pose d in its N et ass et pos ition to i ts own cre dit ri sk in re spec t of the 2023 d ebe nture s which a re acc ounted f or at fai r value thr ough pr oﬁt or lo ss. Un der IFR S 9, the ef fect o f the los ses a nd gain s aris ing fr om own cre dit ri sk on the f air valu e of bond s desi gnate d at fair valu e throu gh proﬁ t or los s are re cord ed in O ther c ompre hens ive inco me. Financial counterpar ty credit risk Th e major ity o f the Ast raZ enec a Grou p ’s ca sh is ce ntral ised w ithin th e Group t reas ur y entit y and i s subje ct to co unterp ar ty r isk on th e prin cipal inves ted. Th e level of the G roup’s cash inve stme nts and h enc e credi t risk w ill dep end on th e cas h ﬂow gene rate d by the Gro up and th e timing o f the u se of that c ash. T he cre dit ri sk is miti gated t hroug h a polic y of prio riti sing se curi ty a nd liqui dit y ov er re turn a nd, as su ch, ca sh is onl y investe d in hi gh cre dit-qua lit y investm ents. C ounte rpar t y limit s are set a ccor ding to the a sse sse d risk o f each c ounter par ty a nd expo sure s are mo nitore d aga inst th ese li mits on a r egula r bas is. Th e Group’s prin cipal ﬁ nanc ial cou nterp ar ty c redit r isks at 31 De cemb er 2021 were a s follow s: Current as sets 20 21 20 20 20 19 $m $m $m Cas h at ba nk and i n hand 1, 4 61 1 ,1 8 2 75 5 Money mark et liqu idity funds 4,7 72 6,60 2 4 ,11 0 Collateralised repurchase agreement – – 40 0 Other shor t -term cash equivalents 96 48 10 4 T ot al Ca sh and c ash e quiva lent s (Note17) 6,329 7, 8 3 2 5,3 69 Fixe d inco me se curi ties a t fair va lue th roug h prof it an d loss ( Note12) 16 11 8 8 11 Fixe d dep osit s (Note12) 53 42 38 T ot al de rivat ive fin anci al ins tru ment s (Note13) 83 14 2 36 Cu rr ent a ss ets s ub jec t to cr ed it ri sk 6, 481 8 ,1 3 4 6 ,25 4 Non-current assets 20 21 20 20 20 19 $m $m $m Fixe d inco me se curi ties a t fair va lue th roug h prof it an d loss ( Note12) – – 62 De rivat ive fin anci al ins tru ment s (Note13) 10 2 17 1 61 No n- cur re nt as set s su bje ct t o cre di t ris k 10 2 17 1 12 3 Th e major ity o f the Gro up’ s ca sh is inve sted in US d ollar A A A r ated mo ney mar ket liqu idit y fund s. The m oney ma rket liqu idit y fund p or tfol ios are m anag ed by ﬁve ex terna l third -par t y fund m anage rs to ma inta in an A A A rat ing. Th e Group’s investm ents re pre sent no m ore tha n 1 0% of eac h overal l fund val ue. The re were n o other s igniﬁ cant c once ntra tions of ﬁ nanc ial cre dit ri sk at the r epor tin g date. Th e shor t-term re purc hase a gree ment s were ful ly coll atera lise d investm ents. T he Gro up clo sed ou t its re purch ase ag reem ents d uring 20 20. Th e value of th e cash d epos ited in r epurc hase a gree ment s at 3 1 De cemb er 2021 was $ nil (2020: $ nil; 201 9: $4 0 1m). Th e ﬁxed inc ome se curi ties we re mana ged by fo ur exte rnal th ird- par ty f und man ager s. Du ring 20 20, the se curit ies wer e sold a nd re- investe d in mo ney mar ket fund s. The l ong-te rm rat ing of the se se curit ies was B BB- o r bet ter . All ﬁ nanc ial de rivati v es a re tran sac ted with c omme rcia l banks , in line wi th sta ndard m arket p ract ice. Th e Grou p has ag reem ents wi th som e bank cou nterp ar ties w here by the par tie s agre e to post c ash c ollate ral, for t he ben eﬁt of the o ther , equ ivale nt to the ma rket valu ation of th e der ivative po sition s above a pr edete rmin ed thre shol d. The ca rr yin g value of su ch ca sh coll atera l held by th e Grou p at 3 1 D ece mber 20 2 1 was $ 93m (2020: $ 288m; 201 9: $71 m) and t he car r ying val ue of suc h cash c ollate ral p osted by th e Grou p at 3 1 D ece mbe r 202 1 was $ 4 7m (2020: $1 1m ; 201 9: $1 0m). Th e impai rmen t provis ion for ot her ﬁn ancia l ass ets at 31 De cemb er 2021 was im mater ial. T rade r eceivables T ra de rec eivab le expos ures a re man aged l ocal ly in the o pera ting uni ts whe re they ar ise an d cre dit limi ts are se t as de emed a ppro pria te for the customer . The Group is expose d to cust omers ranging from gov ernment-backed agencies and large priv ate wholesalers to privat ely owned pha rma cies, a nd the u nder lying l ocal e cono mic an d sovere ign ris ks var y thro ughou t the wor ld. Whe re app ropri ate, the G roup en deavou rs to mini mise r isks by the u se of tra de ﬁna nce ins trum ents s uch as l ette rs of cr edit a nd insu ranc e. The G roup ap plie s the expe cted c redi t loss app roac h to esta blish a n allowa nce for i mpair ment t hat rep rese nts it s estim ate of expe cted l oss es in re spec t of T rad e rece ivabl es. Th e Group a pplie s the IFR S 9 simpl iﬁed a pproa ch to mea suri ng expe cted c redit l oss es whic h use s a lifetim e expe cted lo ss all owance fo r all T ra de re ceivab les. T o m eas ure expe cted c redi t loss es, T r ade re ceivab les have b een g roupe d base d on sh ared c redi t char acter istic s and th e days pas t due. Th e expec ted los s rate s are ba sed on p aymen t proﬁle s over a pe riod of 3 6 mont hs befo re 3 1 D ece mbe r 202 1 , 31 De cemb er 2020 or 31 De cemb er 201 9 re spe ctivel y and the c orr espo nding h istori cal c redit l osse s expe rien ced wi thin thi s per iod. Th e histor ical l oss r ates ar e adjus ted to reﬂe ct cur rent a nd for ward -loo king in form ation on m acro eco nomic f actor s af fecti ng the ab ilit y of the cus tomer to s ett le the re ceiva bles. 185 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements On th at bas is, the l oss all owance wa s deter mine d as foll ows: 0 -90 d ays 9 0 -18 0 d a ys Ove r 1 8 0 days 31De cemb er 2019 Curre nt pas t due pa st due p ast du e T otal Expected loss ra te 0 .1% 0 .8% 2.0% 4 4.0% Gr oss c arr yin g amou nt ($ m ) 3 ,17 8 3 12 82 34 3 ,606 Lo ss all owanc e ($m) 2 2 2 15 21 0 -90 d ays 9 0 -18 0 d a ys Ove r 1 8 0 days 31De cemb er 20 20 Current pa st due pa st du e pa st du e To tal Expected loss ra te 0 .1% 1. 6 % 19 . 4% 6 0.6% Gr oss c arr yin g amou nt ($ m ) 3,659 12 4 21 25 3,829 Lo ss all owanc e ($m) 2 2 4 15 23 0 -9 0 day s 9 0 -1 8 0 d a y s O ver 18 0 day s 31De ce mbe r 20 21 Current past due past due past due To t a l Expected loss ra te 0 .1% 1. 2% 22 .6% 11. 0 % Gr oss c arr yin g amou nt ($ m ) 5 , 6 17 32 8 18 91 6,05 4 Lo ss all owanc e ($m) 5 4 4 10 23 T ra de rec eivab les ar e writ ten of f whe re ther e is no rea sona ble exp ect ation of r ecover y . Imp airm ent los ses o n T rad e rece ivable s are pr ese nted as n et impa irme nt los ses wi thin Op erat ing proﬁ t, any su bseq uent re cover ies ar e credi ted aga inst th e same l ine. In the U S, sal es to thre e whol esa lers a ccou nted fo r approx imatel y 94 % of U S sale s (2020: thr ee whol esa ler s acco unted fo r appr o xim ately 95% ; 201 9: th ree wh oles aler s acc ounte d for app roxima tely 94 % ). Th e movemen ts of the G roup exp ecte d cre dit los ses p rovisio n are as f ollows: 20 21 20 20 20 19 $m $m $m At 1Ja nuar y 23 21 38 Net mov eme nt reco gn ised in income statement (2) 3 (13 ) Amounts utilised, e xchange and other mo vements 2 ( 1) (4) At 31D ece mb er 23 23 21 Given the proﬁle of our customers, including large wholesalers and government - back e d age ncies, no f urther credit risk has been identiﬁed wit h the T rad e rece ivabl es not pa st due o ther th an thos e bala nces f or whic h an allowa nce ha s bee n made. T he inc ome st ateme nt cre dit or ch arge is re cord ed in O pera ting pr oﬁt. 29 E mployee c osts a nd sh are pl ans fo r employees Em ployee c ost s Th e monthl y averag e numbe r of pe ople, to th e neare st hun dred, e mploye d by the Gr oup is se t out in th e table b elow. In acc ordan ce with t he Com panie s Act 20 06 , this inc lude s par t-time em ployee s. 20 21 20 20 20 19 Employ ees UK 8,90 0 7, 9 0 0 7, 4 0 0 Re st of Eur ope 18 ,3 0 0 16, 6 0 0 15 ,5 0 0 The Americas 18 ,8 0 0 1 7, 3 0 0 16 , 60 0 As ia, Af ric a & Aust rala sia 33,6 00 33 ,000 2 7, 8 0 0 Continuing operations 79,6 00 74 , 8 0 0 6 7, 3 0 0 Ge ogra phic al dis tribu tion de scri bed in t he tab le above is by lo cati on of leg al ent ity e mployi ng staf f. Cer ta in sta ff wil l unde rt ake some o r all of the ir activity in a different location. Th e numbe r of peo ple em ployed by th e Grou p at the en d of 2021 was 83, 100 (2020: 76, 1 00; 2019: 7 0,60 0). Th e cost s incur red du ring th e year in r espe ct of the se em ployee s were: 20 21 20 20 20 19 $m $m $m Wages and s alaries 7, 6 3 3 6, 273 5,64 8 Social security costs 886 726 658 Pension costs 564 435 491 Other employment costs 1 ,19 2 813 7 71 To t a l 10, 2 75 8 , 247 7, 5 6 8 Seve ranc e cost s of $238m a re not in clude d above (20 20: $ 1 16m; 201 9: $1 58m). Th e Dire ctor s believe th at, toge ther w ith the ba sic sa lar y syste m, the G roup’ s e mploye e ince ntive sc heme s provid e comp etitive a nd mar ket -re lated packages to mot ivat e employ ees. They should also align the int erests of employ ees with those of sha reholders, as a whole , through long-t e rm sha re owne rshi p in the Co mpany. The Gr oup’ s c urre nt UK, S wedis h and US s cheme s are de scr ibed b elow; oth er ar rang emen ts app ly els ewhere . No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 28 F in anc ial r isk m an agement objec tiv es and p olicie s cont inued 18 6 A st ra Zene ca A nn ual R epo rt & For m 20 - F In for mat ion 2 021 Financial State men ts Bonus plans Th e Astr aZen eca U K Per forma nce Bo nus Pla n Emp loyees of p ar ticip ating A stra Zene ca UK c ompan ies ar e invited to p ar ticip ate in this b onus p lan, whi ch rewar ds str ong indi vidua l per for manc e. Bon uses a re pai d in cas h. Th e Astr aZen eca E xecut ive Annu al Bon us Sch eme Thi s sche me is a pe rf orma nce bo nus sc heme fo r Dire ctor s and se nior e mploye es who d o not par ti cipate in t he Astr aZe nec a UK Per form ance Bon us Plan. A nnua l bonu ses a re paid i n cash a nd reﬂe ct bo th cor pora t e and i ndivi dual p er form ance m easu res. T he Rem uner ation C ommit tee has d iscr etion to re duce o r withh old bo nuse s if bus ines s per for manc e falls s uf ﬁcien tly sho rt o f expec tati ons in any ye ar suc h as to make th e paym ent of b onuse s inap prop riate. Th e Astr aZen eca D efer red Bo nus Plan Thi s plan wa s intro duce d in 200 6 and i s used to d efer a p or tion of the b onus e arn ed und er the A stra Zene ca E x e cuti ve Annu al Bonu s Sche me into Or dinar y Sh ares i n the Com pany for a p erio d of thre e year s. The p lan cu rren tly ope rate s only in re spe ct of E x e cuti ve Dire ctor s and me mber s of the S ET (wi th awards g rante d as As traZ enec a ADS s for mem ber s of SE T empl oy ed w ithin th e US). A war ds of sha res un der thi s plan a re ty pica lly mad e in Mar ch eac h year , th e ﬁrs t award havi ng bee n made i n Febru ar y 200 6. Swe den In Swe den, a n all- empl oy ee p er form ance b onus p lan is in o pera tion, wh ich rewa rds str ong ind ividu al pe rfo rman ce. Bon uses a re pai d 50% into a fun d investi ng in As traZ enec a equi ties a nd 50% in ca sh. The A stra Zen eca E x ec utive An nual B onus Sc heme , the Ast raZe nec a Per form ance Sha re Plan a nd the A stra Zene ca Gl obal Re stri cted S tock Pla n all ope rate in re spe ct of re levant As tra Zene ca emp loyee s in Swede n. US In the U S, ther e are t wo all- empl oyee sho rt-ter m or annu al pe rfo rman ce bo nus pla ns in op erati on to dif fere ntiate a nd rewar d stron g indivi dual pe rfo rma nce. An nual b onus es are p aid in ca sh. Th ere is a lso on e senio r staf f lon g-ter m ince ntive sch eme, un der wh ich 1 2 9 par tici pants m ay be eli gible fo r awards g rante d as As tra Zenec a ADS s. Ast raZe nec a ADSs n ece ssa ry to s atisf y the awa rds ar e purch ase d in the ma rket or fu nded v ia a sh are tru st. T he Astr aZe nec a P er for manc e Sha re Plan an d the As tra Zene ca Glo bal Re stric ted Sto ck Plan op era te in resp ect of r elevan t emp loyees in th e US. Share plans Th e charg e for sh are- base d paym ents in r espe ct of sh are pl ans is $ 6 15m (2020: $ 2 7 7 m; 201 9: $259 m) . Payme nts ma de to the Emp loyee Be neﬁt T ru st upo n vesti ng of sha re awards a re rec ogni sed wi thin op erati ng cas h ﬂows, re ﬂect ing the su bsta nce of th e arr ange ment in p lace b etwe en the gro up and th e T rus t. The p lans a re equ ity se ttl ed. The AstraZene ca UK A ll-Employ e e Share Plan Th e Compa ny offe rs UK e mploye es the o ppor tun ity to bu y Par tner ship S hare s (Ordi nar y Sha res). Empl oyees may i nvest up to £1 50 a mo nth to pur chas e Par tner ship S hare s in the Co mpany at t he cur rent ma rket val ue. In 201 0, th e Comp any intro duce d a Match ing Sha re ele ment , the ﬁr st award o f which wa s made i n 20 1 1 . Cur rentl y one Ma tching S hare is awa rded f or ever y four Pa rt ner ship Sh ares p urcha sed. Pa rt ner ship Sh ares and M atchin g Shar es are h eld in th e HM Revenu e & Custo ms (HMR C)-ap proved A ll- Employe e Share P lan. At the C ompa ny’ s AGM i n 2002, sha reho lder s app roved the i ssue of n ew shar es for th e purp ose s of the All -Emp loyee Sh are Pla n. Th e Astr aZen eca 201 4 Pe rfo rma nce Sh are Plan Thi s plan wa s appr oved by sha reho lder s in 201 4 for a pe rio d of 1 0 yea rs an d repl aces t he Astr aZe nec a Per forma nce S hare Pla n. Gen eral ly , awar ds ca n be gra nted at a ny time, bu t not dur ing a clo sed p erio d of the Co mpany . Th e ﬁrst g rant of awa rds wa s made in M ay 20 14. A ward s gran ted und er the p lan ves t afte r thre e year s, or in the c ase of E xecu tive Dire ctor s and me mbe rs of the S ET , af ter a n addit ional t wo-ye ar hol ding pe riod, a nd ca n be subj ect to th e achieve ment of p er form ance c ondi tions. Fo r awards g rante d to all pa rti cipan ts in 2021 , ve sting i s subje ct to a com binat ion of me asur es focu sed o n scie ntiﬁc le ade rshi p , r evenue gr owth a nd ﬁna ncia l per for manc e. The Re mune ratio n Commi tte e has re spon sibili ty for agr eein g any award s unde r the pla n and for s ett ing the po licy fo r the way in whi ch the pl an sho uld be op erate d, incl uding a gree ing pe rfo rma nce ta rgets a nd whi ch emp loyees s hould b e invited to p ar ticip ate. Ordinar y Shares WA FV 1 ADR Shares WA F V 1 ’000 pence ’000 $ Ou ts ta ndi ng a t 1Jan ua ry 2 019 2,68 2 229 5 6,963 15 .6 5 Granted 1, 018 314 7 1, 97 8 21. 0 6 Forfeited (350) 2 3 17 ( 1,9 0 0 ) 16 . 80 E xerc ise d (4 91) 19 8 3 (1, 8 3 5 ) 1 4 .17 Ou ts ta ndi ng a t 31Dec em ber 2 019 2,8 59 26 49 5, 206 17. 8 0 Granted 932 370 2 1,7 67 24. 02 Forfeited (191) 3088 (478 ) 19 . 57 Cancell ed (3) 223 4 – – E xerc ise d (5 52) 24 26 ( 1,7 0 4) 15 .4 3 Ou ts ta ndi ng a t 31Dec em ber 2 02 0 3,045 298 5 4 ,791 2 0.76 Granted 1, 27 5 24 85 2 ,082 1 7.18 Forfeited (220) 3005 (49 4) 2 0.53 Cancell ed (9) 3653 – – E xerc ise d ( 632) 2 332 ( 1, 20 1) 1 7. 4 0 Ou ts ta ndi ng a t 31Dec em ber 2 02 1 3,459 2 919 5 ,17 8 2 0 .1 2        187 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ents Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Th e Astr aZen eca Inve stme nt Plan Thi s plan wa s intro duce d in 201 0 an d appr oved by sha reho lder s at the 201 0 AGM. T he ﬁnal g rant of awa rds un der thi s plan to ok plac e in Mar ch 201 6. Award s gran ted und er the pl an vest a fte r eight ye ars a nd are s ubjec t to per for man ce con dition s mea sured ove r a per iod of fou r year s. The AstraZene ca Global Restricted St ock Plan Thi s plan wa s intro duce d in 201 0. T his pla n provi des for t he gra nt of res tric t ed s tock uni t (RSU ) awards to s elec ted bel ow SET-level em ployee s and i s use d in conj uncti on with t he Astr aZe nec a Per forma nce S hare Pla n to provid e a mix of RS Us and p er form ance s hare s. Awards t ypi call y ves t on the thi rd anni vers ar y of the date o f grant a nd are c ontin gent o n conti nued e mploym ent wi th the Com pany . The R emun erat ion Com mit tee has r espo nsib ilit y for agr eeing a ny awards u nder t he plan a nd for s etti ng the po licy for t he way in whi ch the pl an shou ld be op erate d. Ordinar y Shares WAF V ADR Shares WAF V ’000 pence ’000 $ Ou ts ta ndi ng a t 1Jan ua ry 2 019 1, 0 0 1 459 8 10, 49 3 3 1. 57 Granted 759 6 313 3, 885 42.0 6 Forfeited ( 115 ) 5438 ( 1,1 9 9 ) 3 5.44 Cancell ed – – (1) 32. 39 E xerc ise d ( 3 17 ) 40 28 (3,4 08) 2 8.82 Ou ts ta ndi ng a t 31Dec em ber 2 019 1, 3 28 5640 9 ,770 36. 22 Granted 689 74 0 8 3 ,671 4 7. 7 1 Forfeited ( 113 ) 6 204 ( 1,0 7 7 ) 41. 0 8 Cancell ed – 728 0 (9) 36.93 E xerc ise d ( 278) 4929 ( 3 ,1 8 0 ) 31. 47 Ou ts ta ndi ng a t 31Dec em ber 2 02 0 1,6 2 6 6 471 9 ,17 5 41. 8 9 Granted 902 6893 4,509 4 7. 7 5 Forfeited (15 8 ) 6865 (1, 2 5 4) 4 5 .77 Cancell ed (1) 7244 (8) 45.89 E xerc ise d ( 3 41) 4980 (2 , 8 81) 3 5 .11 Ou ts ta ndi ng a t 31Dec em ber 2 02 1 2 ,028 6 879 9 , 5 41 4 6 .1 9 The AstraZene ca Restricted Share P lan Thi s plan wa s intro duce d in 200 8 and p rovide s for the g rant of r estr icted s hare awa rds to key emp loyees , excludin g Exec utive Di recto rs. Award s are ma de on an ad h oc bas is with va riab le vesti ng date s. The pl an has b een u sed fo ur time s in 2021 to make awar ds to 1 1 1 em ployee s. Th e Remun erat ion Com mit tee has r espo nsib ility f or agre eing a ny awards u nder t he plan a nd for s etti ng the po licy for th e way in whic h the pla n should be operated. Ordinar y Shares WAF V ADR Shares WAF V ’000 pence ’000 $ Ou ts ta ndi ng a t 1Jan ua ry 2 019 92 49 52 1, 0 6 2 3 0.7 9 Granted 10 5 6894 17 6 4 3.91 Forfeited (7) 59 07 (14 1) 3 1 .17 Cancell ed – – (2) 2 8 .1 9 E xerc ise d (14 ) 524 4 (44 6) 3 0 .1 2 Outstanding at 31 D ecember 201 9 17 6 6 0 51 649 3 4.7 0 Granted 80 7 931 295 5 2.92 Forfeited (6) 716 8 (79) 39.26 E xerc ise d (89) 516 6 (359) 3 1.0 5 Outstanding at 31 D ecember 2020 16 1 74 3 4 506 4 7. 2 0 Granted 13 9 741 5 4 81 53.96 Forfeited (18) 75 62 (42 ) 44 .73 E xerc ise d (27) 764 3 (18 2) 41. 8 7 Ou ts ta ndi ng a t 31Dec em ber 2 02 1 255 7393 76 3 52.8 8 Th e Astr aZen eca E xte nded I ncen tive Plan Thi s plan wa s intro duce d in 201 8 an d provid es for th e gran t of awards to key e mploye es, exclu ding E x e cuti ve Dire ctor s. Awards a re made o n an ad ho c basi s and 50% of the awa rd will n orma lly ves t on the ﬁf th an niver sar y of gr ant, wi th the ba lanc e v es ting on th e tenth an niver sar y of gr ant. Th e award ca n be subj ect to th e achieve ment of p er form ance c ondi tions . The Re mune ratio n Commi ttee h as res pons ibili ty for a gree ing any award s unde r the pla n and fo r set ting the p olicy fo r the way in wh ich the p lan sh ould be o pera ted, inc ludin g agre eing pe rf orma nce ta rget s (if a ny) and w hich em ployee s shou ld be invi ted to par tic ipate. Ordinar y Shares WAF V ADR Shares WAF V ’000 pence ’000 $ Ou ts ta ndi ng a t 1Jan ua ry 2 019 238 523 9 65 3 8.46 Granted 44 73 01 – – Outstanding at 31 D ecember 201 9 282 556 3 65 38.4 6 Granted 18 8386 – – Outstanding at 31 D ecember 2020 300 573 0 65 3 8.46 Granted – – 17 5 56.83 Forfeited (18) 8386 (4 5) 3 8. 46 Ou ts ta ndi ng a t 31Dec em ber 2 02 1 282 5563 19 5 54.92 No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 29 E mployee c osts a nd sh are pl ans fo r employees c ont inued 18 8 A st ra Zene ca A nn ual R epo rt & For m 20 - F In for mat ion 2 021 Financial State men ts Alexion employ ee share aw ard plan Al exion e mployee s hare awa rds wer e conver ted in to Astr aZe neca r estr icted s tock awar ds that c ontin ue to have, and s hall be s ubje ct to, the sa me terms and condit ions as applied in t he corresponding Ale xion a wards immediat ely prior to comple tion. Ordinar y Shares WAF V ADR Shares WAF V ’000 pence ’000 $ Ou ts ta ndi ng a t 1Jan ua ry 2 02 1 – – – – Granted – – 2 0 ,1 8 9 5 7. 5 4 Forfeited – – (8 38) 5 7. 5 4 E xerc ise d – – ( 4 ,1 3 1) 5 7. 5 4 Ou ts ta ndi ng a t 31Dec em ber 2 02 1 – – 15, 2 2 0 5 7. 5 4 Th e fair val ues for t he mar ket -ba sed p er form ance c ondit ions of th e Astr aZe neca 201 4 Pe rf orma nce Sh are Pla n were dete rmin ed usi ng a mod iﬁed ver sion of t he Monte Ca rlo m odel. T his met hod inc orp orate d market i nput s in addit ion to expe cted d ivide nds. T he fai r value s of all othe r plan s are set u sing th e marke t pric e at the po int of awar d. The gr ant date f air valu es of sh are awar ds disc lose d in this s ecti on do not t ake acc ount of se rv ice and non-mark et relat ed per fo rmance cond itions . 30 Co mm itment s and c onti ngent lia bil itie s 20 21 20 20 20 19 Commitments $m $m $m Contracts placed for future capital expenditure on Proper ty , plant and e qui pment and sof t ware deve lop ment c osts n ot prov ide d for in th ese f inan cial s tate ment s 388 689 396 Gu aran tees an d conti ngen cies a risi ng in the o rdina ry c ours e of bus ines s, for wh ich no se cur ity ha s bee n given, a re not exp ecte d to resu lt in any material ﬁnancial loss. Research and dev elopment collaboration payments The Group has various ongoing collaborations, including in-licensing and similar arrangements with dev e lopment partners. Such collaborations may re quire t he Gro up to make paym ents o n achieve ment o f stage s of devel opme nt, laun ch or reve nue mile stone s, alt hough t he Gro up gene rall y has t he rig ht to termi nate the se agre eme nts at no c ost. T he Gro up rec ogni ses re sear ch and d evelop ment mi leston es as a n inta ngible a sse t once it is c ommi tted to p aymen t, whic h is gene rall y when t he Grou p reac hes se t trigg er po ints in th e develop ment cyc le. Reven ue- relate d mile stone s are r eco gnise d as int angib le as sets on p rodu ct lau nch at a val ue bas ed on the G roup’s long -t er m revenue f orec asts f or the re lated pr oduc t. The ta ble bel ow indic ates po tentia l develop ment a nd revenu e-r elate d payme nts tha t the Gro up may be re quir ed to make un der su ch col labor ation s. Y ears 5 T otal Un der 1 ye ar Y e ars 1 a nd 2 Y e ars 3 a nd 4 and greater $m $m $m $m $m Future potential research and dev elopment milestone pa y ments 12 ,76 4 1, 0 47 1, 9 58 3,3 82 6,377 Futu re pote ntia l revenu e mile stone p ayme nts 17, 7 6 9 68 420 1,4 5 2 15, 8 2 9 Th e table i nclu des all p otenti al paym ents fo r achieve ment of m iles tones un der on goin g rese arch a nd develo pmen t arr ange ments . Revenue -re lated mile stone p aymen ts rep rese nt the ma xim um pos sible a moun t payable o n achi evement o f spec iﬁed l evels of reve nue as s et out in i ndivi dual co ntra ct agr eeme nts, b ut exclud e varia ble paym ents th at are b ased o n unit s ales (e.g. roya lty-t ype p aymen ts) whic h are exp ense d as the a sso ciated s ale is re cogn ised . The ta ble exclud es any pay ment s alre ady ca pita lise d in the Fina ncia l State ment s for the ye ar end ed 31 Dece mbe r 2021 . Th e futur e payme nts we dis close r epre sent c ontra cted p ayment s and, a s such, a re not di scoun ted and a re not r isk-adju sted. As d etai led in th e Risk se ction from pa ge 48, the deve lopme nt of any ph arm aceu tical p rodu ct can didate i s a comp lex and r isk y proc ess th at may fa il at any st age in the d evelop ment p roce ss due to a nu mbe r of facto rs (in cludi ng item s such a s failu re to obta in regu lator y app roval, unf avourab le dat a from key stu dies, a dver se reac tion s to the pro duct c andi date or in dicati ons of oth er sa fety c once rns). Th e timing of t he payme nts is b ase d on the Gr oup’ s cur rent b est e stima te of achieve ment o f the releva nt mile stone. Environmental costs and liabilities Th e Group’s expen ditur e on envir onme ntal p rotect ion, inc ludin g both ca pita l and reve nue item s, rel ates to co sts tha t are ne ces sar y for im plem entin g inte rnal sy stems a nd pro gram mes, a nd mee ting le gal a nd regu lator y re quire ments f or pro ces ses an d prod ucts. T his in clude s invest ment to co nse rve natural resources and otherwis e minimise the impact of our ac tivit ies on the environment. Th ey are an in tegra l par t of no rmal o ngoin g expen ditur e for car r ying ou t the Gro up’ s re sea rch, ma nufac turin g and co mmer cial o pera tions a nd are not s epar ated fr om overa ll oper ating a nd devel opme nt cost s. The re are n o known c hange s in le gal, re gulato ry o r other r equir emen ts res ulting i n mate rial c hang es to the leve ls of expe nditu re for 201 9, 20 20 or 2021 . In ad dition to ex pend iture fo r meet ing cur rent a nd fore see n enviro nmen tal pr otecti on req uirem ents , the Gro up incu rs co sts in inve stiga ting an d cle anin g up land a nd gro undwate r cont amina tion. In p ar ticul ar , As tra Zene ca has e nviron ment al lia biliti es at so me cur rentl y or form erl y owned, lea sed a nd thir d-pa rt y site s. In the U S, Zene ca Inc., a nd/or its i ndem nitee s, have be en nam ed as p otentia lly re spon sible p ar ties (PR Ps) or defe ndan ts at a num ber of s ites whe re Zen eca In c. is likely to i ncur fu ture e nvironm enta l investi gatio n, reme diati on, ope ratio n and ma inten ance c osts u nder fe der al, sta te, statu tor y or common law en vironmental liability allocation schemes (together , US En vironme ntal Consequenc es ). Similarly , Stauf f er Management Company LLC (SM C) , w hich wa s esta blish ed in 1987 to own and m anage c er tai n asse ts of Sta uf fer Che mica l Comp any acqu ired th at year, and / or i ts inde mnite es, have be en na med as PR Ps or defe nda nts at a num ber of s ites wh ere SMC i s likely to in cur US Env ironm enta l Cons eque nces . 18 9 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements As tra Zene ca has a lso give n inde mnitie s to third par ti es for a nu mber o f sites ou tsid e the US. These environmental liabilities arise from legacy operatio ns t hat are n ot cur rentl y par t of the Gr oup’ s bu sine ss an d, at mos t of thes e sites, remediation, where require d, is either com plete d or in pr ogre ss. As tra Zene ca has made pro visions for th e estimat ed costs of future environmental in vestigation, remediation, operation and main tenance activ ity beyond normal ongoin g expe nditure for maintaining the Group ’ s R&D and manufacturing capacity and p rodu ct ra nges, w here a p rese nt obli gatio n exis ts, it is p roba ble tha t such c osts wi ll be inc urre d and th ey can be e stim ated rel iabl y . Wit h resp ect to su ch es timate d futur e cost s, the re were p rovisi ons at 31 Dec embe r 2021 in the a ggre gate of $9 0m (20 20: $ 1 00 m; 201 9: $ 96m), mai nly rel ating to th e US. Whe re we are j ointly l iable o r other wi se have cost-sharing agree ments with third par ties, we reﬂ ect on ly our s hare of th e oblig ation. Whe re the li abili ty is in sure d in par t or i n who le by insu ranc e or othe r arr ange ment s for rei mbur seme nt, an a sset i s rec ognis ed to the exte nt that t his rec over y is vir tua lly ce rt ain. It is p ossi ble tha t Astr aZen eca c ould in cur future en vironmental costs beyond the e x t ent of ou r curre nt prov ision s. The ex tent of s uch possible additional costs is inherently difﬁcult to es timate du e to a numbe r of fac tors, i nclud ing: (i ) the natu re and ex tent of c laims t hat may be as ser ted in t he futu re; (ii) w hethe r Astr aZe neca has o r will have a ny lega l oblig ation wi th res pec t to ass er ted or un ass er ted cla ims; (ii i) the t ype of re medi al act ion, if a ny , that may be s ele cted at s ites wh ere the r emed y is pr ese ntly not k nown; (iv) t he poten tial fo r re coverie s from o r allo catio n of liab ilit y to thir d par tie s; and (v) the l engt h of time th at the environmental in vestigation, remediation and li ability allocat ion pro cess can tak e. As p er our a ccou nting po licy on p age 1 4 4, Provi sions f or the se cos ts are ma de whe n the re is a pre sen t oblig ation a nd whe re it is pro babl e that exp endit ure on re medi al work will b e requ ired a nd a reli able e stima te can be mad e of the co st. Not with stan ding an d subje ct to the fo rego ing, we es timate th e potent ial additional loss for future e n vironme ntal inv estigation, remediation, remedial operation and m ainte nanc e activ ity a bove and b eyond our p rovisi ons to be, i n aggre gate, be twee n $9 9m and $165m (2020: $ 95m a nd $1 58m; 201 9: $ 86m a nd $1 43m) wh ich rel ates ma inly to the US . Legal p roceedi ngs As tra Zene ca is involve d in vari ous le gal proceedings considered typical to its busines s, including actual or t hreatened litigation and actual or potential gov ernment investigations relating t o employment matters, product liability , commercial disputes, pricing, sa les and m arket ing pra ctic es, inf ring emen t of IP rig hts, a nd the vali dit y of cer ta in paten ts and competition laws. T he m ore s igniﬁcant matters are d iscussed belo w. Mos t of the cl aims invo lve highl y comp lex is sues . Of ten the se iss ues ar e subje ct to substantia l uncer tainties and, therefore, the pro babil ity of a l oss, i f any , be ing su stain ed and / or a n estim ate of the am ount of a ny loss is di fﬁc ult to as cer tai n. Unless speciﬁca l ly identiﬁed below t hat a prov ision h as be en take n, Astr aZe neca con side rs ea ch of the c laims to r epre sent a contingent liabilit y and discloses information wit h resp ect to the n ature a nd fac ts of the ca ses in a ccor danc e with IAS 37 . Th ere is on e mat ter , wh ich is c onsid ere d pro babl e that an o utﬂ ow will be re quire d, but f or whic h we are un able to ma ke an es timate of th e pos sible l oss o r ran ge of po ssibl e loss es at th is stag e. We do not b elieve tha t discl osur e of the amounts sought by plaintiffs, if known, w ould be me anin gful wi th resp ect to t hese l egal pro cee ding s. This i s due to a num ber of fa ctor s, inc ludin g (i) the s tage o f the pro cee dings ( in ma ny case s tria l dates have n ot bee n set) and t he overa ll leng th and ex tent of p re-tr ial dis cover y; (ii ) the en titlem ent of th e par ties to an ac tion to a ppea l a deci sion; (i ii) cla rit y as to the orie s of liab ilit y , dam ages a nd gover ning law; ( iv) unce r taint ies in ti ming of li tigati on; and ( v) the pos sibl e nee d for fur the r leg al proceedings t o establish the appropriate am ount of da mage s, if any. Whi le ther e can be n o assu ran ce reg ardin g the outc ome of a ny of the le gal pro cee ding s re fer red to in t his Note 3 0, base d on managemen t’s current and considered view of ea ch situ ation, we d o not cur rentl y expe ct the m to have a mater ial ad vers e effe ct on o ur ﬁnancial position including within the next ﬁna ncia l year . T his po sitio n coul d of cour se cha nge over ti me, not le ast b ecau se of the fac tors re ferr ed to above. In ca ses th at have be en set tle d or adju dicate d, or where quantiﬁable ﬁnes and penalties ha ve be en as ses sed an d which a re not s ubjec t to app eal (or o ther si milar fo rms of r elief ), or wh ere a los s is pro babl e and we ar e able to ma ke a rea sona ble es timate of t he los s, we gen eral ly ind icate th e loss a bsor bed o r make a provi sion for o ur bes t esti mate of the ex pec t ed l oss. Whe re it is c onsi dere d that th e Group i s more likel y than no t to prevail, l egal c osts i nv olve d in de fendin g the cla im are c harge d to proﬁ t as th ey are in curre d. Whe re it is c onsi dere d that th e Group h as a vali d contr act wh ich prov ides t he righ t to reimbursement (from i nsurance or oth er wi se) of le gal co sts an d/or all o r par t of any lo ss inc urre d or for w hich a pr ovisio n has be en es tabli shed , and we co nside r rec ov er y to be vir tua lly ce rt ain, the b est e stima te of the am ount exp ecte d to be rec eived i s reco gnise d as a n asse t. KJ As ses smen ts as to whe ther o r not to re cogni se provi sion s or as sets, a nd of the amounts concerned, usually inv olve a series of comple x judgements abou t future events and c an rel y heavil y on es timate s and assumptions. Astra Z eneca believes that the p rovisi ons re corde d are a dequa te base d on currently av a ilable inform at ion and that the in sura nce re cover ies re cord ed will b e received. Howev er , given the inherent uncer tainties involved in asse ssing the outc ome s of thes e case s, and i n estim ating the a mount o f the pote ntial lo sse s and the associated insurance reco veries, we could in the future incur judgments or insurance settleme nts that could have a material adv e rse ef fec t on our re sult s in any par ti cular p eri od. IP cl aims in clude c hall enge s to the Gro up’ s pate nts on va rious p rodu cts or p roce sse s and asser tions of non-infringement of patents. A los s in any of th ese c ases c ould re sult i n loss of pate nt prote ctio n on the re lated p rodu ct. Th e cons eque nces o f any suc h loss c ould be a sig niﬁc ant de crea se in Pro duct S ales , which could hav e a mat e rial adv e rse effect on our res ults. T he laws uits ﬁl ed by Ast raZ enec a for patent infringement against companies that have ﬁle d a bbre viated new dr ug applications (A NDAs) in the U S, see king to m arket ge ner ic for ms of pro duc ts sold by t he Grou p prio r to the ex pir y of the ap plica ble pa tents c o ver ing the se pro duct s, ty pica lly als o involve allegations of non-infr ingement, inv alidity and u nenfo rcea bilit y of the se pate nts by the AN D A ﬁle rs. In t he event tha t the Gr oup is unsuccessful in t hese actions or the statut or y 30 -mo nth stay ex pire s befor e a rulin g is obt aine d, the AN D A ﬁle rs involve d will al so have the a bilit y , sub ject to FDA a pproval , t o intr oduc e ge neri c versi ons of th e prod uct co ncer ned. As tra Zene ca has f ull con ﬁdenc e in, an d will v igoro usly d efend a nd enfo rce, it s IP . Ove r the cou rse of th e past s evera l year s, including in 202 1, a signiﬁ cant number of commercial litigation claims in which As tra Zen eca is invol ved have b ee n res olve d, par ticularly in the US, thereby reducing potential contingent liabilit y exposure arising fro m such li tigat ion. Sim ilar ly , in pa rt d ue to patent litigat ion and settlement developments, greater cer tainty has be en achiev e d regarding po ssibl e gene ric e ntr y dates wi th res pec t to som e of our pa tented p roduc ts. At th e sa me time, li k e othe r comp anie s in the pharmaceutical sector and ot her industries, As tra Zene ca cont inues to b e subje ct to government in vestigations around the world. Patent litigation Calquence US patent proceedings In Feb rua ry 20 22 , in re spon se to Para grap h IV noti ces f rom mul tiple A NDA ﬁler s, As traZ enec a ﬁled patent infringeme nt l a wsui ts in the US Di stric t Cour t fo r the Dis tric t of Del aw are . No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 30 Co mm itment s and c onti ngent lia bil itie s cont inued 19 0 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s In its complaint, AstraZeneca alleged that a ge neri c versi on of Calquence , i f app roved and m arkete d, would i nfrin ge paten ts liste d in the U S FDA Oran ge Boo k with ref eren ce to Calquence t hat are ow ned or l icen sed by As tra Zene ca. No t rial da te has be en se t. T agrisso US patent proceedings In Feb rua ry 20 20, in resp onse to Pa ragr aph IV noti ces f rom mul tiple A NDA ﬁler s, As traZ enec a ﬁled patent infringeme nt l a wsui ts in the US Di stric t Cour t fo r the Dis tric t of Del aware. In it s complaint, AstraZene ca alleged that a generic ver sion of T agrisso , if a pprove d and ma rketed, woul d infri nge a US O rang e Book-lis ted T agrisso p atent. In t he four th qu ar ter of 202 1 , Astra Zeneca entered into settleme nt agreements with Z ydus Pharmaceuticals (USA) Inc. a nd Cadil a Heal thca re Limi ted (coll ecti vely , Zydus) an d MSN L abor atori es Pv t. Ltd. a nd MSN Pharmaceuticals Inc. ( collectiv ely , MSN) , res olvin g all US pa tent lit igatio n with Zydu s and MSN r elati ng to T agrisso . T he tri al with th e remaining defendant, Alembic Pharmaceuticals Lim ited, is s ched uled fo r May 2022. In Se ptemb er 2021 , Pum a Biote chnol ogy , Inc. a nd Wyet h LLC ﬁled a p atent inf ring emen t laws uit in the U S Dist rict C our t for the D istr ict of De laware ag ains t Astr aZe neca r elati ng to T agrisso . Nei ther a ca se sc hedul e, nor a tr ial date h av e be en set ye t. Paten t proc eedi ngs ou tside t he US In Ru ssia i n Octob er 2021 , A stra Zene ca ﬁle d a laws uit in the A rbi trati on Cour t of th e Mosc ow Re gion ag ains t Axel phar m, LLC to preven t it fro m obta ining au thor isati on to mar k et a ge neri c versi on of T agrisso p rior to th e expiration of A straZeneca’ s patents cov e ring T agrisso . The l awsuit a lso nam es the M inistr y of He alth of th e Russ ian Fe dera tion as a t hird par t y . Ne ithe r a case s ched ule, no r a trial d ate have be en set . Fas lod ex Paten t proc eedi ngs ou tside t he US In Ja pan, in A pril 20 2 1, Astr aZe neca r ece ived noti ce fro m the Jap an Patent O fﬁ ce tha t Sand oz K. K. ﬁle d a Req uest fo r Invalid ation of t he Fas lod ex formulation patent. In O ct ober 202 1, As tra Zene ca rec eived n otice th at Sun Ph arma Jap an Ltd. req ueste d to inter ven e in the Re ques t for Invali datio n broug ht by San doz K. K seek ing inval idati on of the Fa slo dex formulation patent. The Japan Pat e nt O fﬁce has p erm itte d the inte rve ntion. A stra Zene ca is defending t he challenged patent. Far x iga / Fo rx iga US patent proceedings In 201 8 , in resp onse to Pa ragr aph IV n otice s, Astra Z eneca initiated ANDA litigation against Zydus Ph arma ceut ical s (USA) I nc. (Zydu s ) in the US D istr ict C our t for the D istr ict of D elaware (the D istr ict Co ur t) . In May 20 2 1, tria l again st Zydus p roce ede d in the Di stri ct Cou rt. I n Oc tober 20 2 1, the Di stric t Cour t is sue d a de cisio n ﬁndin g the as ser ted cl aims of As tra Zene ca’ s US Pate nt No. 6,51 5, 1 1 7 as vali d and inf ring ed by Zydus’ s pro pose d ANDA product. Paten t proc eedi ngs ou tside t he US In Ca nada, i n Janu ar y 2021 , San doz Can ada Inc. s er ved thre e Noti ces of A lleg ation on A stra Zene ca all egin g invalidi ty an d/or non-infrin gement of all three patents listed on the C anadian Pat ent Register in relat ion to For xig a . A straZeneca commenced litigat ion in re spon se. A tri al date ha s bee n set for Oc tober 20 22 with cl osin g argum ent in De cemb er 2022. In Feb rua ry 20 2 1, T eva C anada L imite d ser ved a Noti ce of Al lega tion on A stra Zene ca al legin g invalidity and/or non-infringeme nt of all three patents list ed on the Canadian Pat e nt Register in re latio n t o For xig a . AstraZeneca commenced liti gatio n in resp onse . A trial d ate has b een set f or Octo ber 202 2 with clo sing a rgume nt in De cem ber 202 2 . Brilinta US patent proceedings In 201 5 a nd sub sequ ently, in resp onse to Para grap h IV noti ces fr om ANDA ﬁl ers , Astra Zeneca ﬁled patent infringement laws uits in th e US Dis tric t Cour t for t he Di stric t of Del aware (the D istr ict C our t) relat ing to pate nts lis ted in the FDA O rang e Book w ith refe renc e to Brilinta . In 20 20, Ast raZe nec a entered into three separate settle ments and the D istr ict Co ur t entere d con sent ju dgme nts to dis miss e ach of the c orr espo nding li tigat ions. Additional proceedings are ongoing in the Di stric t Cour t. N o tria l date has b een s et. Roxadustat US patent proceedings In A pril 2021 , A kebia T her apeu tics , Inc. and Otsuka A m erica P harmaceutical , Inc. se rve d Astr aZe neca w ith a com plain t see king a de clar ation of i nv ali dity a nd non -infr inge ment for s everal o f FibroG en, In c ’ s (Fib roGe n) met hod of us e patent s rela t ed to HI F prolylhydroxylase inhibitors. As traZeneca is th e ex c lusi ve licen see of Fi broG en in the Uni ted Sta tes. As tra Zene ca ﬁle d a motion to dis miss in J une 2021 . Paten t proc eedi ngs ou tside t he US In Ca nada, i n May 201 8, A kebia T hera peut ics, Inc. ﬁled an impeachment action in the Fed eral C our t of Can ada all eging i nvalidit y of seve ral of Fib roGe n, Inc. ’s (Fib roGe n) metho d of us e patent s relate d to HIF pr olylhyd roxyl ase inh ibitor s. As traZ enec a is the exclu sive lic ense e of Fibr oGen i n Canad a. As tra Zene ca and F ibroG en wer e defen ding the a ction . The par ties have re solv e d the action. Symbicort US patent proceedings As tra Zene ca is involve d in ong oing AN DA litigation with Myla n Phar maceuticals Inc. (My lan) and K indeva D rug D eliver y L .P . (K indeva) b rough t in the US D istri ct Cou rt for th e Nor the rn Dis tric t of West Vi rgini a (the D istr ict Co ur t) . In the a ctio n, Astr aZe neca alleges that the def endants’ generic versions of Symbicort , if appr oved and m arkete d, would infringe various AstraZene ca patents. In Se ptemb er 2020, My lan an d Kind eva stipulated to pat ent infringeme nt to the extent tha t the as ser ted pa tent cla ims ar e found to be val id and e nforc eabl e, but re ser ved th e rig ht to see k a vacatu r of the sti pulat ion if the US Co ur t of App eals fo r the Fed eral C ircui t (the Fe der al Circ uit) rever ses o r modi ﬁes the Di stric t Cour t ’ s cla im con stru ctio n. In Marc h 2021 , th e Dist rict C our t dec ided i n favour of As tra Zene ca and d eterm ined th at the as ser ted pa tent cl aims we re not invali d or unenforceable. Mylan and Kindeva ap pealed to the Fe dera l Circu it. In De cem ber 2021 , t he Federal Circuit afﬁrmed the decision b y the Di stric t Cour t de termi ning tha t the as ser ted patent claims w e re no nob vious. Howev e r , the Fed eral C ircui t revers ed the D istr ict Co ur t’ s claim construction decision, vacated the stipulated judgment of infringeme nt by Mylan and K indeva a nd rem ande d the mat ter ba ck to the D istri ct Cou rt f or dete rmina tion of whe ther th eir AN DA produ ct inf ringe s the as ser ted pa tent cl aims un der th e Feder al Cir cuit’s cla im cons truc tion. I n Janua ry 20 22, As tra Zene ca ﬁle d a Combi ned Peti tion fo r Panel Rehearing and Rehearing En Banc with the Feder al Circuit. Daliresp US patent proceedings In 201 5 a nd sub sequ ently, in resp onse to Para grap h IV noti ces fr om ANDA ﬁl ers , Astra Zeneca ﬁled patent infringement lawsuits in the U S Dist rict C our t for th e Distr ict of N ew Jersey (the District Court) relating to patents lis ted in the FDA O rang e Book w ith refe renc e to Daliresp . In 2020, A stra Zen eca e ntere d into a set tle ment a nd the Di stri ct Cou rt e ntere d a con sent j udgm ent to dis miss th e cor resp ondin g litigation. A dditional proceedings are ongoing in the D istr ict Co ur t. No tr ial date h as bee n set. Mova ntik US patent proceedings In Ma rch 2020, A ether T her apeu tics, I nc. ﬁle d a pate nt infr inge ment law suit in th e US Dis tric t Cou rt f or the Di stri ct of De laware ag ains t AstraZeneca, Nektar Therapeutics and Dai ichi Sa nkyo, In c. , rel ating to Mova ntik . A tri al has be en set fo r Marc h 2023. Onglyza Paten t proc eedi ngs ou tside t he US In Ca nada, i n Novemb er 201 9, Sa ndoz Can ada Inc. s ent a Not ice of A llega tion to As tra Zene ca challenging the v alidity of Canadian substance Paten t No. 2 4 02894 (exp iry M arch 20 2 1) (the ‘894 patent) a nd formulation Pat e nt No. 2568 391 ( expi ry M ay 2025) rela ted to Onglyza . As tra Zene ca com menc ed an ac tion in res pons e rela ted to the ‘89 4 paten t in Janu ar y 2020. In O ctob er 2021 , the p ar ties r eache d an agr eeme nt to res olve the di spute. T his ma tter is now co ncl uded. 191 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Enhertu US patent proceedings In Oc tobe r 2020, Sea gen In c. (Seag en) ﬁled a complaint against Daiic hi Sank y o Company , Lim ited in th e US Dis tric t Cour t for th e Eas tern Di stric t of T exas a llegi ng that Enher tu inf ringes US Pate nt No. 1 0, 808,0 39 (th e ‘039 pa tent). AstraZeneca Ph armaceuticals LP co- commercialises Enhertu with Daiichi Sank y o, Inc. ( Daiic hi San kyo) in th e US. In Jul y 2021 , AstraZeneca Ph armaceuticals LP and As tra Zene ca UK Lim ited inte rve ned in t he T exas a ctio n in supp or t of Daii chi Sa nkyo. A claim construction hearing took place i n Aug ust 2021 an d a trial h as be en sch edul ed for A pril 20 22. On 23 D ece mber 20 20, Astr aZe nec a and Da iichi Sa nkyo ﬁl ed a po st-gra nt revie w petiti on with the US Pa tent an d T rade mar k Of ﬁce al legin g, inte r alia , that the ‘ 039 pa tent is inva lid for la ck of wr itte n desc ripti on and e nabl emen t. In Jan uar y 2021 , As tra Zene ca and D aiic hi Sank yo ﬁle d a sec ond po st-gra nt revie w petiti on with the US Pa tent an d T rade mar k Of ﬁce ex tendin g its challenge to ad dit ional claims in t he ‘039 pate nt. In Ju ne 2021 , the U S Patent an d T ra dema rk Of ﬁc e decli ned to in stitu t e the post -grant re view s. AstraZeneca and Daiichi Sa nkyo h av e req ueste d a rehe ari ng of thei r post-grant review petitions. In Au gust 2021 , As traZ enec a Phar mace utic als LP an d Daii chi Sa nkyo ﬁl ed an ac tion a gains t Andrew Hirshfeld, acting in his ofﬁcial capacity as Un der S ecre tar y of Com merc e, and th e US Paten t and T r adem ark O fﬁc e in the US D istr ict Cou rt f or the Ea ster n Distr ict of V irgin ia see king jud icial r eview of the U S Patent O fﬁ ce’ s discretionary authorit y to deny instit ution of post-grant review proceedings. Ultomiris US patent proceedings In Nove mber 2018, Chuga i Phar mace utica l Co., Ltd. (Chu gai) ﬁ led a law suit ag ainst A lexio n in the D elawa re Dist rict C our t alle ging th at Ultomiris inf ringe s a US pate nt held by C huga i. Upo n issu ance o f anoth er US pate nt in Novem ber 201 9, C hugai ﬁ led a se con d lawsuit in the s ame c our t alle ging th at Ult omiris also inf ringe s the se cond p atent. T he two l awsuit s were c onso lidate d. T ria l sche dule d to occu r in Jan uar y 2022 ha s bee n post pone d until Feb ruar y 202 2 due to COVID - 1 9. Paten t proc eedi ngs ou tside t he US In Ja pan, in D ece mber 201 8, Chu gai Pha rmac eutic al Co., Ltd (Chu gai) ﬁ led a laws uit in the T o kyo D istr ict Co ur t again st Al exion Pha rma G K in Japa n and al lege s that Ultomiris infringes two Japanese patents held by Chugai. Chugai’ s complaints se ek unspeciﬁed damages and cer tain in junctive rel ief. In Mar ch 2020, the S upre me Cour t of Japan d ismissed Chugai ’s appeal against an ea rlie r IP High C our t of Japa n dec ision w hich held that one of the Chugai patents-in-suit is invali d. Subs eque ntly , C huga i ﬁled a c orre ctio n to the cl aims of t his pate nts- in-su it and A lexio n has c ounte red th at the co rrec ted cl aims ar e stil l invalid a nd not inf ring ed. In al l case s, Alexion has denied the charges and count e red that the patents are neither valid nor infringed. In Oc tobe r 2021 the Japa nes e Patent O fﬁc e inv alidated four Chugai patents, including those as ser ted in t he T ok yo Dist rict C our t Cas e. Chugai has appealed the patent o fﬁce decis ion . Product liability litigation Far x iga a nd Xigduo XR In seve ral ju risd ictio ns in the U S, Astr aZe neca has b een n ame d as a defe ndant i n lawsui ts involving plaintiffs claiming physical injur y , including Fournier’s Gangren e a nd necrotising fasciitis, from treatment with Fa r xig a a nd /o r Xigd uo XR . A majo rit y of thes e claim s are ﬁle d in De laware s tate co urt a nd rem ain pe nding . On e case, ﬁ led in s tate cou rt i n Minne sota , is sc hedu led fo r trial i n Janua r y 2023. Byetta / Bydureon In the U S, Amy lin Phar mace utic als, LLC (a whol ly owne d subsi diar y of A stra Zene ca) and A stra Zen eca a re amo ng multi ple defe ndan ts in var ious law suits ﬁ led in fe der al and s tate co ur ts involvi ng cla ims of phys ical inju ry f rom tre atme nt with Byet ta an d /o r By dureon . T he lawsu its all ege seve ral t ype s of injuries including pancrea t ic cancer and thyroid cancer . A multidistrict lit igation w as es tabli shed i n the US Di stri ct Cou rt fo r the South ern Dis trict of Cal ifornia (th e Di strict Cou rt) i n rega rd to the al lege d panc reati c ca ncer c ase s in fede ral c our ts. Fur the r , a coordinated proceeding has been esta bl ished in Su peri or Cou rt i n Los An gele s, Cali forni a (the C alifor nia Co ur t) in rega rd to the va riou s laws uits in Ca lifor nia st ate cour ts . In Octo ber and D ece mbe r 2020, the Di stri ct Cou rt a nd the Cali forn ia Cour t jo intly he ard or al ar gumen t on ren ewed mot ions ﬁl ed by Defe ndan ts see king sum mar y jud gment a nd dis miss al of all c laim s alleging pancreatic can cer . In March and April 2021 , th e Dist rict C our t and th e Califo rnia Court respec t ively granted the Defendants’ moti ons, a nd dism isse d all ca ses a llegi ng pancreati c cancer with prejudice. Plain tif fs have dis miss ed the a ppea l as to Amy lin Pharmaceut icals, LLC and AstraZeneca. Th e other c laims i n both co ur ts, inc ludin g those alleging thyroid cance r , rem ain pending. Onglyza and K ombiglyze In the U S, Ast raZe nec a is defe nding va riou s lawsuits alleging hear t failure, cardiac injuries, and / or de ath fr om trea tment w ith Onglyza or K ombigly z e . I n Febr uar y 201 8, th e Judic ial Panel on Multidistrict Litigation orde red the tra nsfe r of vario us pen ding fe dera l acti ons to the US D istr ict C our t for the E aster n Dis tric t of Kentucky (District Court) for consolidat ed pre -tri al pro cee dings w ith the fe dera l acti ons pe nding in t he Dis tric t Cour t. In th e previ ously disclosed California State Court coordinated pro cee ding, A stra Zene ca su bmit ted its m otion for s umma ry ju dgme nt in De cemb er 2021 . Nexiu m a nd Los ec / P rilosec US proceeding s In the U S, Ast raZe nec a is defe nding va riou s laws uits br ought i n fede ral an d state c our ts inv olving multiple plaintiffs claiming that they have be en diagnosed with various injuries foll owing tre atme nt with p roton pum p inhib itors (PPIs ), including Nexium a nd Pri losec . T he vast majorit y of those lawsuits relat e to allegations of ki dney inj urie s. In par tic ular, in May 201 7 , cou nsel f or a grou p of such p laint iff s clai ming that they have been diagnosed with kidney inju rie s ﬁled a mo tion wi th the Jud icial Pa nel on Multidistrict Litigation ( JPML) seeking the tra nsfe r of any cur rentl y pend ing fed era l cour t ca ses as we ll as any s imila r , sub sequ ently ﬁle d cas es to a coo rdina ted and c onso lidate d pre-trial multidistrict litigation (MDL) pro cee ding. In A ugus t 20 1 7 , th e JPML gra nted the m otion a nd cons olid ated the p endin g fed eral c our t ca ses in a n MDL pr ocee ding in fe dera l cour t in N ew Jer sey for pr e-tr ial pur pos es. A tri al in the M DL prev iousl y sch edul ed for Ja nuar y 202 2 has be en res che duled to O ctobe r 2022. In ad dition to the M DL cas es, th ere are c ase s ﬁled i n severa l st ate cour ts a round t he US; a tri al in Del aware state court previously scheduled for Februar y 2022 i s being r esch edul ed. In addition, A straZeneca has been defending lawsuits involving allegations of gastric cancer foll owing tre atme nt with PPIs . One su ch clai m is ﬁl ed in the U S Dist rict C our t for the M iddle District of Louisiana, where the court has sch edul ed a tri al for Nove mber 20 22. Canada proceedings In Ca nada, i n July a nd Augu st 201 7 , As tra Zene ca was se rve d with th ree pu tative cla ss ac tion laws uits. T wo o f the lawsu its have be en dis miss ed, one i n 20 19 and o ne in 2021 . Th e third law suit, ﬁl ed in Sa skatc hewan, se eks authoris ation to represent individual resid ents in Ca nada wh o alle gedly s uf fere d kidney inju rie s from th e use of pr oton pum p inhibi tors , including Nexium a nd Lose c . Commercial litigation Amplimmune In the U S, in Jun e 20 1 7 , A stra Zene ca was se rve d with a laws uit ﬁle d by the stoc khol der s ’ agents for Amplimmune, I nc. (Amplimmune) in Delaware Stat e Court that alleged, among other things, breaches of contractual obligat ions rel ating to a 201 3 m erge r agre eme nt bet ween As tra Zene ca and A mplim mune. A tr ial of the m atte r was hel d in Febr uar y 2020 an d po st -tri al ora l argu ment wa s hear d in Augu st 2020. In N ovembe r 2020, the D elaware C our t of Cha nce ry d ecid ed in As tra Zene ca’ s favo ur and s ubse quen tly ente red a Fi nal Jud gmen t as to all p endin g clai ms in favour o f Astr aZe neca . In De cem ber 2020, t he plai ntif fs ﬁle d an app eal to th e Delawa re Supr eme Co ur t. In Oc tober 20 2 1, the De laware Su prem e Cour t af ﬁrm ed the D elaware C our t of Cha nce ry’s decision. This matter is now concluded. No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 30 Co mm itment s and c onti ngent lia bil itie s cont inued 192 A st ra Zen eca A nn ual R epo rt & For m 2 0- F In for mat ion 2 021 Financial State men ts Ar ray Bio Phar ma In De cem ber 201 7 , A stra Zen eca was s er ved wit h a compl aint ﬁl ed in New Y o rk St ate cour t by Ar ray Bio Phar ma, In c. (Ar ray) all eging breaches of contractual obligations relating to a 200 3 coll abor ation a gree ment b etwe en As tra Zene ca and A rray. In June 20 20, an app eal c our t deni ed As tra Zene ca’ s mo tion for a n ear ly dism issa l of the ca se, all owing the c ase to co ntinue towa rds tr ial. No tr ial date h as bee n set. Ocimum law suit In the U S, in De cemb er 201 7 , A stra Zene ca was s er ved with a c ompl aint ﬁle d by Oci mum Bio scie nce s, Ltd. (Ocim um) in the Su per ior Cou rt f or the St ate of Del aware tha t alle ged, among other things, breaches of contractual obligations and misappropriation of trade se crets , relat ing to a now ter minate d 2001 licensi ng agreement between AstraZen eca and G ene L ogic, In c. (Gene L ogic), the r ights to whi ch Ocim um pur por ts to have ac quire d fro m Gene L ogic. I n Febru ar y 2021 , the De laware Su prem e cour t af ﬁrm ed the g rant of AstraZeneca’ s motion for summar y judgment. Thi s mat ter is now c onclu ded. Seroquel XR ( Antitrus t Litigation) In the U S in 201 9, As tra Zene ca was na med in seve ral rel ated co mpla ints br ought i n the US Di stric t Cour t fo r the Sou ther n Dist rict of N ew Y or k (the Cou rt), in cludin g sever al put ative class action lawsuits t hat were purpor tedly bro ught o n beha lf of cla sse s of direc t pur chas ers o r end payo rs of Seroquel XR , tha t alleg e Astr aZe neca a nd ge neri c drug manufacturers violated antitrust laws when settling patent lit igation related t o Seroquel X R. In Au gust 2020 , the Cou rt g rante d Astr aZe neca’s moti ons to tr ansfe r all su ch lawsui ts to the US Di stric t Cour t fo r the Dis tric t of Del aw are . As tra Zene ca has ﬁl ed mot ions to dis miss t he complaints, which rem ain pending. Anti- T error ism A ct Civil Lawsuit In the U S, in Oc tober 201 7 , Astr aZe nec a and cer tai n other pharma ceutical and/ or medical devi ce com panie s were na med a s defen dant s in a co mpla int ﬁle d in fede ral c our t in the Di stric t of Colu mbia (t he Dis tric t Cour t) by US nationals ( or their estates, survivors, or heirs) who we re kill ed or wou nded i n Iraq b etwe en 200 5 and 201 3. Th e plain tif fs all ege tha t the defendants violated the US Anti- T er rorism Act a nd var ious st ate laws by se lling pharmaceuticals and medical su pplies to the Ir aqi Min istr y of He alth. In J uly 2020, th e Di stric t Cour t gr anted A stra Zen eca’s and the othe r defe ndant s’ motion a nd dis miss ed the laws uit, an d the pla intif fs ap pea led to the D C Cir cuit Co ur t of App eals (t he App ellate C our t). In Ja nuar y 2022, a pa nel of th e Appe llate Cou rt r evers ed the di smis sal an d rema nde d the c ase ba ck to the Di stric t Cour t. A stra Zen eca and t he othe r defen dants h ave ﬁled p etitio ns re ques ting en ba nc revi ew by the ent ire Appellate Court. A Z D1 222 Securities litigation In Ja nuar y 2021 , p utati ve secu ritie s clas s ac tion laws uits we re ﬁled i n the US Di stri ct Cou rt f or the So uthe rn Dis tric t of New Y or k aga inst A stra Zen eca PLC an d cer tai n ofﬁ cer s, on be half o f purch ase rs of As tra Zene ca pub licly t rade d secu ritie s dur ing the pe rio d 21 May 2020 th rough 20 N ovembe r 2020. Th e Cour t app ointe d co- lead p lainti ff s in Apr il 2021 and t hey ﬁle d an Ame nde d Compl aint in Jul y 2021 on beh alf of pu rcha ser s of AstraZene ca publicly traded securities during the p erio d 1 5 Ju ne 2020 thro ugh 29 Ja nuar y 2021 . T he Ame nde d Compl aint a llege s that defe ndan ts mad e mater ially f alse a nd misleading statements in connection with the d evelopm ent of A ZD1 222, A stra Zene ca’ s vacc ine for t he preven tion of COV ID- 19. In Se ptemb er 2021 , A stra Zene ca moved to dis miss th e Ame nded C ompla int. Deﬁniens In Ge rma ny , in Jul y 2020, As traZ enec a rec eived a noti ce of ar bitra tion ﬁl ed with t he Ger man Ins tituti on of Ar bitr ation f rom the s eller s of Deﬁ nien s A G (the S elle rs) reg ardin g the 201 4 Sha re Purc hase A gree ment (S P A) b etwe en As tra Zene ca and th e Selle rs. T he Se ller s cla im they a re owed app roxima tely $1 40 m in ea rn- out s under t he SP A . Astr aZe neca dis putes th e clai ms of the Se ller s. An o ral hea ring i s sche dule d for Jul y 2022. Alexion shareholder litigation In Ma rch 2021 , s everal s hare hold ers of Alexion Pharmaceuticals, Inc. (Alexion ) ﬁled individual l awsuits against Alexion, its management, and/or AstraZeneca and af ﬁliate s in fed eral d istri ct co urt i n New Y or k. The complaints generally alleged that the preliminar y registration statement ﬁle d wi th the S EC on 1 9 Fe brua ry 20 2 1 , om itte d cer ta in allegedly material information in connection wit h Astr aZen eca’s propo sed a cquis ition of Al exion (th e Acqui sitio n ), and on e of the complaints fur ther alleged that the Alexion dire ctor s bre ache d their ﬁ ducia ry d utie s in connection with the Acquisition and that As tra Zene ca and th e other e ntit y defe ndant s aid ed an d abet ted the a lleg ed bre ache s. In May 2021 , a ll suc h comp laint s were wit hdrawn and d ismi ssed . This ma tter i s now con clude d. P A RP in hibi tor roya lty d isp ute In Oc tobe r 20 12, T e sar o , Inc. (now w holly owne d by Gla xoSmi thKli ne plc, ‘GS K’) entered into two worldwide, ro yalty-bea ring pat ent license agreements with AstraZeneca rel ated to GS K’ s p roduc t nira pari b . In May 2021 , A stra Zene ca ﬁle d a lawsu it agai nst T es aro in th e Comm erci al Cou rt of En glan d and Wa les all egin g that GS K has fa iled to pay all of t he royalt ies due o n nira pari b sale s und er our l icen se agre eme nts. Wh ile a ca se sch edul e has not ye t bee n set, tr ial is ant icipa ted in H2 20 22 . Portola shareholder litigation In co nnec tion wi th Alex ion’ s J uly 2020 acquisition of P or tola P harmaceutica ls, Inc. (Portola), A le xion assumed litigation to which Por tola i s a par ty. In Janu ar y 2020, put ative se curi ties cl ass ac tion l awsuit s were ﬁle d in the US D istr ict C our t for the N or ther n Dist rict of Cal iforn ia aga inst Por tola a nd ce rt ain of ﬁce rs an d direc tors , on beh alf of pu rcha ser s of Por tola p ublic ly trad ed se curi ties du ring th e pe riod 8 J anuar y 201 9 thro ugh 26 Feb rua ry 20 20. The third amended complaint alleges that defe ndan ts mad e mater ially f alse a nd/or misleading statements or omissions about the d eman d for And exxa , us age of And exxa by h ospitals and healthcare organisations, and a bout Po rto la’ s ac coun ting for i ts retur n res er ves. In A ugust 20 2 1 , th e cour t de nied i n par t de fenda nts’ moti on to dism iss th e case. A tri al date ha s bee n set for D ece mbe r 2022. Shareholder litigation – Alexion (US) In De cem ber 201 6 , puta tive sec uriti es cla ss ac tion laws uits we re ﬁled i n the US Di stri ct Cou rt f or the Di stri ct of Con nec ticut (t he Di stric t Cour t) ag ains t Alexi on and c er tain of ﬁce rs an d direc tors , on beh alf of pu rcha ser s of Alexi on publicly trade d se curit ies during t he pe riod 3 0 Janua r y 20 14 throu gh 26 May 201 7 . The amended complaint alleges that defendants engaged i n securities fraud , including by making misreprese ntations and omissions in its public disclosures concerning Alexion’ s Soliris s ales practices, management changes, and related in vestigations. In August 2021 , th e Dist rict C our t iss ued a de cisi on deny ing in pa rt D efen dants’ m otion to di smis s the matter . Syntimmune In connection with Alexion ’s p rior acquisition of Syntimmune, Inc. (Syntimmune) , a clinical-stage biotechnology company dev eloping an ant ibody t herapy targeting the Fc Rn, in the U S, in De cemb er 2020, Al exion wa s ser ved wit h a lawsui t ﬁled by th e stockholde rs’ re presentative for Syntimmune in De laware S tate Cou rt t hat all ege d, among other things, breaches of contractual obligations relating t o the 2 01 8 merger agreement. The stockholders’ representative all ege s that Al exion fa iled to m eet it s obligations under the merger agreement to use comme rcial ly reasonable efforts to achieve the milestones, and the pl aint if f has re ques t ed p aymen t of all mil estone o bl iga tio ns. Al exion al so ﬁle d a claim f or bre ach of the rep rese ntat ions in th e 20 1 8 m erge r agre eme nt re gardi ng unus able d rug pr oduc t and dr ug subs tanc e that A lexion a cqui red fro m Syntimmune. T r ial in the matter is scheduled for N ov emb er 2022. 193 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Government inv es tigations/proceedings T oprol- XL Louisiana Attorney General litigation In Jul y 2020, the L ouisi ana Fir st Cir cuit Co ur t of Ap pea ls (the A ppell ate Cou rt) reve rse d and r eman ded a Lo uisi ana st ate tria l cour t (the T r ial Cour t ) ruling that had granted AstraZeneca’ s motion for summar y judgment and d ismi ssed a s tate co ur t comp laint , bro ught by th e Attor ney Ge nera l for the S tate of Louisiana (the Stat e) , alleging that AstraZenec a engaged in unlawful monopolisation and unf air tra de pra ctice s in co nnec tion wi th the enf orce ment of i ts T o prol- XL patents. In Aug ust 2020, A stra Zen eca pe titio ned the Louisiana Supreme Cour t (the Supreme Cour t) to revi ew the dec isio n of the Ap pella te Cour t and r eins tate the T ria l Cour t’s summ ar y jud gmen t rulin g. In Apr il 2021 , the S upre me Cou rt g rante d a motio n to dismi ss all of t he St ate’ s cla ims wi th preju dice a nd vaca te the de cisio ns of the T ria l Cour t an d Appe llate Cou rt . This m atte r is now clo sed. Vermo nt US At torney Inve stiga tion In A pril 2020, A stra Zen eca re cei ved a Civi l Inves tigati ve Dema nd fro m the US At torney ’ s Of ﬁc e in V e rmo nt and th e Depa rt ment of Justice, Civil Division, seeking documents and information relating to AstraZeneca’ s relationships with elec tronic health-recor d vend ors . Astr aZen eca i s co- ope rating w ith this enquir y . US 34 0B Lit igatio ns and P roce edin gs As tra Zene ca is involve d in sever al mat ter s relating t o its contract pharmacy recognition pol icy und er the 3 40B Dr ug Pri cing Pro gram in the U S. In 2020, th ree law suits we re ﬁle d by covered entities and advocacy groups against the US D epa rtm ent of He alth a nd Hum an Se rvi ces, t he US He alth Re sour ces an d Se rvi ces Ad minis trati on as well a s othe r US gove rnme nt age ncie s and the ir of ﬁcia ls. The complaints allege, among other t hings, that these agencies should enforce an interpretation of the gov erning statute for the 3 40B Dr ug Pri cing Pr ogra m that woul d require drug manufac turers par ticipating in the p rogr am to of fer the ir drug s for pu rcha se at st atutor ily ca pped r ates to an u nlimi ted number of contract pharmacies. Astra Z eneca has s ough t to inter vene in t he lawsu its. T wo of the th ree ca ses a re cur rentl y stayed p endi ng fur th er pro cee dings a nd the th ird ca se has been dismiss ed. Administrative Dispute Resolution procee di ngs ha ve also been initiated against AstraZeneca before the US Health Resources and Ser vices Administration. In Feb rua ry 20 2 1, Astr aZe neca r ecei ved a Civ il Investi gative Su bpoe na fro m the Atto rney Ge nera l’ s O fﬁ ce for the S tate of Verm ont seeking documents and information relating t o Astra Z eneca’ s contract pharmacy recognition pol icy und er the 3 40B Dr ug Pri cing Pro gram . As tra Zene ca has c oope rated w ith the in quir y . In Ja nuar y 2021 , A stra Zene ca ﬁle d a sep arate laws uit in fe dera l cour t in D elaware a lleg ing tha t an Advi sor y Opi nion is sued by t he De par tmen t of Hea lth and H uman S er vice s violates the Administrativ e Proce dure Act. In Ju ne 2021 , the C our t foun d in favour of Astra Z eneca, invalidating the Advisory Opinion. Pri or to the Co ur t’ s r uling, h owever , in M ay 2021 , th e US gover nment i ssue d new an d se parate l ette rs to As tra Zene ca (and oth er companies) asser ting that our contract pharmacy policy violates t he 340B statute. In Jul y 2021 , As tra Zene ca ame nded t he complaint to i nclude allegations challenging the l ette r sent in M ay . In Se ptemb er 2021 , th e US gove rnme nt iss ued a fo llow-up l ette r to Astra Z eneca (and other companies) a sserting tha t it has re ferr ed the ma tter to t he Of ﬁce of Ins pec tor Ge nera l for fur the r review and c onsi der ation. In O ctob er 2021 , or al arg umen ts were he ld bef ore the fe der al cour t in Delaware c hallenging the letters sent in May a nd Sep tembe r . In Se ptemb er 2021 , A stra Zene ca was s er ved wit h a clas s-ac tion an titru st com plain t ﬁled i n fed eral c our t in New Y o rk by Mos aic He alth on be half o f a purp or ted cla ss. T he comp laint all ege s that As tra Zene ca con spire d with Sa noﬁ-Avent is U.S., LLC, Eli Lill y and Com pany , L illy US A, LLC, an d Novo Nor disk Inc. to re str ict ac ces s to 340B di scou nts in th e diabetes market t hrough contract pharmacies. US Congressional In Ja nuar y 201 9, A stra Zene ca re ceive d a let ter fr om the US H ouse of R epre sent atives Committee on Ov e rsight and Reform (Committee) seeking information relat ed to pricing practices for Cr estor . Sim ilar le tter s were s ent to 1 1 othe r phar mace utic al manufactur ers. AstraZeneca cooperat ed with the in quir y an d produ ced c er tain r espo nsive info rmat ion. In De cem ber 2021 , t he Commit t ee issue d a ﬁnal rep ort culminating the C ommittee ’s pharmaceutical prici ng inv estigation. AstraZenec a ’s pro ducts are not the s ubjec t of the ﬁn dings i n the ﬁna l repo rt. European Commission claim regardingA ZD 12 22 In A pril 2021 an d May 2021 , the Eu rope an Com miss ion (ac ting on be half o f the Euro pean Uni on and it s memb er st ates) init iated t wo separate legal proceedings against As tra Zene ca AB in th e Cour t of Fir st In stan ce in Br uss els. B oth proc eed ings re lated to a n Adva nce Pur chas e Agree ment b etwe en the par ti es date d 2 7 Aug ust 2020 (t he AP A ) for the supply of A ZD 1 222. The allegations include cla ims tha t Astr aZe neca h as fai led to me et ce rt ain of it s oblig ation s unde r the APA and the Eu rope an Comm issi on was se eki ng, am ong othe r thing s, a Cou rt o rder to c ompel As tra Zene ca to supp ly a spe ciﬁe d numb er of dos es bef ore the e nd of the s econ d quar ter of 2021 . I n June 2021 , t he Cour t is sue d a decision in the ﬁrst proceeding ﬁnding that As tra Zene ca did not m eet i ts Bes t Reasonable Effor ts obligation i n the AP A be caus e Astr aZe neca d id not us e all of the ma nufac turer s liste d in the A P A to sup ply the m embe r state s. The C our t orde red As tra Zene ca to provi de an add ition al 50 mill ion dos es of vac cine by the e nd of Se ptembe r 2021 , whi ch Ast raZ enec a excee ded by th e end of J une 2021 . T he Cour t den ied th e rema inder o f the Com miss ion’ s claims and reque st ed relief. In Se ptemb er 2021 , th e par ties r each ed an agr eeme nt to res olve the di spute. T his ma tter is now co ncl uded. COVID- 1 9 V accine Supply and Manuf acturing Inquiries In Ju ne 2021 , Ar genti na’ s Fe dera l Crimi nal Prosecutor’ s Ofﬁce (the Prosecutor) contact ed Astra Zeneca Argentina se eking documents and e lec troni c reco rds in c onne ction w ith a local criminal inv estigation relating t o the public procurement and supply o f Va x z evr i a in tha t count ry. In Octob er 2021 , t he Prose cuto r ﬁle d a subm issi on with th e pres iding c our t reques t ing dismissal of the criminal investigation. The request remains pe nding. T agrisso In In dia, in J une 2021 , th e Natio nal Pharmaceut ical P ricing Authority (NPP A) is sued a d eman d notic e (Dem and No tice) to As tra Zene ca Phar ma Indi a Limite d (A ZPIL), re gardi ng the pr icing o f T agrisso . T he NPP A has alleged that AZPIL has o vercharg ed T agrisso , claiming approximately $2 1 m plus inte rest . AZPIL h as cha lleng ed the D ema nd Noti ce in the D elhi H igh Cou rt . T ur kish M inistr y of H ealth m atte r In T ur key , in Jul y 2020, the T u rkis h Minis tr y of Health initiated an inv e stigation regarding paym ents to h ealth care p rovide rs by A lexion T urke y and former employ e es and c onsu ltants. The inv e stigation arose from Alexion ’s dis clos ure of a civ il set tlem ent wit h the US Securities & Exchange Commis sion (SEC) in Jul y 2020 full y reso lving t he SEC’ s inv estigation into p ossible violat ions of the FCP A. Alexion neither admitted nor denied any wrongdoing in c onnection with the set tle ment b ut paid $ 2 1.5 milli on to the SEC, co nsis ting of am ount s attr ibut able to dis gorg emen t, civil p enal ties, a nd pre - judgment interest. As traZeneca is coop erating wit h the invest igati on by the T ur kish a gency. In Se ptemb er 2021 , th e Minist ry of H ealt h completed its draft investigation re port, and r efer red the m atte r to the An kara Pu blic Prosecutor’ s Ofﬁce with a r ecommendation for further proceedin gs against cer tain former employees. No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 30 Co mm itment s and c onti ngent lia bil itie s cont inued 19 4 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s Canadian pricing matter In Oc tobe r 20 1 7 , Al exion ﬁl ed pro cee dings i n the Fe dera l Cour t of Ca nada to se ek ju dicia l review of a determination b y the C anadian Patent e d Medicine Prices Review Board (PMPRB ) that Ale xion had e xcessively priced Soliris in a man ner in cons istent w ith the Canadian pricing rules and guidelines. In its de cisio n, the PMPRB o rder ed Al exion to de crea se the pr ice of Soliris to an u pper li mit bas ed up on pri cing in c er tain o ther co untri es and to f or feit exce ss revenu es for t he per iod bet wee n 2009 a nd 201 7 . In M ay 20 19, the Federal Court dismissed Alexion ’s application. Alexion appealed the decision to the Canadian Fed eral C our t of Ap peal. O n 29 July 20 2 1, the Fed eral C our t of Ap peal of C anada i ssu ed its jud gmen t allowin g the app eal, reve rsi ng the PMPRB’s dec ision a nd rem itti ng the ma tter to the PMPR B for re -de termi nation w ith co sts to As tra Zene ca. In S eptemb er 2021 , th e Attor ney Ge nera l of Cana da sou ght leave to a ppea l the de cisio n to the Sup reme C our t of Cana da. Pur suan t to an ord er mad e by the Fede ral Co ur t of Can ada, a s of Augu st 2021 , A stra Zene ca has placed approximately $ 7 1 .4 m in escr ow pending the ﬁnal r esolution of a ll a ppea ls i n thi s m a t t e r. Brazilian operations investigation In May 201 7 , Bra zilia n autho ritie s seize d re cords a nd dat a from A lexio n ’s São Pau lo, Br azil of ﬁc es as pa rt o f an invest igati on bein g conducted into Alexion ’ s Brazilian operations. As tra Zene ca are c oope ratin g with thi s inqui ry. Br azili an ta x ass ess ment m atte r In co nnec tion wi th an on going m atte r , in Aug ust 201 9, th e Bra zilia n Feder al Reven ue Se rvi ce prov ided a N otice of T a x and De scri ption of th e Facts (t he T ax A sse ssm ent) to two A lexio n subsi diar ies (th e Bra zil Sub sidia rie s) , a s well as to t wo addit ional ent ities , a logis tics p rovide r utilize d by Al exion an d a distr ibuto r . The T a x As ses sme nt foc uses o n the imp or tatio n of Soliris vials pursuant to Alexion ’s free drug supply to patients program (referred t o as Global Acc ess to M edic ines, o r GA T M) in Bra zil. In Se ptembe r 201 9, the B razi l Subsi diar ies ﬁl ed defe nce s to the T a x Ass essm ent di sputi ng the bas is for li abili ty un der the T a x As ses sme nt, bas ed on, a mong ot her s, the fol lowing: in connection with the operation of G A T M, dur ing the p erio d from S eptem ber 201 4 to Jun e 20 19: (i) t he impo rte rs re spon sible f or the im por tat ion of the G A TM Soliris vials into Br azil we re cor rec tly ide ntiﬁe d and (i i) the co rrec t custo ms valu e was utili sed fo r the pur pos e of impo rti ng the GATM Soliris via ls provi ded to th e patie nts fre e of cha rge. A lexion p revaile d in the ﬁ rst leve l of administ rativ e appeals in the Brazil ian f ederal administrative proceeding system based on a deﬁ cien cy in the Br azi l T a x As ses smen t. Th e deci sion wa s subje ct to an au tomati c (ex of ﬁcio) ap peal to th e sec ond level of t he administrative cour ts, which is pending. Th ere are t hree s epar ate levels o f administ rativ e appeals with in th e Brazilian federal administrative procee ding system and, if th e outcom e of thes e admin istra tive app eals is unfav oura ble , the ﬁnal de cision o f the federal administrative procee ding system can be di spute d to the fed eral c our t syste ms in Br azil (at t his time, A stra Zen eca in tends to app eal th e T ax A sse ssme nt if it i s not over tur ned in th e cour se of ad minis trative app eal s ). Given t he ear ly sta ge of the se pro cee ding s, Astr aZe neca i s unab le to pre dict the du ratio n, sco pe or ou tcome of th is mat ter , but we ex pec t that a ﬁn al res oluti on will ta ke thre e year s or mo re. Whil e it is po ssib le that a los s rela ted to the T a x As ses sment m ay be inc urre d, given i ts ongo ing nat ure, we can not reasona bly estimate the potential magnitude of any s uch po ssib le los s or ran ge of los s, or the c ost of th e ongoi ng admi nistr ative app eal s (and potential appeals t o th e federal c o urt syste m) of the T a x Ass ess ment. A ny determination that any aspects of the impor tation of free of c harge medications in to Br azil a s set for th in t he T a x Asse ssm ent ar e not, o r were no t, in com plian ce with ex istin g laws or regulations could result in the imposition of ﬁne s, civ il pena ltie s and, po tentia lly cri minal penalties, and/or other sanctions against the Group, and could hav e an adverse impact on the Group ’ s Bra zi lian operations. Additional gov e rnment inquiries As i s true fo r most, i f not all, m ajor prescript ion ph armaceutical companies, Astra Zeneca is currently involved in multiple inquiries into drug marketing and pricing practices. In addition t o the in vestigations described abo ve , v a rio us la w enforcement of ﬁce s have, from t ime to time, r eque sted info rmat ion fro m the Gro up. The re have be en no material dev elopm ents in those matters. Ta x SE AstraZene ca considers whether it is probable that a taxation authority will accept an un cer ta in ta x treat ment. I f it is co nclud ed that it is not probable that the taxation authority will a ccep t an unc er tain t ax tr eatme nt, wh ere ta x expo sure s can be q uanti ﬁed, a n accr ual is mad e base d on eit her the m ost like ly amo unt met hod or th e expec ted valu e metho d depending on which method management expe cts to b ette r pred ict the r esol ution of t he unc er tain ty . Acc rual s can b e built up ove r a lon g per iod of tim e, but the u ltima te resol ution of ta x expo sure s usua lly oc curs a t a point i n time, and given t he inherent uncer tainties in as ses sing th e outcom es of the se exp osure s (whi ch som etime s can be b inar y in na ture), we cou ld, in fu ture pe riod s, expe rien ce adjustments to t hese accruals that hav e a mate rial p osit ive or neg ative ef fec t on our res ults in a ny par tic ular pe rio d. Deta ils of the m ov eme nts in r elatio n to mater ial ta x exposures are discussed belo w . KJ As tra Zene ca face s a numb er of au dits and r eviews in j uris dicti ons ar ound th e world and , in some c ase s, is in di spute wi th the ta x authorities. The issues under discussion are of ten co mplex an d can re quire m any year s to res olve. Ac crua ls for ta x co ntinge ncie s re quire ma nage ment to m ake key judge ment s wit h resp ect to the u ltima te outcom e of cur rent a nd pote ntial f uture t ax au dits, a nd ac tual re sults c ould va ry f rom the se est imates . T ransfer pricing and other int ernational taxcontingencies Th e total ne t accr ual in clude d in the G roup Fina ncia l State ment s to cover the wo rldwi de expo sure to tr ansf er pri cing au dits is $77 m ( 2020: $287 m; 201 9: $1 4 0m), a decr ease of $21 0 m com pare d with 2020 m ainly a s a res ult of re duct ion of ta x lia biliti es ar ising fro m upda t es to e stima tes of pr ior pe riod ta x liab ilitie s follow ing set tle ments w ith ta x authorities. These positions can be complex and judgeme ntal. Therefore in determining the accrual, management has assesse d their expe cta tion of th e ultim ate reso lutio n of the uncer taint y , includin g s ettlement or litigation. Manageme nt continues t o believe t hat As tra Zene ca’ s po sitio ns on al l its tra nsfe r pr icing a nd othe r inter natio nal ta x aud its and dis putes a re robu st, an d that As tra Zene ca is appropriately pro vide d , including consideration of whether corresponding relief will be a vailable un der Mutu al Agreeme nt procedu res or unilat e rally . HMRC communicated to the Group that they do no t cons ider th at the Gr oup is a b eneﬁc iar y of st ate aid fo llowing t he Europ ean Commission’ s (E C) decision on the state a id revi ew of UK Con trolle d Forei gn Com pany Group Financing Exemption the ref ore this mat ter is n ow clos ed. For transfer pricing and o ther international ta x mat ter s where A stra Zen eca a nd the ta x auth orit ies ar e in disp ute, Ast raZe nec a estimates the pot e nt ial for additional liabilities ab o ve the a mount p rovide d wher e the poss ibility of the additional liab ilities falling due i s more th an rem ote, to be up to $4 8m (2020: $ 2 5 1m; 20 19: $7 6 m) inclu ding asso ciat ed interest. Managem ent believ e s that it is unlikely that these addit ional liabilities will a rise . It is pos sibl e that so me of the se con tinge ncie s may cha nge in th e futur e to reﬂ ect pr ogre ss in ta x au thori ty rev iews, to the ex tent th at any ta x auth orit y cha lleng e is concluded , or ma tters lapse incl uding foll owing exp ir y of the rel evant st atutes of limitation resulting in a reduction in the tax cha rge in f uture p erio ds. 195 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Note s to t he Gro up Fi na ncia l St atem ent s Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements Other ta x contingencies Inc lude d in the ta x acc rua l is $691 m (2020: $727 m; 201 9: $8 8 7 m) r elatin g to a numbe r of othe r ta x conti ngenc ies, a d ecre ase of $ 36m m ainly d ue to rel ease s of ta x cont ingen cies f ollowin g the expi ry of t he releva nt sta tute of limi tatio ns and o n the con clus ion of ta x aut hori ty revi ew and excha nge rate e ffe cts, p ar tiall y off set by the i nclus ion of pr ovisio ns for t ax co nting enci es rela ting to Al exion. T he maj orit y of the ac cru al rela tes to ta x con tinge ncie s whic h are es timate d using t he expe cted va lue meth od and d epe nd on As tra Zene ca’ s as ses sme nt of the like lihoo d of the app roac h take n by the ta x auth orit ies an d could c hang e in the fu ture to reﬂ ect p rogre ss in t ax au thor ity rev iews, th e extent t hat any t ax au thori ty ch alle nge is con clud ed, or ma tter s lap se incl uding f ollowin g expir y of the r elevant s tatu tes of limi tatio n resu lting in a r educ tion in th e ta x char ge in fut ure pe riod s. For th ese oth er ta x con tinge ncie s, Astr aZe nec a estim ates the p otenti al for addi tional liabiliti es above the amoun t provide d whe re the po ssib ilit y of the a dditi onal li abilit ies fa lling du e is more t han re mote, to be up to $ 598m (20 20: $5 1 7m; 201 9: $3 2 7m) inclu ding a ssoc iated i ntere st. It is po ssibl e that so me of the se con tinge ncie s may red uce in th e futur e if any ta x auth orit y cha llen ge is con clud ed or ma tter s lap se follow ing expi ry of t he releva nt sta tutes of li mitat ion, re sultin g in a red uctio n in the ta x ch arge in f uture p erio ds. Tim ing of ca sh ﬂows a nd inter est It is n ot pos sible to e stima te the timin g of ta x cas h ﬂows in rel ation to e ach ou tcome. I t is antic ipate d that ta x paym ents m ay be req uire d in relat ion to a num ber of si gniﬁc ant di spute s which m ay be res olved ove r the nex t one to two ye ars . Astr aZe neca c onsi der s the acc rua ls set ou t above to app ropr iately r eﬂec t the exp ecte d value of a ny ﬁnal se ttle men t. Some of t he item s discu sse d above ar e not cur rentl y within t he sco pe of ta x aut hori ty aud its an d may take lo nger to r esolve. Inc lude d within o ther re ceiva bles a nd payab les is a n et amo unt of inte rest a risi ng on ta x con tinge ncie s of $85 m (2020: $82m; 201 9: $ 90 m) . 31 Stat utor y and o ther i nfor mat ion 20 21 20 20 20 19 $m $m $m Fees pay able to PricewaterhouseCoope rs LLP an d its associates: Gr oup au dit fe e 10 .5 6.3 3.9 Fee s payab le to Pri cewate rho use Coop ers L LP an d its as soc iates f or othe r ser vi ces: The audit of subsidiaries pursuant to legislation 15 . 2 10 .8 8.3 Attestation under s404 of Sar banes-Oxley Act 2 002 2.0 2.0 2.0 Audit -related assurance services 4.5 0.7 0. 3 Other assurance se rvices 3.4 0. 2 0 .1 Fee s payab le to Pri cewate rho use Coop ers A sso cia tes in re spe ct of th e Grou p ’s pens ion s chem es: The audit o f subsidiaries’ pension schemes 0.3 0. 3 0.3 35.9 20.3 14 . 9 $0.4 m of fees p ayable in 20 2 1 are i n resp ect of th e Grou p audit a nd audi t of subs idia ries r elate d to prior ye ars ( 2020: $0.8 m in res pec t of the 201 9 G roup au dit and a udit of s ubsi diari es). $0. 3m of aud it fee s and $0.7 m of Aud it-rela ted and O the r assu ranc e ser vic es rel ate to pre -acq uisit ion fee s incu rred by A lexio n. Inc lude d in Audit-r elate d and O ther a ssur ance s er vice s are $ 6. 1m of ser vic es prov ided in r elati on to the ac quisi tion of A lexion a nd rel ated debt issuance. Related part y transactions Th e Group h ad no ma t er ial rel ated pa rt y tra nsac tion s which m ight re ason ably b e expec ted to inﬂ uenc e deci sion s made by the u ser s of thes e Financial Statements. Ke y management personnel compensation Key man agem ent pe rso nnel a re deﬁn ed for th e purp ose of di sclos ure un der IAS 24 ‘Re lated Pa rt y Dis clos ures’ as t he mem ber s of the Boa rd and t he mem ber s of the SE T . 20 21 20 20 20 19 $’ 000 $’ 000 $’ 000 Shor t -term employee b enefits 32,98 5 2 9 ,1 2 6 31, 3 2 9 Post - emplo yment benefits 1,378 1, 6 0 2 1, 76 6 Share-base d payments 45,234 27 ,666 19, 210 79,5 97 58,394 5 2,30 5 T ota l remu nera tion is i nclud ed with in emp loyee co sts (se e Note 29). 32 S ub se que nt eve nts On 4 Ja nuar y 202 2 , As traZ enec a comp leted t he sal e of the glo bal rig hts to Tu d o r z a and D uaklir to Covis Pha rma G mbH for a n upfro nt paym ent of $270m, w hich wi ll be rec orde d withi n Othe r ope rating i ncom e and exp ense. T he int angib le as sets of $ 368 m ass ociate d with th is tran sac tion were c las siﬁe d as As sets he ld for s ale as a t 3 1 D ecem ber 20 2 1 ( Note 1 8). No tes to t h e Grou p F ina n cia l Statem ents c ont inue d 30 Co mm itment s and c onti ngent lia bil itie s cont inued 19 6 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financ ial Stat ement s Gro up Sub s idia ries a n d Hol d ings Wholly owned subsidiaries Algeria A AP M Sarl 10 0 % 20 Z one Macro-Economique, Hydra, Da rElMed ina, A lgie rs , Alge ria Argentina Astra Zeneca S.A. 10 0 % Nicolas de V edia 361 6, Piso 8, Ciudad Autónoma de Buenos Aires, A rgentina Al exio n Phar ma A rge ntin a SRL 10 0 % Aveni da Lea ndr o N. Ale m 592 Pis o 6, Buenos Aires, Argentina Austra lia Astra Zeneca Holdings Pt y Limited 10 0 % As tra Ze nec a PT Y Lim ited 10 0 % 66 T alavera Road, Macquarie P ark, NSW21 13, Aus tral ia Alexion Pharmaceuticals A ustralasia Pt y Ltd 10 0 % Bui ldin g A Suite 4 0 1 Leve l 4, 20 Rodb orough Road, Frenchs F orest, NSW20 86, Au str alia Austri a AstraZeneca Österreich GmbH 10 0 % Landstraßer Hau ptstraße 1A, A- 1030 Wien, Österreich Alexion Pharma Austria GmbH 10 0 % Do nau- Cit y-S traß e 7 , 3 0. Stoc k, DC T ow er , Vienna 1 220, Austria Belgium As tra Ze nec a S. A. / N . V. 100 % Al fons G oss etla an 40 bu s 201 at 1 702 Groot-Bijgaarden, Belgium Al exio n Phar ma B elgi um Sp rl 10 0 % Al exio n Ser vi ces Eu rop e Srl 10 0 % de Me eûs squ are 37 Br uxell es 1 00 0 Be lgium Bermuda Alexion Bermuda Holdi ng UL C 10 0 % Alexion Bermuda Limit e d 10 0 % Can on’ s Cou rt , 22 Vic tori a St., Ha milto n, Bermuda Bra zil Astra Zeneca do Brasil Limitada 10 0 % Ro d. Rapo so T ava res , KM 26, 9, Co tia, B raz il Alexion F armacêutica América Latina Ser viços de Administração de V endas Ltda. 10 0 % Alexion F ar macêutica Brasil Import ação eDi str ibui ção d e Prod utos e S er viç os de Administração de V endas Lt da 10 0 % Aveni da Dr. Chuc ri Za idan , 1 240, 1 5thf loor,Mor umbi C orp orate G olde n T owe r , Sã o Paulo, S P , 0471 1 -1 3 0, Bra zil Bulgaria Astra Zeneca Bulgaria E OOD 10 0 % 36 D raga n T za nkov Blvd., D istr ict Iz grev, Sofia, 1 057 , Bulgaria Canada Astra Zeneca C anada Inc. 1 10 0 % Sui te 500 0, 1004 M iddl egat e Road, O nta rio, L4Y 1M 4, C anada Alexion Pharma Canada Corporation 10 0 % 1 30 0-1 9 69 ST , U ppe r W ate r , Ha lifa x, NSB 3J3R7 , Ca nada Cayman Islands AZ Reinsurance Limited 100 % 18 Forum L ane , 2nd Floo r , Ca man a Bay , Grand Ca yman, P .O . BOX 69, Ca yman Isl ands Chile Astra Zeneca S.A. 10 0 % Astra Zeneca F ar maceutica Chil e Limitada 10 0 % Av . I sido ra Goye nec hea 3 4 77 , 2nd F loor, La sCon des, S anti ago, Ch ile China Astra Zeneca Phar maceuticals Co., Limited 10 0 % No. 2 , Huangshan Road, W u xi , Jia ngs uProvin ce, Chi na As tra Ze nec a (Wu xi) Tradi ng Co. Lt d 10 0 % Building E, Huirong P laza , Jinghui Road Ea st, Xi nwu Di stri ct, Wux i, Jian gsu Pr ovinc e, China Astra Zeneca In vestment (China) Co. , L td 10 0 % 1 9 9 Lia ngj ing Road, China (Shanghai) Pilot Free T rade Zone, Shanghai, China Astra Zeneca P harmaceutical (China) Co. Ltd 10 0 % No. 9 Me dic al Avenu e, Jian gsu Pr ovinc e, T aizhou, China Astra Zeneca P harmaceutical (Beijing) Co. ,Ltd 10 0 % 1 F , Bui lding N o.4, No.8 C our tya rd, No. 1Ke gu Stre et, B eijin g Econ omic - T echnological Development Area, Be ijing1001 76, Chi na In ac cord ance w ith se ction 4 09 of the Com pani es Act 20 06 a f ull list o f subsi diar ies, par tnerships, as sociates, joint v e ntures and joi nt arr ange ment s, the co untr y of inc orpo rati on, re gister ed of ﬁce ad dres s, and t he ef fecti ve pe rcen tage of e quit y owne d as at 31 Dec embe r 2021 are d isclo sed b elow . Unle ss oth er wise st ated the s hare c apit al disc lose d comp rise s ordinar y shares which are indirectly held by As tra Ze ne ca PLC. Unless other wise stated the accounting year en ds of sub sidia ries a re 31 Dece mbe r . The Group Financial Statements consolidate the Fina ncia l State ment s of the Com pany an d its sub sidia rie s at 3 1 D ece mbe r 2021 . Astra Zeneca ( Gu angzhou ) Pharmaceutic al Consulting Co., Ltd. 10 0 % Ro om 406 - 17 8, No. 1, Yic huan g Stre et, (China-Singapore Guangzhou Know ledge City) Huangpu District, Guangzhou City , China Astra Zeneca In vestment Consulting ( Wuxi )Co., Lt d 10 0 % Ro om 80 8, 8F , Bui lding 9 9-2 L ingh u Avenue, Xi nwu Dis tric t, Wux i, Jian gsu, C hina Astra Zeneca P harmaceutical (H ang zhou)C o., Ltd 10 0 % 1 2F & 1 4 F , B uildi ng 1 , S huli Pl az a, 758 Fei Jia T ang Road , Gongshu District, Hangzhou, Zhejiang Province, China Astra Zeneca Global R&D (China) Co., Ltd 10 0 % 16F , 88 Xi zan g Nor th Roa d, Jing ’ an D istr ict , Shanghai, China Astra Zeneca P harmaceutical (Chengdu) Co. , Ltd. 10 0 % 10th Fl oor , Bui ldin g 1 1 ( Buil ding E1 1 ), No.3 66, He min St reet , Chen gdu Hi gh-te ch Zon e, Chin a (Sic huan) Pi lot Free Trad e Zone Astra Zeneca P harmaceutical (S hang hai )Co., Lt d 10 0 % B1 F , 8F & 9 F , 88 Xi zan g Nor th Roa d, Jing’ an District, Shanghai, China Alexion Pharmaceuticals ( Shanghai) Company Limit ed 10 0 % Ro om 702, Leve l, No. 1 5 39 Wes t Nanj ing Road, Jing ’an District, Shangai, China Colombia Astra Zeneca Colombia S. A.S. 10 0 % Car rer a 7 No. 71 -21, T or re A, Pi so 19, Bogota, D. C., Colombia Alexion Pharma Colombia S.A .S. 10 0 % Car rer a 9 No. 1 1 5 – 06 / 30 Edif icio T ier ra Firme Oficina 2 904 Bogota D .C., Colombia Costa Rica As tra Ze nec a CAMCA R Cos ta Ri ca, S .A . 10 0 % Escazu, Guachi pelin, Centro Corporativ o Plaza Roble, E dificio Los Balcones, Se gund o Nivel, S an Jo se, Co sta Ri ca Croatia As tra Zene ca d.o.o. 10 0 % Ra dnick a ces ta 80, 100 00 Z agr eb, Cro atia Czech Republic Astra Zeneca C zech Republic, s .r .o . 10 0 % U T r ezork y 921/2, 1 5 8 00 Pr ague 5, Czech Re publ ic Al exio n Phar ma Cz ech s .r . o. 10 0 % Novo dvor ská 99 4/1 3 8, Br aník , 1 42 0 0 Prague, Czech Republic Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest 197 As tr aZ ene ca A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Fi na nci al S tate ment s / Grou p Sub sid ia rie s and H oldi ngs Denmark Astra Zeneca A/S 10 0 % Worl d T ra de Ce nter Ba ller up, Bor upvan g 3, DK- 2750 Bal leru p, Denm ark Egypt Astra Zeneca E gypt for Pharmaceutical Industries SAE 10 0 % 6t h of Octo ber Ci ty, 6th In dust rial Z one, Plot2, G iza , Egypt As tra Ze nec a Egyp t LLC 10 0 % 47 St. 270 New Ma adi, M addi, C airo, Eg ypt Dr imex L LC 10 0 % Plot 133, B anks’ D istr ict, 5 th Set tlem ent, New Cairo , Cairo , Egypt Estonia Astra Zeneca E esti OÜ 10 0 % Valuko ja 8, Üle mis te Cit y , T a llinn 1 14 15, Estonia Finland Astra Zeneca O Y . 10 0 % Itsehallintoku ja 4, Espoo, 02600, Fin land Fr anc e AstraZeneca S.A.S. 10 0 % T our Carpe Diem-31 , P lace des Corolles, 92 40 0 Courbevoie, France Astra Zeneca Dunkerque P roduction SCS 10 0 % 22 4 Avenue de la Dordogne, 59 640Du nkerq ue, Fra nce Astra Zeneca Reims Produc tion 10 0 % Che min de Vr illy Pa rc, In dust riel d e la Pompel le, 5 1 1 0 0 , Reims, F rance Alexio n E urope S.A .S. 10 0 % Al exio n Phar ma Fr anc e S. A. S. 10 0 % 103-1 0 5 Rue A natole Fr anc e 9230 0 Levallois-Perret Germany Astra Zeneca Holding GmbH 10 0 % AstraZeneca GmbH 10 0 % Ti nsda ler Weg 183, We del, D -2288 0, Ge rmany Sofotec GmbH 10 0 % Be nzst ras se 1 -3 , 6 1352, Ba d Homb urg v.d. Hohe, Germany Astra Zeneca Computational Pat holo gyG mbH 2 10 0 % Bernhard-Wicki-Straße 5, 80636, Munich, Germany Portola FRG G mbH 10 0 % Fraunhof erstraße 1 2Planegg 821 52 Germ an y Al exio n Phar ma G erm any Gm bH 10 0 % Landsberger Straße 30 0 , 80687 Muni ch, Germany Greece Astra Zeneca S.A. 10 0 % Agisilaou 6-8 str ., Marousi-At hens, 1 5 123 , Greece Hong K ong Astra Zeneca Hong Kong Limit e d 10 0 % Uni t 1 – 3, 1 1 /F ., 18 King Wa h Road, No rthPo int, H ong Kon g Hungar y Astra Zeneca K ft 10 0 % 1 st f loor, 4 buil ding B, A líz st r ., Bu dape st, 1 1 1 7 , Hungary India Astra Zeneca Ind ia Privat e Limited 3 10 0 % Blo ck A , Nevil le T owe r , 1 1 th Fl oor , Ramanujan IT SEZ, T aramani, Chennai, T a mil Nad u, PIN 60 01 1 3 , Indi a Alexion Business Services Private Limit ed 10 0 % 9t h Floo r , Pla tina , G Bloc kPlot N o. C-5 9, Bandra-Kurla Complex Bandra (East), Mumbai 400051 India Iran Astra Zeneca P a rs Company 10 0 % Sui te 1 , 1st Flo or No. 3 9, Alvan d Ave., Argantin Sq. , T ehran 1 5 166 73 1 1 4, Iran Ireland Astra Zeneca P harmaceuticals (Ireland ) Designated Activity Company 10 0 % 4th Fl oor , So uth Ba nk Hou se, Ba rrow St reet , Dublin, 4 , Republic of I reland Alexion Pharma Holding UC 10 0 % Alexion Pharma International Operations UC 10 0 % Alexion Pharma Development UC 10 0 % College Business & T echnology Park, Blanchardstown Road , North Dublin 1 5, Ireland Israel Astra Zeneca (Israel) L td 10 0 % 6 Hac har ash S t., Hod H asha ron, 4 52 4 07 5, Israel Al exio n Phar ma Is ra el Ltd 10 0 % 4 W eizmann Str ., T el-Aviv -Jaf fa, Israel Italy Simesa SpA 10 0 % Astra Zeneca SpA 10 0 % Vi ale De cum ano 39 20157 Mila n, Ita ly Al exio n Phar ma It aly S rl 10 0 % Via Melchiorre Gioia 8 Milano 201 2 4, Italy Japan Astra Zeneca K.K. 10 0 % Gr and Fro nt Osa ka T owe r B, 3-1 , Of uka- cho, Kita-ku, Osaka, 530-0 0 1 1 , Japan Al exio n Phar ma G K 10 0 % Ebisu Fi rst Square, 1 8- 1 4, Ebisu 1 -chome, Shibuya-ku, T okyo, J apan Keny a Astra Zeneca Phar maceuticals Limited 10 0 % L .R. No. 1/1 327 , Avenue 5 , 1 st F loor, Ro seAvenue , Nair obi, Ken ya Latvia Astra Zeneca Latvija SIA 10 0 % Sk anste s iel a 50, Rig a, L V-1 013, Lat via Lithuania Astra Zeneca Liet uva U AB 10 0 % Sp audo s g., Viln ius, L T - 051 3 2 , Li thuan ia Luxembourg Astra Zeneca Lux embour g S .A. 10 0 % Ru e Nico las Bové 2 A – L - 1253 Lu x em bour g Malaysia Astra Zeneca Asia-Pacific Business Se rv ice s Sdn B hd 10 0 % 1 2th F loor, Men ara S ymph ony , N o. 5 Jala n Prof, K hoo Ka y Kim, S eksye n 1 3, 4 6200 Petalin g Ja ya, Sel angor Darul Ehsan, Malaysia Astra Zeneca Sdn B hd 10 0 % Nu cleu s T ower, Level 1 1 & 12, No. 10 Jala n P JU 7 /6 , Muti ara Da man sar a, 47800 Pe tali ng Jaya, Selangor Darul Ehsan, Malaysia Mex ico Astra Zeneca Health Care Division, S. A .deC.V . 10 0 % As tra Ze nec a, S. A . de C.V . 10 0 % Av . Pe rife ric o Sur 4 305 in teri or 5, Co lonia Jardines en la Montaña, Mexico City , Tl alpa n Dist rito Fe der al, CP 1 421 0, Mex ico Al exio n Phar ma M exico S . de R .L . de C. V . 10 0 % Pas eo de l os T am ari ndos 9 0 T or re 1 p iso 6 – ACol . Bosq ues de l a Lom as CP 051 2 0 D.F Mexico Morocco AstraZeneca Maro c SARLAU 10 0 % 92 B ouleva rd An fa ETG 2, Ca sabl anc a 200 00, Morocco The Netherlands Astra Zeneca B. V . 10 0 % Astra Zeneca Continent B.V . 10 0 % AstraZeneca Gamm a B. V . 10 0 % Astra Zeneca Holdings B.V . 10 0 % As tra Ze nec a Jota B . V. 10 0 % As tra Ze nec a Rho B.V . 10 0 % Astra Zeneca Sigma B . V . 10 0 % AstraZeneca T reasur y B.V . 10 0 % Astra Zeneca Z eta B. V . 10 0 % Alexion Holding B.V . 10 0 % Alexion Pharma Foreign Holdings, B.V . 10 0 % Pri nse s Beat rixl aan 5 82, 2595BM , TheHague, The Netherlands AstraZeneca Nijmegen B. V . 10 0 % La gel ands eweg 78, 6 545 CG N ijme gen, TheNetherlands Ace r ta Pha rm a B. V . 10 0 % Aspire Therapeutics B. V . 10 0 % Kl ooste rs traa t 9, 5349 A B, Os s, TheNetherlands Financi al S tat eme nts At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest Gro up Sub s idia ries a n d Hol d ings c ont inue d 198 A st ra Zen eca A nn ual R epo rt & For m 2 0- F In for mat ion 2 021 Portola Netherlands B. V . 10 0 % Prins Bernhardplein 200 JB A msterdam 1 0 9 7 , The Netherlands Alexion Pharma Netherlands B. V. 10 0 % He reng rach t 282 Am ster dam 101 6 BX , The Netherlands New Zealand Astra Zeneca Limit e d 10 0 % Pharmacy Retailing (NZ) Limited t / aH eal thca re Log isti cs, 58 R icha rd Pea rse Dr ive, Ma nger e, Auck lan d, 1 1 42, NewZ eala nd Nigeria Astra Zeneca Niger ia Limited 10 0 % 1 1A, A lfre d Ola iya Str eet, Aw use Es tate, Of fSa lvati on Stre et, O peb i, Ikeja , Lag os, Nigeria Nor way Astra Zeneca A S 10 0 % Fred rik Se lme rs vei 6 N O- 06 63 Os lo, Nor way Pakistan Astra Zeneca P harmaceuticals Pak ist an( Priva te) Lim ite d 4 10 0 % Of fi ce No. 1, 2nd Floo r , Sa si A rcad e, Bloc k 7 , Mai n Clif ton Ro ad, Ka rach i, Paki stan Panama AstraZeneca C AMCAR, S.A. 10 0 % Bodega #1 , Parque Logistico MIT , CarreteraHacia Co co S olo , Colon, Panama Per u AstraZeneca Peru S.A. 10 0 % Cal le La s Orq uíde as No. 675, Int . 802, Edif ici o Pacif ic T owe r , Sa n Isid ro, Lim a, Per u Philippines Astra Zeneca P harmaceuticals (Phils.) Inc . 10 0 % 16th Flo or , I noza Tower , 4 0th S tree t, Bonifacio Global City , T aguig 1 634, Phil ippines Poland Astra Zeneca Phar ma Poland Sp.z.o.o . 10 0 % Pos tepu 1 4, 02- 676, Wars zawa , Polan d Portugal Astra Alpha Produtos F ar maceuticos Lda 10 0 % Astra Zeneca P rodutos F a rmaceuticos Lda 10 0 % Nova str a Pro moç ão e Com érc io Farmacêutico Lda 10 0 % Novastuart Produtos Farmaceuticos Lda 10 0 % Stuar t - Produtos Farmacêuticos Lda 10 0 % Zeneca Epsi lon – Produtos Farmacêuticos Lda 10 0 % Zenecapharma Produt os F ar mace uticos, Unipessoal Lda 10 0 % Ru a Humb er to Made ira , No 7 , Q uel uz de Baixo , 27 3 0-097 , Barcarena, P or tugal Puerto Rico IPR P harmaceuticals, Inc. 10 0 % Road 1 88, San Isidro Industrial Park, Can óvana s, Pue rto R ico 0 0729 Romania Astra Zeneca Phar ma S .R.L. 10 0 % 1 2 Menuetului Str eet, Bucharest Business Par k, Bui ldin g D , West W ing, 1st Flo or , Se ctor 1, Buc hare st, 013 713, Rom ania Russia Astra Zeneca Industries, LL C 10 0 % 2490 06, 1st Vost ochn iy proye zd, 8, Dobrinovillage , Borov skiy district, RussianFederation AstraZeneca Pharmaceuticals, L LC 10 0 % Building 1 , 2 1 First Krasnogvardeyskiy lane, floor 30 , Mosco w, Russia Al exio n Phar ma OO O LLC 10 0 % 4th Le snoy Pe reul ok, Fl oor 5, O ff ice 529, Moscow , 1 2504 7 , Russian F ederation. Singapore AstraZeneca Si ngapore P t e Li mited 10 0 % 10 Kall ang Avenu e #1 2- 10, Ap eri a T ower 2, 3395 10 , Singapore South Africa Astra Zeneca P harmaceuticals (Pt y) Limited 10 0 % 1 7 G eorg ian C resc ent Wes t, No rth downs Of fi ce Par k, Br yan ston, 219 1 , S out h Afri ca South Korea As tra Ze nec a Korea C o. Ltd 10 0 % 21 s t Floo r , As em T owe r , 51 7 , Y eo ngdo ng- daero, Gangnam-gu, Seoul, 061 64, South K orea Al exio n Phar ma Kor ea LLC 10 0 % 4 1 F L., 1 52 T e her an-r o (Yeoks am- don g Gangnam Finance Center) , Gangnam- gu, Seoul, South K orea Spain Astra Zeneca F ar maceutica Ho ldin gSpa in,S. A . 10 0 % Astra Zeneca F ar maceutica Spain S.A . 10 0 % Fundación As traZeneca 10 0 % La bor ato rio B eta , S. A. 10 0 % Laboratorio Lailan, S. A. 10 0 % La bor ato rio T au S .A . 10 0 % Par que No rte , Edifi cio Ál amo, C/S err ano Galvache no 56., 28033 Madrid, Spain Al exio n Phar ma S pain S .L . 10 0 % Av D iagonal Num. 60 1 P . 1 Barcelona 08028, Spain Swe den As tra E xp or t & T ra din g Ak tieb ola g 10 0 % Astra Lakemedel Aktieb olag 10 0 % Astra Zeneca AB 10 0 % AstraZeneca Bio tech AB 10 0 % Astra Zeneca Bio VentureHub AB 10 0 % Astra Zeneca Holding Ak tiebolag 5 10 0 % Astra Zeneca In ternational Holdings A ktiebolag 6 10 0 % Astra Zeneca Nordic A B 10 0 % Astra Zeneca P harmaceuticals Ak tiebolag 10 0 % As tra Ze nec a Söde r täl je 2 AB 10 0 % Stuar t Phar ma A ktiebolag 10 0 % Tika Lakemedel Aktiebolag 10 0 % SE-1 51 85 Sö der täl je, Swe den Aktie bolaget Ha ssle 10 0 % Symbicom Aktiebolag 6 10 0 % 431 83 M oInd al, Swe den Astra T ech International Aktiebolag 10 0 % Box 14, 431 2 1 MoI ndal , Swede n Alexion Pharma Nordics Holding AB 10 0 % Al exio n Phar ma N ordi cs AB 10 0 % T TM Eur ope D evelo pme nt AB 10 0 % Wilson Therapeutics AB 10 0 % Wilson Therapeutics Incentive AB 10 0 % Kungsgatan 3, 1 1 1 43 Stockholm, S weden Switzerland Astra Zeneca A G 10 0 % Neuhofstrasse 34, 6340 Baar , S witzerland Spirogen Sarl 6 10 0 % Ru e du Gra nd- Chê ne 5, CH - 1 00 3 La usa nne, Switzerland Portola Schwei z GmbH 10 0 % c/o T om S chaf fn er Sc häre r Rec htsa nwälte Hintere Bahnhofstrasse 6, 500 0 A arau, Switzerland Alexion Pharma GmbH 10 0 % Giesshübelstrasse 30, Zürich, 8045, Switzerland T aiwan AstraZeneca T aiwan Lim ited 10 0 % 21 s t Floo r , T a ipei M etro B uild ing 207 , T u nHwa Sou th Road , SEC 2 T a ipei, Taiwan Al exio n Phar ma T ai wan Ltd 10 0 % Ro om 1 1 5 3, 1 1 F , N o. 1, Son gZhi R d T aip ei, 1 10 47 T a i wa n Thailand Astra Zeneca ( Thailand) Limited 10 0 % As ia Cen tre 19th f loor, 1 73/20, S outh Sathorn Rd, Khwaeng Thungmahamek, Khet Sathorn, Bangk ok , 10 120 , Thailand Tu n i s i a Astra Zeneca T unisie SaRL 10 0 % Lot N o. 1 .5 .5 les j ardi ns du la c, bloc B l es berges du lac T unis, T unisia Tu r k e y As tra Ze nec a Ilac S anay i ve Tic are t Lim ited Sirketi 10 0 % YK B Plaz a, B Bl ok, Ka t:3- 4, Leven t/ Besiktas, Istanbul , T urkey Ze nec a Ilac S anay i Ve Tica ret A non im Sirketi 10 0 % Bü yükde re Cad., Y .K .B. Pl az a, B Blo k, Kat:4, Lev ent/Besikta s , Istanbu l, T urke y Alexion Ilac Ticaret Limited Sirketi 10 0 % Iç eren köy Maha lle si Umu t Sok. A ND Of is Si t. No. 10 1 2/ 73 Ata sehi r Ista nbul , T urkey Ukraine As tra Ze nec a Ukr ain a LLC 10 0 % 54 S imi Pra khov yk h stre et, Ki ev , 01033 , Ukraine Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest 199 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 F ina nci al S tat ement s / Gro up Su bsid ia rie s an d Hold ing s Unit ed Arab Emirat es Astra Zeneca FZ -LLC 10 0 % P .O. Box 5 05070, Blo ck D, Dub ai He alth careC ity, Oud M ehta R oad, D ubai, United Arab Emirates Al exio n Phar ma Mi ddl e Eas t FZ-LLC 10 0 % Du bai Sc ienc e Park , 501 , F loor 5, E IB Bui ldin g No. 2, Duba i, Uni ted Ar ab Emi rate s United Kingdom Ardea Biosciences Limited 10 0 % Arrow Therapeutics Limited 10 0 % Astra Pharmaceuticals Limited 10 0 % AstraPharm 6 10 0 % As tra Ze nec a Chin a UK Lim ite d 10 0 % Astra Zeneca Death In Ser vice T r ust eeLi mite d 10 0 % Astra Zeneca Emplo yee Sh areTrus tLim ited 10 0 % Astra Zeneca F inance Limited 100 % Astra Zeneca In termediate Holdings L imi ted 5 10 0 % Astra Zeneca In vestments Limited 10 0 % Astra Zeneca J apan Limited 10 0 % Astra Zeneca Nominee s Limited 10 0 % Astra Zeneca Q uest Limited 10 0 % As tra Ze nec a Sha re T r ust L imit ed 10 0 % Astra Zeneca Sw e den Investments Limited 10 0 % AstraZeneca T reasur y Limit e d 6 10 0 % As tra Ze nec a UK Lim ited 10 0 % Astra Zeneca US Investments Limited 5 10 0 % AZENCO2 Limited 10 0 % AZENCO 4 Lim it ed 10 0 % Cambridge Antibody T echnology Gr oupL imit ed 10 0 % KuDOS Horsham Limit ed 10 0 % KuDOS P harmaceuticals Limited 10 0 % Ze nco (N o. 8) Li mite d 10 0 % Zeneca Finance (Netherlands) Company 10 0 % 1 F r ancis Crick Avenue , Cambridge Biomedical Campus, C ambridge, CB2 0A A, United Kingdom MedImmune Limit e d 10 0 % Milstein Building, Granta Park, Cambridge, CB21 6G H, Uni ted Ki ngdo m MedImmune U .K . Limited 10 0 % Plot 6 , Renaissance Wa y , Boulevard Industry Par k, Live rpo ol, L 2 4 9 JW, Unite d King dom Syntimmune Limited 10 0 % 21 Holb orn V iadu ct, L ondo n, EC1 A 2DY , United Kingdom Alexion Pharma UK Limited 10 0 % Portola Pharma UK Limited 10 0 % 3 Fur zegr ound Way, Stock ley Pa rk, Ux brid ge, Mid dle sex, UB1 1 1 EZ , Unit edKin gdo m Unite d States Am ylin O hio L LC 7 10 0 % Am ylin P har mac euti cal s, LLC 7 10 0 % Astra Zeneca Collaboration V entures, LLC 7 10 0 % Astra Zeneca P harmaceuticals LP 8 10 0 % Atkemix Nine Inc. 10 0 % Atke mix T e n Inc. 10 0 % BMS Holdco, Inc. 10 0 % Corpus Christi Holdings Inc. 10 0 % Omthera Pharmaceuticals , Inc. 10 0 % Optein, Inc. 10 0 % St auf fer M ana gem ent C ompa ny LLC 7 10 0 % Zeneca Holdings Inc. 10 0 % Zeneca Inc. 10 0 % Zeneca Wilmington Inc. 5 10 0 % As tra Ze nec a Fina nce LLC 10 0 % Astra Zeneca F inance and Holdings Inc. 5 10 0 % 1800 C onco rd Pike, W ilmin gton, D E 1 9 803 , Uni ted Sta tes ZS Ph ar ma Inc . 10 0 % 1 100 Par k Plac e, Suit e 300, S an Ma teo, CA94 403, U nited S tate s Al pha Cor e Phar ma , LLC 7 10 0 % 33 3 Park land Pl az a, Sui te 5, Ann A rb or , MI48103, U nited S tate s AZ-Mont I nsurance Company 10 0 % 76 St Pau l Stre et, Su ite 50 0, Bur lingto n, V T054 01 , Uni ted St ates Definiens Inc. 10 0 % 1808 A ston Aven ue, Sui te 1 9 0, Car lsba d, CA920 08, U nite d State s MedImmune, L LC 7 10 0 % MedImmune V e ntures, Inc. 10 0 % One MedImmune W ay , Gaithersburg, MD20 878, Unite d Sta tes Pearl Therapeutics, Inc. 10 0 % 20 0 Cardi nal Way, Redwo od Cit y , C A 9406 3, Uni ted Sta tes Caelum Biosciences Inc. 10 0 % 1 200 Florence Columbus Road, Bordentown, NJ 0 8505, U nite d State s Alexion Services Latin America Inc. 10 0 % 60 0 Bri ckell Ave, M iami, F L 331 31 , Uni tedSt ates Portola USA, Inc. 10 0 % Portola Pharmaceuticals LL C 10 0 % 270 Eas t Gra nd Avenu e,Sou th San Fran cis co, CA 940 80, Un ited S tate s Achillion P harmaceutica ls, Inc. 10 0 % Alexion Delaw a re Holding LLC 10 0 % Alexion Holding LLC 10 0 % Al exio n Phar ma LLC 100 % Alexion Pharmaceuticals, Inc. 10 0 % Syntimmune, Inc. 10 0 % Al exio n US Hol din gs LLC 10 0 % Al exio n US1 LLC 10 0 % Savo y Therapeutics Corp 10 0 % Wilson Therapeutic s USA , Inc. 10 0 % 1 21 Sea por t Bou levar d, Bos ton, MA 0 221 0, Uni ted Sta tes Ace r ta Pha rm a LLC 7 10 0 % 1 21 Oys ter Poin t Boul evard, S out h San Fran cis co, CA 940 80, Un ited S tate s Ci der Me rg er Sub , Inc. 10 0 % 1 209 O ran ge Str eet, C ity o f Wilmi ngto n, Co unty o f New Ca stle, D elawa re 1 9 801 , Uni ted Sta tes Uruguay Astra Zeneca S.A. 10 0 % Y a guar ón 1 407 o f 1 20 5, 1 1. 1 00 , Montev ide o, Uruguay V enezuela AstraZeneca V enezuela S. A. 10 0 % Gotland Pharma S.A. 10 0 % Av . L a Cas tella na, Torre L a Cas tella na, Pis o5, Ofi cina 5 -G , 5- H, 5- I, Ur baniz aci ón La Castellana, Municipio Chacao, Estado Bolivariano de Miranda, V e nez uela Vietnam Astra Zeneca Vietnam Company Limited 10 0 % 18th Flo or , A &B T owe r , 76 Le L ai, Be n Tha nh Ward , Dist ric t 1 , Ho C hi Minh C ity, Vie tnam Financi al S tat eme nts At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest Gro up Sub s idia ries a n d Hol d ings c ont inue d 200 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Subsidiaries where the effective interest is l es s tha n 100 % India Astra Zeneca Phar ma India Limited 3 75 % Blo ck N1 , 12th Fl oor, Manyat a Emba ssy Business Park, Rachenahalli, Out er Ring Road, Bangalore-560 045, India Indonesia P . T . AstraZeneca Indonesia 95 % Per kanto ran H ijau A rkad ia T owe r F , 3r dFloo r , JI. T .B. S imatu pan g Kav . 8 8, Jakart a, 12 520 , Indonesia Joint V entur es Hong K ong WuXi MedImmune BiopharmaceuticalCo., Limited 50 % Ro om 1 9 02, 19/F , Le e Gard en On e, 33Hy san Ave nue, Ca useway B ay , Ho ng Kong IHP HK Holdings Limit ed 50 % Uni t 580 5, 58/F ., T wo Inte rna tion al Fina nce Ce ntre 8 Fi nanc e Stre et, C entr al, Hon g Kong United Kingdom Archigen Biotech Limited 9 50 % Centus Biotherapeutics Limited 9 50 % 1 F r ancis Crick Avenue , Cambridge Biomedical Campus, C ambridge, CB2 0A A, United Kingdom Unite d States Montrose Chemical Corporation ofCa lif orn ia 50 % Sui te 380, 6 00 E rick sen Ave N/ E, BainbridgeIsl and, Unit e d States Significa nt Holding s Austra lia Ar ma ron B io Ltd 10 24.6 0 % MPR G roup, HW T T ow er , L evel 19 , 40 Ci ty Rd , Southbank, VIC 3006, Australi a China Di zal (J iang su) Ph arm ace uti cal C o., Ltd. 11 26.95 % 1 9 9 Lia ngj ing Rd, Zhangjiang Hi- T e ch Park, Pudong District, Shanghai, China, 20 12 0 3 Wuxi AstraZeneca-CICC Venture Capit al Partner ship (Limited Par tnership) 2 2 .13 % Ro om 80 8, 8F , Bui lding 9 9-2 L ingh u Avenue, Xi nwu Dis tric t, Wux i, Jian gsu, C hina United Kingdom Apollo Ther apeutics LLP 7 25 % Stev e nage Bioscienc es Catalyst, GunnelsW ood Road, Stev enag e , He rt ford shir e, SG12FX , Uni ted Kin gdo m VaxEquity 14 40 % The Mansion, Chesterford Research Park, Li ttle C hes ter ford, E ssex , CB1 0 1XL , Uni tedKi ngdo m Unite d States C.C . Global Chemicals Company 8 3 7. 5 % PO Box 7 , M S2901, T exas , TX 76 101-0 007 , Uni ted Sta tes Associated Holdings Fr anc e Medetia SAS 9 10 % Institute Imagine 2 4, Boulevard du Mo ntpar nas se 7501 5 , Pari s, Fran ce Swe den Swedish Orphan Biovitrum AB (publ) 9.9 % T omtebodavägen 2 3A , St o ckholm, Sweden Ondosis 6 19 .9 % Bio V entureHub, Pepparedsleden 1 , 431 8 3 Mölndal, Sw eden United Kingdom Circassia Pharmaceuticals PL C 17 % Nor t hbrook House, Robert Robinson A venue, Ox ford S cie nce Par k, Ox for d, OX 44G A, United Kingdom Unite d States AbMed Corporation 12 18 % 68 Cummings Park Drive, Woburn, MA01801 , U nite d State s Aristea Therapeutic s, Inc. 13 11. 8 5 % 1 22770 Hi gh Blu ff D rive, #3 80, Sa n Die go, CA 92130, Uni ted St ates Ba erg ic Bio , Inc. 19. 9 5 % 2 Ga nsevo or t Stre et, 9 th Floo r , Ne w Y ork , NY 10014, Unite d State s Employ ee Bene fit T rust The AstraZene ca Employee Benefit T rust                                                                                                                                                                                                                             Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest At 31D ece mb er 2 021 Group Interest 2 01 As tr aZ ene ca A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Fi na nci al S tate ment s / Grou p Sub sid ia rie s and H oldi ngs Compa ny Ba l anc e S heet at 31Dec embe r Astra Zen eca PLC 20 21 20 20 Note s $m $m Fixed assets Fixed a sset inv estments 1 6 5,62 4 3 3,268 Other receivables – 4 65,624 3 3,27 2 Current assets De btor s – othe r 9 26 De btor s – amou nts owe d by Grou p unde rt aki ngs 6,321 7, 0 1 1 6,330 7, 0 3 7 Cr ed ito rs: A mo unt s fa lli ng d ue wi th in on e yea r Other payables 3 (19 8 ) (19 2 ) Interest -bearing loans and borrowings 2 (1 ,249) (1, 5 3 5) (1, 44 7) ( 1,7 27 ) Net current assets 4,88 3 5 , 310 T otal ass ets less current liabilities 70,5 07 38,582 Cr ed ito rs: A mo unt s fa lli ng d ue af te r mo re t han o ne ye ar Amounts owed to Group underta kings 2 (2 83) (28 3) Interest -bearing loans and borrowings 2 ( 20 ,7 81) ( 17, 1 6 1) Other payables 3 (32) – (21 ,0 96) (1 7 ,444) Net assets 4 9 , 411 2 1,1 3 8 Capital and reserves Called-up share capital 4 387 328 Share premium account 35, 1 26 7, 9 7 1 Capital redemption reserve 15 3 15 3 Other reserves 2 ,1 8 2 2,382 Profit and loss account 11 , 5 6 3 10, 3 0 4 Shareholders’ funds 4 9 , 4 11 2 1 ,13 8 $m m eans m illion s of US doll ars . Th e Compa ny’ s p roﬁt fo r the year wa s $5, 1 4 1m (2020: $1 ,97 4m). Th e Compa ny Finan cial S tatem ents fr om pag es 202 to 208 we re app roved by the B oard a nd were s igne d on its be half by Pas ca l Sor iot Ara d h ana Sarin Dir ector Di rector 1 0 Febr uar y 2022 Company’ s registered number 02723534 Financi al S tat eme nts 202 A st raZ ene ca A nnu al R epor t & For m 20 - F In for mat ion 20 21 Co m pany State men t of Changes in Eq uity for th e year e nded 31De cemb er Share Capital Share premium redemption Oth er Profit and T otal capital account reserve reserves 1 loss account 2 equity $m $m $m $m $m $m At 1Ja nu ar y 2 02 0 3 28 7, 9 4 1 15 3 2 ,4 41 11, 9 9 8 22, 861 T otal c omprehensive income for t he period Prof it fo r the pe riod – – – – 1, 9 74 1 , 9 74 T otal c omprehensive income for t he period – – – – 1, 9 74 1 , 9 74 T r an sac ti on s wit h own er s, r eco rd ed di re ct ly in e qu it y Dividends – – – – (3,66 8) (3,668 ) Capital contributions for share-base d payments – – – (59) – (59) Issue of Ordinary Shares – 30 – – – 30 T otal contributions by and distributions to owners – 30 – (59) (3,6 68) ( 3,6 97) At 31D ece mb er 2 02 0 328 7, 9 7 1 15 3 2,382 10, 3 0 4 2 1,1 3 8 T otal c omprehensive income for t he period Prof it fo r the pe riod – – – – 5 ,1 41 5 ,14 1 T otal c omprehensive income for t he period – – – – 5 ,1 41 5 ,14 1 T r an sac ti on s wit h own er s, r eco rd ed di re ct ly in e qu it y Dividends – – – – (3,8 82) (3,8 82) Capital contributions for share-base d payments – – – (2 00) – (20 0) Issue of Ordinary Shares 59 2 7,1 5 5 – – – 2 7, 2 14 T otal contributions by and distributions to owners 59 2 7,1 5 5 – (2 00) (3,882 ) 2 3 ,1 3 2 At 31D ece mb er 2 021 3 87 35 , 1 26 15 3 2 ,1 8 2 11, 5 6 3 4 9 , 4 11                                                                                                                                                                                                                                                                                                                                                           Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 203 A st ra Zen eca A nn ual R epo rt & For m 2 0- F In for mat ion 2 021 F in anc ial S ta teme nts / Co mpa ny St ateme nts Co m pany Acco unti n g Poli cies Ba sis of pre sentat ion of  na ncia lin for mat ion These ﬁnancial statements were prepared in ac cord ance w ith FRS 10 1 ‘Re duce d Disclosure Frame work’ . In preparing these ﬁnancial statements, the Company appl ied the recognition, measurement and disclosure require ments of Int e rnational Fina ncia l Repo rt ing Sta ndar ds as ad opted by the UK (UK -adopted Int ernational Accounting Standards) , but made amendments where ne ces sar y in or der to co mply wi th the Com pani es Act 20 06 a nd to take ad vantag e of FRS 101 discl osure exe mption s. In these ﬁnancial statements, the Co mpan y has applied the e xemptions av ailable under FRS 101 in resp ect of t he follow ing dis closu res: > St ateme nt of Cas h Flows and r elate d notes > dis clos ures in r espe ct of tr ans actio ns with wholly owned subsidiaries > disclosure s in re spect of capital managemen t > the e ffe cts of new b ut not yet e ffe ctive IFR Ss > dis clos ures in r espe ct of th e comp ensa tion of K ey Management Personne l . As th e Grou p Finan cial St ateme nts ( pres ented on pa ges 134 to 201 ) inc lude the e quiva lent dis clos ures, t he Comp any has a lso ta ken the exempt ions un der FRS 101 availab le in re spec t of the following disclo sures : > IFRS 2 ‘ Shar e-ba sed Pay ment ’ in res pect of Gr oup set tle d shar e-b ased p aymen ts > cer tain disclosure s required by IFRS 1 3 ‘Fai r V alue Measurement’ and the disclosure s required by IFRS 7 ‘Financial Instruments : Disclosures’ . No in divid ual pro ﬁt and l oss ac coun t is pre pare d as pr o vid ed by se ction 4 08 of the C ompan ies Ac t 200 6. U K - ad opted I n te rnat ional Acc oun ting Stan dard s On 31 De cemb er 2020, EU -adop ted IFRS wa s brought int o UK la w and became UK -adopted International Accounting Standards, with future cha nges to I FRS bei ng subj ect to en dor seme nt by the UK E ndor sem ent Boa rd. In pr epar ing these ﬁnancial statements in accordance with FRS 1 01 , t he Company F inancial Statements transitioned to UK -adopted Int ernational Accounti ng Standards (as described abo ve) on 1 Ja nuar y 2021 . T here i s no impa ct on recogni t ion, measureme nt or disclosure in the p erio d repo rte d as a re sult of th is chan ge. Ba sis of acc ount ing The Company Financial Stat ements are prepared u nder t he hi storical cost conv ention and o n a goin g conc ern ba sis, i n acco rdanc e wit h the Com panie s Act 20 06. The fol low ing para graphs describe the main accounting policies, wh ich hav e been applied consistent ly . Es tim a tes a n d judgements The preparation of the Company Financial St atemen ts in co nform ity wi th gen eral ly accepted acco unting p rinciples requires management t o mak e estimates and jud geme nts tha t affe ct the r epor te d amoun ts of as sets a nd lia biliti es at the d ate of the Fina ncia l State ment s and the r epor ted am ounts of r evenue s and exp ense s duri ng the repor ting period. Actual results could dif fer f rom tho se est imates . The re are no ke y judgements or signiﬁcant estimates. Foreign c ur rencie s Proﬁ t and lo ss acc ount ite ms in fo reign cur renc ies a re tran slate d into US dol lar s at average rat e s for the relevant accounting pe riod s. Mone tar y as sets a nd liab ilitie s are translated at ex change rates prevailing at the date of the Company Balance Sheet. Exc hange g ains a nd los ses o n loans a nd on sho rt-ter m fore ign cur renc y borr owings a nd deposit s a re included within net Finance expe nse. E xchan ge dif fere nce s on all oth er foreign curren cy tr ansactions are recogni sed in Operating proﬁt. Ta xat ion Th e curre nt ta x payab le is bas ed on t axa ble pro ﬁt for the ye ar . T a xab le proﬁ t dif fers fro m repo rte d proﬁt b eca use ta xab le proﬁ t exclud es item s that a re eith er never t axa ble or t ax de duct ible or i tems tha t are ta xab le or t ax de duct ible in a di ffe rent p erio d. The Com pany’s curr ent ta x as sets a nd liab ilitie s are c alcu lated u sing ta x ra tes that h ave been ena cted o r subs tanti v ely e nac t ed by th e repor ting date . Def erre d ta x is provi ded u sing the b alan ce she et lia bilit y meth od, provi ding fo r tempo rar y dif fer ence s bet ween th e car ry ing amo unts of assets and liabilities for ﬁnancial reporting pur pos es and th e amou nts us ed for t axat ion pur pos es. De ferre d ta x ass ets ar e reco gnise d to the ex tent th at it is pr obab le that t axa ble pro ﬁt will be ava ilab le agai nst whi ch the a sset ca n be utili sed. T his re quire s judge ment s to be ma de in re spec t of the avai labili ty of f uture taxable income. No de ferr ed ta x ass et or li abilit y is re cog nised in re spe ct of temp orar y di ffe renc es as soci ated wi th investm ents in s ubsi diar ies and b ran ches w here th e Compa ny is abl e to con trol th e timing of r evers al of the te mpor ar y dif fer ence s and it i s proba ble th at the temp ora ry di ffe renc es will n ot rever se in the f ores eeab le fut ure. Th e Compa ny’ s d efer red ta x as sets a nd liabilities are calculated using t ax rates that are ex pec ted to app ly in the p erio d when t he lia bilit y is set tle d or the a sset r ealis ed ba sed on ta x ra tes that h ave been e nacte d or sub stan tively e nacte d by the rep or ting da te. Accrua ls for tax continge ncies require ma nagem ent to ma k e jud geme nts of po tentia l expo sure s in rela tion to ta x au dit iss ues. T a x bene ﬁts ar e not rec ogni sed un less t he ta x pos ition s will pr obabl y be acc epted by t he aut hori ties. T his is ba sed u pon ma nage ment ‘s interpretation of applicable la ws and regulations and t he expe ctat ion of how th e ta x autho rit y will r esol ve the mat ter . O nce co nsid ered probable of not being accepted, management reviews each material tax beneﬁt and reﬂects the e ffe ct of the u ncer ta int y in deter minin g the related ta xable result. Accruals for tax contingencies are measured usi ng eith er the m ost likel y amou nt or the expe cted va lue am ount de pen ding on wh ich met hod the C ompa ny expec ts to bet ter predict the resolu tion of the uncer tainty . Financi al S tat eme nts 204 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 I nves tme nts Fixed asset investments, including inv estments in su bsidi arie s, are s tated a t cost a nd revie wed for impairment if there are indications that the ca rr ying va lue may not b e rec ov er able. Debtor s Am ounts owe d by Grou p unde rt akin gs are recogni sed initially at fair value. Subsequent to initial recognition they are measured at amor t ised cost usi ng the ef fectiv e interest method, less any impairment losses. Th e recove rabil ity of t hese b alanc es ha s bee n as ses sed in a ccor danc e with IFR S 9 and no impairment has been identiﬁed. The amounts owed by G roup un der tak ings a re con side red to have low cr edit r isk, d ue to timel y payme nt of inte rest a nd set tle ment of p rinc ipal am ounts on ag ree d due date s, limi ting the l oss all owance to 12 - month ex pec ted cre dit lo sses . Am ounts owe d by Grou p unde rt akin gs are wr itte n off wh ere the re is no r easo nabl e expectation of recov er y . Impairment losses are presented as net impair ment losses within Op erati ng proﬁ t, any sub seq uent re cover ies are c redi ted aga inst th e same l ine. Ot her paya bles Lia bilit ies inc lude d in Oth er payab les ar e recogni sed initially at fair value. Subsequent to initial recognition they are re-measu red at fai r value us ing an ex pec ted cre dit los s mod el. Share -based payments Th e issu ance by th e Comp any to empl oyees of it s subsi diar ies of a gr ant of awa rds over the Company’ s shares, represents additional ca pita l contr ibuti ons by the C ompa ny t o its subsidiaries. An additional inv estment in subsidiaries results i n a corresponding increase in shareholders’ equity . The additional ca pita l contr ibuti on is ba sed on th e fair valu e of the gr ant is sued, a lloc ated over th e und erly ing gr ant’s vesti ng per iod, le ss the ma rket cos t of sha res cha rge d to subsi diar ies in se ttle ment o f such s hare awar ds. Fi na ncia l inst r ument s Interest-bearing loans are initially mea sured at fa ir value (w ith dire ct tr ansa ction c osts be ing amo rt ised ove r the life of th e loan) and are subsequently mea sured at amortised co st usin g the ef fec tive rate me thod at e ach repor ting date . Changes in carr ying value are recogni sed in proﬁt. Li tigat ion Th rough t he nor mal co urse o f busin ess , the As tra Zene ca Gro up is involve d in leg al disp utes, the s ettl emen t of whic h may involve co st to the C ompany. Provis ion is ma de whe re an adverse outcome is probable and associated co sts ca n be est imated r eliab ly . In o ther cases, appro priat e descrip tions are included . Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 205 A str aZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Comp any A cco unt ing P olic ies No tes to t h e Com pa n y F ina n cia l Statem ents 1 Fi xed a sset i nvest ment s Investments in subsidiaries Shares Loans T otal $m $m $m At 1Ja nu ar y 2 02 0 15 , 86 1 15 , 6 64 3 1,5 2 5 Add itio ns dur ing th e year – 2, 971 2 ,971 T r ans fer to De btor s – amou nts owe d by Grou p unde r taki ngs – ( 1,4 51) (1, 4 51) Capital reimbursement (4 4) – (4 4) Exchange – 254 254 Amor tisatio n – 13 13 At 31D ece mb er 2 02 0 1 5 , 817 17, 4 5 1 33,26 8 Add itio ns dur ing th e year 3 3 , 74 5 290 34,035 T r ans fer to De btor s – amou nts owe d by Grou p unde r taki ngs – (1 , 249) (1 ,249) Capital reimbursement (13 ) – ( 13) Exchange – ( 17 2 ) (17 2 ) Amor tisatio n – 13 13 Disposals and other mov ements 32 (2 90) (258 ) At 31D ece mb er 2 021 49,581 16 ,0 4 3 65,624 Loa ns to sub sidia ries c onsi sts of b onds wh ich ar e issu ed exte rnal ly and a re iss ued ba ck to Grou p unde rt akin gs with c ompa rabl e terms o n inte rest r ates an d are re payable o n matur ity, deta ils of whi ch are di sclo sed in N ote 2. The re covera bilit y of the se inter-c ompany l oans h as be en as ses sed i n acco rdan ce with I FRS 9 with n o impai rmen t iden tiﬁed. T he inte r - comp any bala nce s are co nside red to have l ow credi t risk d ue to time ly payme nt of inter est an d set tleme nt of pr incip al amo unt on ag reed d ue date s, limit ing the lo ss all owance to 12 - mont h expec ted cre dit los ses . In 2021 , the re have be en no cre dit lo sse s (2020: $ni l). Inc lude d within A dditio ns dur ing the ye ar of inte r - comp any loan s, are th e distr ibuti on in sp ecie r ecei ved fro m subsi diar y un der tak ings in t he for m of a loa n rece ivable f rom Gr oup co mpani es for $2 90m . The loa n was se ttle d duri ng the yea r and re cord ed as di spos ed in th e same ye ar . Th e other m ov eme nts in clude $ 32m rep rese nting fa ir value o f a guar antee p rovide d to Grou p comp anie s as expla ined i n Notes 2 a nd 3. 2 Lo ans a nd bor row ings Repayment 20 21 20 20 dates $m $m Am ou nts d ue w it hin o ne ye ar Interest -bearing loans and borrowings (unsecured) 0.25 % Callable bond euros 2 021 – 614 0.8 75 % Non-callable bond euros 20 21 – 9 21 Floating rat e notes US dollars 20 22 250 – 2.3 75 % Callable bond US dol lars 202 2 999 – 1, 24 9 1, 5 3 5 Am ou nts d ue a ft er mo re t ha n one y ear Amounts owed to Group underta kings (unsecured ) 7 . 2 % Loan US dollars 2023 283 28 3 Interest -bearing loans and borrowings (unsecured) Floating rat e notes US dollars 20 22 – 250 2.3 75 % Callable bond US dol lars 202 2 – 996 Floating rat e notes US dollars 20 23 400 400 0.3 % Callable bond US dollars 20 23 1, 3 97 – 3.5 % Callable bond US dol lars 20 23 848 8 47 0. 75 % Callable bond euros 2 024 1, 014 1 ,10 2 202 4 Floating bank loan US dollars 2 024 1, 9 97 – 3.37 5 % Callable bond US dollars 2 025 1, 9 88 1, 9 8 5 0. 7% Callable bond US dollars 2026 1 ,19 3 1 ,1 9 2 3. 1 25 % Callable bond US dollars 20 27 74 5 74 4 1 .25 % Callable bond euros 2 028 89 6 973 0.3 75 % Cal lable bond euros 2029 898 – 4 % Callable bond US dollars 2029 994 993 1 .37 5% C allable bond US dollars 203 0 1, 2 9 2 1, 2 9 1 5. 75 % Non-callable bond pounds sterling 2 031 470 475 6.45 % Callable bond US dol lars 2 037 2 ,72 4 2,7 22 4 % Callable bond US dollars 2042 988 988 4.3 7 5 % Callable bond US dollars 2045 980 980 4.3 7 5 % Callable bond US dollars 2048 737 737 2. 1 25 % Callable b ond US dollars 205 0 486 486 3 % Callable bond US dollars 2 0 51 73 4 – T o ta l amo unt s du e af te r mor e th an on e yea r 2 1,0 6 4 1 7 ,444 T otal lo ans and borrowings 22 , 313 18 , 979 Financi al S tat eme nts 206 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 20 21 20 20 $m $m Loans and borrowings are repay able: Af ter f ive year s fro m bala nce s heet d ate 11 , 9 4 4 11 , 5 8 1 From t wo to five ye ar s 6 ,1 9 2 4,61 7 From o ne to two ye ar s 2,928 1, 24 6 Wi thin on e year 1, 24 9 1, 5 3 5 T otal unsecured 2 2 , 313 18, 97 9 All b onds a re iss ued wi th ﬁxed in teres t rates w ith the exce ption of t wo bon ds, the 20 22, the 2023 ﬂoa ting ra te notes an d the $2bn U SD 2024 ﬂoatin g rate l oan. Th e $2bn USD 20 2 4 ﬂ oating r ate loa n pays inte rest li nked to 1 mon th LIBOR . As the l oan is h eld at a mor tise d cos t, chan ges in in teres t rate s and th e cred it ratin g of the Co mpany do n ot have any ef fec t on the C ompany ’ s ne t asse ts. Th e other t wo ﬂoat ing rate n otes are n ot impa cted by LIBO R refer ence a s they ei ther u se non- LIBO R ﬁxing s or will m ature b efore th e withd rawal of re levant LI BOR rate. In ad dition , the Com pany ac ts as gu aran tor for bo nds is sued by i ts whol ly owne d subsi diar ies, A stra Zen eca Fin ance L LC and As tra Zene ca Fina nce and H oldin gs Inc. A stra Zen eca Fin ance L LC is the is suer of $1 ,60 0m 0.700% Note s due 2024, $1 ,250 m 1 . 200% Note s due 2026, $1 , 250m 1. 750% Note s due 2028 an d $7 5 0m 2.250% Note s due 2031 (the ‘ As tra Zene ca Fina nce Note s’). Astr aZe neca Fi nanc e and Ho lding s Inc. ha s a $2bn bank loa n due 2023. E ach se rie s of Astr aZe neca F inanc e Notes h as be en full y and un condi tiona lly gua rante ed by the C ompa ny . Eac h of the gu aran tees by the C ompany i s full an d unco nditi onal a nd joint a nd seve ral. Th e guar antee by th e Compa ny of the As tra Zene ca Fina nce No tes is the s enio r unse cure d oblig ation of t he Comp any and r anks e quall y with al l of the C ompany ’ s exi sting a nd futu re sen ior uns ecur ed an d unsub ordin ated in debte dnes s. Each g uara ntee by th e Compa ny is ef fect ively su bordi nated to any se cure d inde btedn ess of th e Comp any to the ex tent of the va lue of the a sse ts sec urin g such in debte dnes s. The A stra Zen eca Fin ance N otes are s truc tura lly sub ordin ated to ind ebted nes s and othe r liab ilitie s of the su bsidi arie s of the Co mpany, none of wh ich gua ran t ee th e Astr aZe neca Finance Notes. 3 Ot her paya bles 20 21 20 20 $m $m Am ou nts d ue w it hin o ne ye ar Other credi t o rs 187 18 5 Deferred income 4 – Amounts owed to Group underta kings 7 7 19 8 19 2 Am ou nts d ue a ft er mo re t ha n one y ear Other credi t o rs 32 – 32 – Non -cu rren t other c redi tors in clude a n amou nt rep rese nting th e fair val ue of the gu ara ntee pr ovided by t he Comp any to its s ubsid iar y for the b onds is sued ex tern ally a s expla ined in N ote 2. As at 31 Dec embe r 2021 , the fa ir valu e of the gua rante e was $3 2 m (2020: $ nil). 4 Ca lle d-up sh are c apita l Det ails of s hare c apit al movem ents in t he year a re incl uded i n Note 2 4 to the G roup Fin anci al Sta tement s. 5 Cont ingent l iab ilit ies Th e Compa ny has gu aran teed th e exter nal bo rrowi ng of a sub sidia ry i n the amo unt of $28 6m (2020: $28 6m), and no am ount of u ndraw n borr owing fac ilit y of a subs idiar y wa s guar antee d (2020: $1 7 .5 bn) in rela tion to the a cquis ition o f Alexi on. V ermont US Attorney In vestig ation In the U S, in Ap ril 2020, A stra Zen eca re ceive d a Civil I nv es tigati ve Dema nd fro m the US At torney’s Of ﬁce i n V e rmon t and the D epa rtm ent of Ju stic e, Civ il Divi sion, s eeki ng doc ument s and inf orma tion re lating to A stra Zen eca’ s rel ation ships w ith ele ctro nic hea lth- reco rd vend ors. A stra Zen eca is co -op erat ing with t his enq uir y . AZD1 222 Securities Litigation In Ja nuar y 2021 , p utati ve secu ritie s clas s acti on lawsu its were ﬁ led in th e US Dis tric t Cour t for t he Sou thern D istr ict of N ew Y ork ag ains t As tra Zene ca PLC and ce r tain of ﬁce rs, o n beha lf of pur chas ers o f Astr aZen eca p ublic ly trad ed se curi ties du ring th e peri od 21 May 2020 throug h 20 Novem ber 2020 . The Co ur t appoi nted co -le ad pla intif fs in A pril 20 2 1 a nd they ﬁl ed an A mend ed Co mplai nt in Jul y 202 1 on b eha lf of p urch ase rs of As tra Zene ca pub licly tr ade d secu ritie s duri ng the pe riod 15 June 20 20 throu gh 29 Jan uar y 2021 . Th e Ame nded C ompl aint al lege s that defe ndan ts mad e mater ially f alse a nd misl eadin g state ment s in conn ecti on with th e develo pment o f AZD1 222, As tra Zene ca’ s vac cine fo r the preve ntion of C OVID - 19. In Sep tembe r 2021 , As tra Zenec a moved to di smis s the Am ende d Comp laint . Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 207 A st ra Zen eca A nn ual R epo rt & For m 2 0- F In for mat ion 2 021 F in anc ial S ta teme nts / Not es to t he Co mpa ny Fi nan cia l St atem ents Alexion Shareholder Litigation In Ma rch 2021 , s everal s hare hold ers of A lexio n Pharm aceu tica ls, Inc. ( Alex ion) ﬁle d indivi dual l awsuits a gain st Alex ion, it s manageme nt, and/or As tra Zene ca and af ﬁli ates in fe dera l dist rict c our t in New Y o rk. Th e comp laint s gene rall y alle ge that th e preli mina ry re gist ratio n sta teme nt ﬁ led wit h the S EC on 1 9 Fe brua ry 20 2 1 , om itte d cer ta in alle gedl y mater ial inf orma tion in c onne ction w ith As tra Zenec a’ s pr opos ed acq uisit ion of Al exion (the Acquisition ), and one o f the complaints fur ther alleges that the Alexion dire ct ors breached their ﬁduciar y duties in connection with the Acq uisit ion and t hat As tra Zene ca and th e other e ntit y defe ndant s aide d and ab ette d the al lege d brea ches . In May 2021 , a ll such c ompla ints were w ithdr awn and d ismis sed. T his ma tter i s now clos ed. US Congressional In Ja nuar y 201 9, A stra Zene ca re ceive d a let t er f rom the US H ouse o f Repre sen tative s Commi tte e on Over sigh t and Ref orm (C omm itte e) s eek ing info rmat ion rel ated to pr icing p ract ices f or Cre stor . Simi lar let ter s were se nt to 1 1 o ther ph arma ceu tical m anuf actur ers. A stra Zen eca c oope rated wit h the inqu ir y and pro duce d cer ta in res pons ive infor matio n. In De cemb er 2021 , th e Commi ttee i ssu ed a ﬁna l repo rt cu lmina ting the Com mit tee’ s p harm aceu tica l pric ing inves tigati on. Ast raZ enec a’ s pro duc ts are no t the subj ect of t he ﬁndin gs in the ﬁ nal re por t. 6 St atuto ry a nd ot her in form ation Th e Dire ctor s of the Com pany wer e paid by an other G roup c ompa ny in 2021 and 2020. 7 Su bs eq uent e vent s No subsequent events ha ving material impact on the ﬁnancial stat e ments w e re ide ntiﬁed after the balance sheet date. Financi al S tat eme nts 5 Cont ingent l iab ilit ies c ontinu ed No tes to t h e Com pa n y F ina n cia l Statem ents c ont inue d 208 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Gro up Fi nancial Record 2 017 2 018 2 019 2020 20 21 For t he yea r ende d 31Dec emb er $m $m $m $m $m Rev enu e an d pro fi ts Product Sal es 2 0 ,1 5 2 21, 0 4 9 23,56 5 25,8 90 3 6 , 5 41 Collaboration Rev enue 2, 313 1, 0 41 819 727 876 Cost of sales (4 , 318 ) ( 4,936) ( 4, 9 21) (5, 299) (12 , 43 7 ) Distribution costs ( 310) ( 3 31) (33 9) (399) (4 46 ) Research and de velopment expense ( 5,75 7) (5 ,932) (6,059) (5 , 9 91) (9,7 36 ) Se lling, g ene ral a nd adm inis trati ve expe nse (10,233) ( 10, 0 31) ( 11 , 6 8 2 ) ( 11, 2 9 4 ) (15, 2 3 4) Ot her op era ting in com e and exp ens e 1, 8 3 0 2, 527 1, 5 41 1, 52 8 1, 49 2 Operating profit 3,67 7 3,3 87 2 ,9 24 5 ,1 6 2 1, 0 56 Finance income 11 3 13 8 17 2 87 43 Finance e xpe nse (1, 5 0 8 ) ( 1, 419 ) (1, 4 3 2) (1, 3 0 6 ) (1,3 0 0 ) Sh are of af ter t ax l oss es in as soc iate s and jo int ven ture s (55) ( 11 3 ) ( 11 6 ) (27 ) (64) Prof it /(los s) befo re ta x 2, 227 1, 9 9 3 1, 5 4 8 3,91 6 (2 65) Ta x a t i o n 6 41 57 (3 21) ( 772) 380 Prof it fo r the pe riod 2 ,868 2, 050 1, 2 2 7 3 ,14 4 11 5 Ot her c ompr ehen sive in com e/(los s) for th e per iod, ne t of ta x 639 ( 1,0 5 9 ) ( 6 11 ) 1, 6 0 8 ( 14 5 ) T otal c omprehensive income/(l oss) for the peri od 3, 507 9 91 6 16 4 ,752 (30) Profit at tributable to: Ow ner s of the Pa rent 3,0 01 2 ,15 5 1 ,335 3 ,1 9 6 11 2 Non-c ontrolling intere sts (13 3 ) (10 5 ) (10 8 ) (5 2) 3 Earnings per sha re Ba sic ea rnin gs pe r $0. 25 Ordi nar y Sha re $ 2.37 $ 1.7 0 $ 1.0 3 $2.4 4 $ 0.08 Di luted e arn ings p er $0 .25 Or dina ry S hare $2.37 $ 1.7 0 $ 1.0 3 $2.4 4 $ 0.08 Dividends $2.80 $2.80 $2.80 $ 2.80 $2 .8 0 2 017 2 018 2 019 2020 20 21 At 31De cem ber $m $m $m $m $m Statement o f F inancial P osition Proper ty , plant and equipment, right-of-use assets, goodwill and intangible assets 45 ,628 41, 0 87 40,8 36 41,7 0 9 72,555 Other non-current assets 2, 387 1, 5 94 2, 260 2,0 38 2,234 De ferr ed ta x as sets 2 ,1 8 9 2, 379 2 ,718 3,4 38 4, 330 Current assets 1 3 ,1 5 0 15 , 59 1 15 , 56 3 19, 5 4 4 26,244 T otal assets 63,354 6 0 ,6 51 61,377 6 6 ,729 1 05,363 Curre nt liabilities (16 , 38 3 ) (16 , 29 2) ( 1 8 ,117 ) (2 0,3 07) (2 2,59 4) Defer red tax liabilitie s ( 3,995) (3, 2 8 6) (2,4 90) ( 2, 918 ) (6,20 6) Othe r n on-curre nt liabilities (26, 334) ( 2 7, 0 2 9 ) ( 2 6 ,1 74 ) ( 2 7, 8 6 6 ) ( 3 7, 2 7 6 ) Net assets 16,642 1 4,044 14 , 59 6 15 ,6 3 8 3 9,287 Share capital 3 17 3 17 3 28 3 28 3 87 Reser v es attributable to equity holders of the Company 1 4,6 43 12 , 151 12 ,79 9 15 , 29 4 3 8 ,8 81 Non-c ontrolling intere sts 1, 6 82 1, 57 6 1, 4 6 9 16 19 T otal equity and reserves 1 6,642 1 4,04 4 14 , 59 6 15 ,6 3 8 3 9,2 87 2 017 2 018 2 019 2020 20 21 For t he yea r ende d 31Dec emb er $m $m $m $m $m Ca sh f lows Ne t cash i nflow/(ou tfl ow) fro m: Oper ating activities 3, 578 2, 618 2,9 69 4 ,79 9 5,963 Investing activi ties (2, 328) 963 ( 657 ) (28 5) ( 11, 0 5 8 ) Financing activities ( 2,936) (2,0 44) (1, 76 5 ) (2,20 3) 3 ,649 ( 1 ,686) 1, 5 37 5 47 2 , 3 11 (1,4 4 6 ) Addit i onal In formation Strate gic Report Corporate Gover nance Financial Stat ements 209 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Fi na nci al S tate ment s / Gro up Fi na ncia l Re cord A d d i t ion a l I n for m at ion Sha reholder in f or mation 211 Di rec tors’ re por t 21 3 Sus tainabili ty su pp le men tar y in for mat ion 2 16 Task fo rce on Cl imat e-r elated F in anci al Di sclosu res S tatem ent 2 17 T rade Ma rks 223 Glos sa ry 224 Cautionar y statement regard ing f or ward- look ing st atements 228 Addit i onal In formation 2 10 A st ra Ze neca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 Thi s sec tion of th e Annu al Rep or t cont ains information for sharehol ders that is required by regulation in the UK. Further information tha t may be of us e to shar ehold ers i s availab le on the Shareholder information page of our website at w ww .astrazene ca.com. Additional information require d by SE C regulations is inc lude d in Astr aZe nec a ’ s Fo rm 20 -F ﬁlin g for 2021 , wh ich is avai lable o n the SEC web site at www .s ec. go v . Th e princ ipal m arkets f or trad ing in As tra Zene ca sha res ar e the Lon don Stoc k Exchange, Nasdaq Stockholm and t he Nasdaq Global Select Market (Nasdaq). As tra Zene ca sha res wer e listed o n Nasd aq on 25 Se ptembe r 2020, pr ior to whi ch they were l isted o n the New Y or k Stock E xcha nge. Or dinar y Sh ares of $ 0.25 ea ch in As tra Zene ca PLC are li sted on t he Lond on Stoc k Excha nge and the shareholde r register is maintaine d by Equiniti Limited, the Ordinar y Share registrar . Sha res li sted on N asda q Stock holm ar e is sued u nder th e Euroc lear S er vice s Agr eeme nt by Euro clea r Swede n AB, the Swedish Central Securities Depositary . Sha res li sted on N asda q are in th e form of Am eri can De posi tar y Sha res ( ADSs), evidenced by American Deposit ary Receipts (A DRs) is sued by th e Comp any’ s ADR depositary , Deutsche Bank T rust Comp any Am eric as (D euts che Ba nk). T wo ADS s are equivalent to one Ordinar y Share. Before 27 July 201 5, the ra tio was o ne ADS pe r one Or dinar y Sh are. Sh ares a re liste d on all th ree ma rkets un der the s tock sym bol A ZN. Ordinar y Share r egistrar Equiniti Limited Aspect House Spencer Road Lancing West Sus se x BN99 6D A UK T el ( F r eep hone in U K): +4 4 (0)80 0 389 1580 T el (ou tside U K): + 44 (0)1 21 4 1 5 703 3 Swe di sh Cent ral S ecu rit ies De posit ar y Euro clea r Swede n AB PO Box 19 1 SE- 10 1 23 Stoc khol m Swe den T el: +4 6 (0)8 40 2 900 0 A DR depo sita r y Deutsche B ank T rust Compan y Americas c/o Ame rica n Stock Trans fer & T ru st Company , LLC 6201 1 5th Aven ue Bro okly n NY 1 12 1 9 USA T el (to ll fre e in the US): + 1 ( 888) 697 801 8 T el (ou tside U S) : + 1 ( 71 8) 921 8 1 37 db@astﬁnancial.com A nnu al G enera l Meet ing (AG M) Th e 2022 AGM will b e held o n 29 Apr il 2022 and f ur ther d etail s will be s et out in t he Notic e of Me eting. I f you hold s hare s liste d in Stockholm or hold ADRs, i nformation relating to votin g and at tenda nce wi ll be inc lude d in the re levant N otice of AG M. If you hol d your shares through a nominee, your nominee prov ider w ill be ab le to advis e you of the ir ar rang eme nts in re lation to vot ing and attendance. Div idends Div iden d dates fo r 2022 are s hown in th e ﬁna ncia l cale ndar b elow. A ﬁrst i nteri m divi dend i s norm ally a nnoun ced in J uly/ Au gust and p aid in S eptem ber an d a sec ond inte rim divi dend i s norm ally a nnoun ced in J anua ry/ Feb ruar y an d paid i n March . Divid ends a re pai d in GBP , S EK and US D , d epen ding on whe re the e ligibl e shar es are li sted. For f ur t her i nfo rm atio n on div ide nds de cl are d, s ee th e Sha reholder i nformat i on section of our website, ww w .astrazeneca.com. Fi na ncia l calend ar Event Provisional date Second interim di vi den d for 2 0 21 Ex-dividend date 24 Feb rua ry 20 22 Record date 25 Febr uar y 2022 Paym ent da te 28 Mar ch 2022 Announceme nt of ﬁrst quarter results fo r 20 22 29 Apr il 2022 Annual General Meeting (A GM) 29 A pri l 2022 Announceme nt of second quar ter and ha lf-ye ar r esu lt s for 2 02 2 2 9 July 20 22 First int erim di vi den d for 2 0 22 Ex-dividend date 1 1 Au gust 20 22 Record date 1 2 A ugus t 2022 Paym ent da te 1 2 Se ptem ber 20 22 Announceme nt of third quarter results fo r 20 22 1 0 N ovemb er 2022 Financial year end 31 December 2022 Rel ated p ar t y tra ns act ions Du ring th e peri od 1 Jan uar y 2022 to 31 Janua ry 20 22, there we re no tra nsa ction s, loans, or p r oposed transactions between the Com pany an d any rel ated pa rti es whi ch were material to either the Company or the relat ed par t y , or w hich wer e unusu al in the ir natu re or con ditio ns (see a lso No t e 31 to the Fina ncia l St ateme nts on pa ge 1 9 6). Con ic ts of i nteres t Th e Ar ticle s ena ble the D irec tors to au thor ise any si tuati on in whi ch a Dire ctor ha s an inte rest th at con ﬂicts o r has th e potent ial to con ﬂict w ith the Co mpany ’ s inte rest s and whi ch would o ther wis e be a bre ach of the Dir ecto r’ s du ty , u nder S ect ion 1 75 of the Com pani es Act 20 06. T he Boa rd has a fo rma l syste m in pla ce for Di recto rs to de clar e such situations to be considered for authorisation by tho se Dire ctor s who have no i ntere st in the matter being considered. In deciding whet her to authorise a sit uation, the n on-c onﬂi cted Di rec t or s must a ct in the way they c onsi der , i n good fa ith, wou ld be mos t likely to p romote th e succ ess o f the Com pany , a nd they m ay impos e limit s or conditions when giving the author isation, or sub sequ ently, if they thi nk this i s appro pria te. Sit uation s cons ider ed by the B oard a nd aut hori satio ns given a re rec orde d in the Boa rd minu tes an d in a regi ster of c onﬂic ts maintained by the C ompany Se cr etary and are r eviewed a nnua lly by the Bo ard. T he Boar d be lieves th at this sys tem ope rate s effe ctive ly . Sha reholder f raud wa rn ing Sha reho lder s of As tra Zenec a and m any othe r companies hav e reported receiving unsolicited calls and correspondence relati ng t o their sharehol dings and in vestme nt matters. Sha reho lder s are a dvise d to be ver y cau tiou s of any u nsoli cited a ppro aches a nd to note th at reputable ﬁ rms authoris ed by the Financial Con duct A uthor ity ( FCA) are ve ry u nlikely to make such approaches. Such appro aches are l ikely to be p ar t of a ‘boil er roo m scam’ attempting to defraud shareholder s. Shareholder s are advised to familiarise the msel ves with t he infor matio n on sc ams avail able o n the FCA webs ite, w ww. f ca.org .uk / c onsum ers a nd with in the F AQs in th e Investor s sec tion of o ur webs ite, ww w .astrazeneca. com. Any suspect e d scams or fraudulent app roac hes sh ould be r epor ted to t he FCA via i ts webs ite and to A stra Zene ca’ s O rdina ry Sha re reg istra r , us ing the c ontac t deta ils on this page. 211 Addit i onal In formation A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financi al S tat eme nts Strate gic Report Corporate Gover nance Sha reholder i nformat i on Sh a re holde r i n for m atio n Is sued sh are c apita l, sh are holdi ngs and s har e pric es At 31 Dece mbe r 2021 , the Co mpany h ad 7 4,520 r egis tered h olde rs of 1 , 549,400,6 65 Or dinar y Sh ares . The re were 16 7 ,9 02 hold ers o f Ordin ar y Sha res he ld und er the Eu rocle ar Se rv ices Ag ree ment, r epre sent ing 1 0. 9 % o f the iss ued sh are ca pita l of the Co mpany a nd 1 ,7 00 r egis tered hol der s of ADS s, repr ese nting 19 .0% of the is sue d share c apit al of the C ompa ny . I nfo rm atio n on th e Comp any ’ s s ha re pr ice , inc ludi ng h isto ric al c losi ng pr ice s and v olum es, a nd a n inte rac tive s ha re pr ice g raph c an b e fou nd on t he Inv est or Rel ati ons pa ge on ou r web site , ww w .astrazeneca.com. Ord in ar y Sh are s in is sue 20 21 20 20 2 019 Or dina ry S hare s in is sue – m illio ns At yea r end 1 ,5 49 1, 3 13 1, 312 Weig hted ave rage f or yea r 1 ,41 8 1, 312 1, 3 0 1 Sto ck ma rket cl osi ng pri ce pe r Ord inar y Sh are (L ond on Sto ck Exc hang e) Highest (pence) 9444.0 9 320.0 780 8.0 Lowe st (pe nce) 6794.0 6 2 21. 0 5325 .0 At yea r end ( pen ce) 8 678.0 73 24.0 7 6 0 7. 0 A na lysis of s har eholdi ngs as a p ercent age of is sued sh are c apita l at 3 1 D ecem ber Number of Ordinary Shares 1 20 21 % 2020 % 20 19 % 1 – 250 0.3 0.4 0.4 25 1 – 50 0 0.3 0.4 0.5 501 – 1 ,00 0 0.4 0.5 0. 5 1 ,00 1 – 5,000 0.6 0.7 0.7 5, 001 – 1 0, 000 0. 2 0. 2 0.2 1 0, 001 – 5 0,000 1 .1 1.1 1. 0 50 ,00 1 – 1 ,000 ,000 1 .1 11. 2 11 . 2 Ov er 1 ,000, 000 96.0 8 5.5 8 5.5 1 I nclu des Eu roc lea r and A DR h oldi ngs . US holdings At 31 Janua ry 20 22, the pro por tion of O rdin ar y Shar es rep rese nted by AD Ss was 19 .0% of the is sue d share c apit al of the C ompa ny . At 31 Janua ry 2022, the re were 7 4, 2 57 regi stere d hold ers of O rdin ar y Shar es, of wh ich 64 6 were ba sed in th e US and th ere wer e 1 ,69 6 reco rd hold ers o f ADRs , of whi ch 1 ,672 were b ase d in the US. Ex cha nge c ontrol s a nd ot her li mit ations a ec ti ng se cu rit y holde rs Th ere ar e no govern ment al laws, d ecre es or r egula tions i n the UK re stri cting th e impo rt o r expor t of ca pita l or af fect ing the re mit tanc e of divi dend s, inte rest o r other p aymen ts to non- resi dent h olde rs of Or dinar y Sh ares o r ADR s. Th ere ar e no limit ation s unde r Englis h law or the A r ticle s on the r ight of no n-re side nt or fo reign ow ner s to be the re giste red ho lder s of, or to exerci se votin g right s in rela tion to, Or dinar y Sh ares o r ADRs o r to be reg ister ed hol der s of notes o r debe nture s of the Co mpany or i ts who lly owne d subs idiar ies , Zenec a Wilmi ngton In c. and A stra Zene ca Fina nce LLC. 212 A st ra Zen eca A n nua l Repo rt & For m 2 0- F In for mat ion 2 021 Add itional In f ormat ion Sh a re holde r i n for m atio n c ont inue d The Direc t o rs’ R eport include s inf ormation re quire d to be given i n acco rdan ce with th e Com pani es Act 20 06. Rel evant inf orma tion be low , w hich is con tain ed els ewhe re in the A nnual R epor t, is incorpor at ed by cross reference herein. Su bsid ia ries a nd pr incipa l act iv ities Th e Compa ny is the ho lding c ompa ny for a gro up of sub sidia ries w hose p rinc ipal ac tiviti es are d escr ibed i n this A nnual R epor t. The Group’ s subsidiaries and their locations are s et out i n Group S ubsi diar ies an d Holdi ngs in the F inanc ial St ateme nts fro m page 19 7 . Bra nches a nd cou ntr ies i n which t he Group conduc ts busi ness In ac cord ance w ith the Co mpan ies Ac t 200 6, we dis clos e below c ountr ies of ou r represe ntative , scientiﬁc or branch of ﬁces outside the U K established through various subsidiaries of the Company: Al geri a, An gola , Cost a Rica , Cuba , Denm ark, Egypt, G eorgi a, Ghana, Jordan , Kazakhstan, Leb anon, N or way , Por tuga l, Roma nia, R ussi a, Saudi Arabia, Serb ia, Slo vakia, Slovenia, Syria, Ukraine , United Arab Emirat es, United St ates (a bra nch ef fec tive 1 Jan uar y 2022), Vietn am, Y emen. Di sclosu re of i nfor mat ion to auditor s Th e Dire ctor s who hel d ofﬁ ce at the d ate of app roval of th is Ann ual Rep or t conﬁ rm that , so fa r as they a re eac h aware, the re is no rel evant au dit info rmati on of whi ch the Com pany’s audi t or s are un aware; and e ach Dir ecto r has ta k en a ll the step s that he o r she oug ht to have take n as a Dir ector to m ake him self o r her self awa re of any re levant au dit info rmat ion and to e sta blish th at the Co mpany ’ s aud itors a re aware of t hat info rmati on. Goi ng conc ern ac cou n t ing ba sis Info rmati on on the b usin ess e nviron ment in which Astra Zeneca operates, includin g the factors unde rpinning the industry’s future grow th pr ospe cts, i s inclu ded in t he Stra tegic Rep or t. Det ails of th e prod uct po rt foli o of the Gro up are c onta ined in t he Stra tegic R epor t (in t he Dis ease A rea Rev iew fro m page 16). For in forma tion on p atent exp ir y dates fo r key mar keted pr oduc ts, se e the Paten t Expiries Supplement on our website , ww w .astra zeneca.com/annualrepor t202 1 . Ou r appro ach to pr oduc t develop ment i s cover ed in de tail wi th addi tiona l infor matio n by dis ease a rea in th e Stra tegic Re por t. For in forma tion on o ur develo pmen t pip eline, s ee the D evelop ment Pip elin e Supplement on our website, ww w .astra zeneca.com/annualrepor t202 1 . Th e ﬁnanc ial po sitio n of the Gr oup, its ca sh ﬂows, liquidity position and borrowing fac ilitie s are de scr ibed in t he Fina ncial R eview fro m page 52. In ad dition , Note 28 to the Financial Statements from page 1 80 includes the Group’ s objectives, policies and processes for managing capital ; ﬁnancial risk management objectives; details of its ﬁnancial instruments and hedging activit ies; and its exposures t o credit, mark et and liq uidity risk. Fur ther d etail s of the Gr oup’ s c ash ba lanc es and b orr owings a re incl uded i n Notes 1 7 a nd 1 9 to t he Finan cial S tatem ents f rom pag e 1 63 . Havi ng ass ess ed the Pr incip al Ris ks and oth er mat ter s cons ider ed in co nnec tion wi th the Vi abilit y st ateme nt on pag e 49, the Boa rd considers it appropriate to adopt the going con cer n basi s of acc ountin g in prep arin g the Annual Report and F inancial Statements. Sha res For m ore i nfor ma tion , se e Iss ued s har e capi ta l, sh are hold in gs an d sha re pr ice s on pag e 212 . A sha reho lder s’ reso lutio n was pas sed a t the 20 2 1 AGM a uthor isin g the Com pany to pur chas e its own s hare s. The Co mpany d id not p urcha se any of i ts own sha res in 20 2 1. On 31 De cemb er 2021 , the C ompa ny did not h old any sh ares i n trea sur y . Rights, preferences and restrictions at tac hing to s har es As a t 3 1 D ecem ber 2021 , t he Comp any had 1 ,5 49,400,6 65 Ord inar y Sha res a nd 50,00 0 Re deem able Pr efere nce Sh ares i n issu e. The Ordinar y Shares repres ent 99 .98 % and the Redee mable Preference Shares repre sent 0.02% of the C ompany ’ s tot al sha re capi tal (these percentages have been calculated b y refe renc e to the 8a m WM/R euter s USD/GBP excha nge rate o n 3 1 D ece mber 20 2 1). As a gree d by the sha reho lder s at the Com pany’s AGM held o n 29 Apr il 201 0, the Ar ticles w e re ame nded wit h immediat e effect to rem ove the req uirem ent for t he Comp any to have an a uthor ise d share c apit al, the c once pt of whi ch was ab olis hed un der the C ompa nies Act 20 06. E ach O rdina ry S hare c arri es the r ight to vote at ge ner al mee tings of t he Comp any . Th e right s and re stri ction s att achin g to the Re deem able Pr efere nce Sh ares d iff er fro m tho se at tachi ng to Ordi nar y Sha res as f ollows: > The R edee mab le Prefe renc e Shar es car r y no ri ghts to re cei v e divi dend s. > The h olde rs of Re dee mable P refere nce Sha res have n o right s to rece ive notic es of, at tend or vo te at gene ral m eetin gs except in ce r tain li mited ci rcum stan ces. T hey have one vote f or ever y 50,00 0 Red eem able Preference Share s held. > On a dis trib ution of a sse ts of the Co mpany, on a wi nding -up or ot her re turn of c apit al (subj ect to c er tain exce ption s) , t he hold ers of Redeema ble Preferenc e S hares ha ve priorit y over th e holde rs of O rdina ry S hare s to re ceive th e capi tal pa id up on tho se sha res. > Subj ect to th e provis ions of th e Comp anie s Act 20 06, t he Comp any has t he righ t to redee m the Redeema ble P reference Share s at any t ime on gi ving not l ess th an seven days’ wr itte n notic e. Th ere ar e no spe ciﬁc re stri ction s on the tr ansf er of sh ares i n the Com pany , wh ich is g ov er ned by the A rticles and prevailing le gislation. Th e Compa ny is not awar e of any agr eeme nts bet wee n holde rs of s hare s that may re sult i n res tric tion s on the tra nsfe r of sha res or th at may re sult i n restr icti ons on voti ng rig hts. Th e Com pany is a lso not awa re of any ar ran geme nts under which ﬁnancial rights a re held by a pe rso n other th an the ho lder o f the sha res. Action necessar y to change the r ights of sharehold ers In or der to var y the r ight s att ache d to any cla ss of sh ares , the con sent i n writi ng of the hol der s of thre e quar ter s in nom inal val ue of the i ssue d shar es of tha t clas s or the s anct ion of a sp ecia l reso lutio n pass ed at a ge ner al meeting of such holders is required. Changes in share capital Cha nges i n the Com pany’s Ordi nar y Sha re ca pita l durin g 2021 , incl uding d etail s of the all otmen t of new sha res un der the C ompa ny’ s sha re pla ns and a s par tia l consi der ation fo r the A lexion a cqui sitio n, are give n in Note 24 and N ote 27 to the Fina ncia l State ments f rom p a g e 17 6 . Em ployee s har e tru st owne rs hip r ight s Th e trus tee of the A stra Zene ca Emp loyee Be neﬁt T r ust (th e EBT , the T r ustee) w ill not ex e rcise v oting rights attache d to shares hel d in the EBT (S hare s) . Any d ecis ion as to acc epta nce o r rejec tion of a n off er for Sh ares sub ject to s ubsis ting awa rds woul d be made by the T r uste e, having r egar d to the inte rest s of a ward holders. 213 Addit i onal In formation A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financi al S tat eme nts Strate gic Report Corporate Gover nance Dire ctors’ Report Di rec tors’ Repor t Directors’ , ofﬁcers’ and SET shareholdings At 31 Janua ry 20 22, the total a moun t of the Com pany’s voting s ecur itie s owned by Dir ecto rs and o fﬁc er s of the Com pany and o ther SE T me mber s was: Ti tle of c lass Amoun t owne d Percentage of cl ass Ordinar y Sha res 6 14 ,7 3 8 0.04 Options t o purchase securities from registra nt or subsidiar ies (a) At 31 Janua ry 20 22, option s outs tand ing to sub scri be for O rdina ry S hare s were: Number of shares Subscription price (pence ) Normal expiry date 1, 2 12, 0 6 0 3597 -6903 20 22- 2027 Th e weighte d averag e subs cript ion pr ice of opti ons ou tsta nding a t 3 1 Ja nuar y 202 2 was 60 35 pen ce. Al l option s were gr anted u nder Company employ ee share schemes. (b) Inc lude d in par agra ph (a) are o ptions gra nted to of ﬁce rs of th e Comp any and S ET me mber s as fol lows: Number of shares Subscription price (pence ) Normal expiry date 526 6839 2 024 (c) Dur ing 2021 , no o ptions we re hel d by Directors. Du ring th e peri od 1 Jan uar y 2022 to 31 Janua ry 20 22, no Dire ctor wa s gran ted or exer cise d any optio ns. Di str ibu tions t o sha reholder s – div idends for 2 021 Det ails of o ur dis tribu tion po licy ar e set out i n the Fi nanc ial Revi ew from pa ge 52 and N otes 24 and 25 to the Fin anci al Sta temen ts from p a g e 17 6 . Th e Compa ny’ s d ivide nd for 2021 of $2.87 (21 0. 1 pe nce, SEK 25.77) p er Ord inar y Sha re is e stima t ed to a mount to, in a ggre gate, a tota l dividend payment to shareholders of $4,445 mill ion. T wo em ployee sh are tr usts , Astr aZe neca Employ ee Beneﬁt T rust and AstraZene ca Sha re Rete ntion T r ust, wa ived th eir ri ghts to a divi dend o n the Or dinar y Sh ares t hey hold and instead received nominal dividends. For m ore i nfor ma tion , se e Fi nan cia l ca lend ar o n page 211. A r tic les of A sso ciat ion As tra Zene ca PLC’ s cu rren t Ar ticl es were adopted b y shareholders at the Company’ s AGM he ld on 1 8 M ay 20 1 8. A ny ame ndme nt to the A rt icle s requi res the a pprova l of sha reho lder s by a spe cial r esolu tion at a ge nera l meet ing of the C ompa ny . Objects The Company’ s objects are unrestricted. Directo rs The Board has the aut hority to manage the bus ines s of the Co mpany, for examp le, thr ough powe rs to al lot and r epurc hase i ts shares, subje ct where required to shareholder res oluti ons. S ubjec t to cer ta in excepti ons, Dir ecto rs do no t have power to vote at B oard me eting s on mat ters i n which t hey have a material interest. Th e quor um for me eting s of the Boa rd is a maj orit y of the f ull Boa rd, of who m at lea st fou r must b e Non- Execu tive Dir ector s. In th e abs enc e of a quor um, the D irec tors do n ot have power to det e rmine compensation ar rang eme nts for th emse lves or a ny memb er of the B oard. Th e Board m ay ex er cise al l the power s of the Com pany to bo rrow mo ney . Vari ation of t hese borrowing powers would require the passing of a sp ecia l reso lutio n of the Com pany’s shareholders. All D irec tors m ust re tire fro m ofﬁ ce at the Com pany’s AGM eac h year an d may pre sent themselves for election or re-elec tion . Direc t o rs are not prohibited, upon reaching a par ti cular a ge, fro m submi ttin g them selve s for election or re-ele ction . For mo re in for mat ion on t he D ire cto rs, s ee Bo ard of D ire cto rs on pa ges 74 a nd 75. Genera l me etings AGMs re quir e 2 1 c lear d ays’ notic e to sha reho lder s. Sub ject to t he Comp anie s Act 200 6, othe r gen eral m eetin gs re quire 1 4 c lear days’ no tice. For al l gene ral me etin gs, a quo rum of t wo sha reho lder s pre sent i n per son or by p roxy , and e ntitl ed to vote on th e busin ess tr ans acted, is re quire d unle ss ea ch of the t wo per sons pre sen t is a cor pora te repre sent ative of th e sa me cor pora tion, or e ach of th e two pe rso ns pre sen t is a prox y of the sa me sha rehol der . Major share holdings At 31 Dece mbe r 2021 , the fol lowing p ers ons ha d discl osed a n inter est in th e issu ed Or dinar y Sh are ca pita l of the Com pany in a ccor danc e with the re quir emen ts of rul es 5. 1.2 or 5. 1 . 5 of the UK Li sting Au thor ity ’ s Di sclo sure Gu idan ce and T r ans pare ncy Rule s. Cha nges i n the pe rcen tage own ers hips di sclo sed by ma jor sha reho lder s are s et out b elow . M ajor s hare holde rs do n ot have dif fere nt voting r ight s. Nu mb er of O rd ina r y Sha re s dis cl ose d as a pe rc ent ag e of is su ed sh ar e cap it al at : Shareholder Date of the latest disclosure to the Company 1 Numbe r of Ordinar y Shares disclosed Date of the latest disclosure to the Company 31 December 20 19 31 December 2020 31 December 20 21 31 Januar y 2022 BlackRock, Inc. 4 December 2 009 100,8 85, 1 81 6.9 6 7. 6 9 7. 6 9 6 .51 6 .51 Inves tor AB 3 A pri l 20 1 9 5 1 , 5 8 7, 8 1 0 3.93 3.9 3 3.93 3. 33 3.33 The Capital Group Companies, Inc. 1 7 J uly 2018 63 ,80 2,49 5 5.04 4. 86 4.86 4 .1 2 4 .1 2 Wellingt on Manageme nt Group LLP 2 21 July 2 020 6 5, 120,892 4.9 6 5.89 3 4.96 4. 20 4.20 Wellingt on Manageme nt Compa n y LLP 2 21 July 2 020 6 5 ,11 8 , 411 4.9 6 5.8 8 4 4.96 4. 20 4.20 1 S ince t he d ate of d isc losu re to t he Comp any, t he inte res t of any p ers on li ste d abo ve in O rdi na r y Sha res m ay hav e inc rea sed or de cre ase d. No r equ ir emen t to not if y the C ompa ny of a ny inc rea se or dec rea se ar ise s un less t he holdi ng pa sses a not i abl e t h resh old in acc orda nce w ith r ule s 5.1. 2 or 5.1.5 of t he U K L is ti ng Aut hori ty ’ s D isc losu re Gu ida nce and Tra nsp are ncy Ru les. 2 T he Comp any wa s noti ed at t he tim e of th e d is clos ure t hat Well in gto n M an agem ent Comp any L LP wa s a sub sid ia ry of Well ing ton M an ageme nt Group L LP a nd t hat th e s ha rehol di ng pe rcen tage not i ed by Well ing ton M ana geme nt Comp any L LP wa s inc luded w ith in t he aggr egat e sh are hold ing pe rcen tage not i ed by Well ing ton M an ageme nt Gro up LL P . 3 B ase d on t he mos t rece nt sha reho ldi ng dis clo sed to th e C ompa ny pri or to 31 De cem ber 2 0 19, be ing a hold ing of 77 , 260 ,2 27 Or di nar y Sh are s dis clos ed on 4 Oc tob er 2019. 4 B ase d on th e m ost re cent sh ar ehold ing d isc lose d to t he Comp any pr ior to 31 D ece mb er 2019, be ing a hold ing of 77 ,153 ,69 7 Or di nar y Sh are s di scl ose d o n 4 O ctob er 2019. So fa r as the C ompa ny is aware, no o ther pe rs on held a n otiﬁa ble inte rest i n the iss ued O rdina ry S hare c apit al of the C ompany. No cha nges to maj or sha reho lding s were dis clos ed to the Co mpany b etwe en 31 Dece mbe r 2021 and 31 Janua r y 2022. So fa r as the C ompa ny is aware, it i s neith er dir ectl y nor ind irec tly owne d or con trolle d by one or m ore co rpo ratio ns or by any gove rnme nt. Th e Compa ny does n ot know of a ny arr ange ment s, the op erati on of whi ch migh t resu lt in a cha nge in th e contr ol of the C ompany. 214 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit ional Inform ation Di rec tors’ Repor t c ont inue d Sha reho lder s and th eir du ly app ointed p roxies and corpo rat e represent ativ e s are entitled to be ad mit ted to gen eral m eeti ngs. Lim ita tion s on the r ight s to own sh are s Th ere ar e no limit ation s on the ri ghts to own s hare s. Ge nder div ersit y Di rec tors o f the Company’ s subsidiaries Men 2 6 2 ( 6 1%) Women 17 0 (3 9 %) To t a l 4 32 Se nior E xec utive Team Men 7 ( 5 8%) Women 5 ( 42 %) To t a l 12 A ll num be rs as at 31 D ece mb er 2021. * For th e p ur pos es of sec tion 414C (8)(c)( ii) of the Co mpa nies Ac t 20 06 , ‘ Se nior M ana gers ’ a re t he Se nior E xec uti ve T ea m (S ET ), the Di rec tor s o f a ll of t he sub sid iar ies of t he Compa ny a nd ot her in div idua ls hold in g n am ed pos ition s wit hi n tho se subsidiar i es. St ake ho lder engage ment The discussion on stakeholder engagement and the impact of the se interactions is contained in Co nnec ting wi th our St akeho lder s from pag e 80 and t hroug hout th e Stra t eg ic Repo rt . This includes en gagement with our employees, suppliers and other stakeholders, as we ll as the im pact o f our ope rati ons on th e community and envir onment. Information on ho w we encourage employee involv e ment in the C ompany’ s per formance is se t out in O ur peo ple on p age 4 1 . D eta ils of so me of the e mployee s hare p lans a re describe d in the Directors’ Remuneration Rep or t from p age 98, a nd in Note 29 to t he Fina ncia l State ment s from pa ge 1 8 6. All em ployee s are prov ided w ith info rmati on on mat ter s of con cern to t hem thr ough re gula r me eting s and up dates on t he Grou p ’ s intr anet and int ernal social media. T ownhall meetings and Q & A ses sion s are hos ted re gular ly by membe rs of senior manage ment, including the S ET , inc ludin g globa l and ta rgete d bro adca sts on i ntern al soc ial me dia. D urin g 2021 , th ese br oadca sts in clude d bus ines s upd ates, a s well as in form ation o n the Gro up’ s re spon se to the COV ID- 19 pand emic and working arrangements. In addit ion, information about the Group ’s qua rterly res ults i s share d with e mploye es. Th ese updates inform emplo yees of the ﬁnan cial and e con omic fa ctor s which a ffe ct the pe rfo rma nce of the C ompa ny . P o li tical do na tio ns Neither the Company nor i ts sub sidiaries mad e any EU poli tica l donat ions or i ncur red any EU po litic al expe nditu re in 2021 and th ey do no t intend to d o so in the f uture in r espe ct of which shareholder authority is required, or for w hich di sclos ure in th is Ann ual Re por t is re quire d, unde r the Com panie s Act 20 06. However, to enab le the Co mpany an d its subsidiar ies t o continue to suppor t interest groups or lobbying o rgan isations concerned wit h the review o f govern ment p olicy or l aw reform without inadv e rtently breaching the Companies Act 2006, which deﬁnes political don ation s and oth er pol itica l expen diture i n bro ad term s, a res oluti on will b e put to sha reho lder s at the 20 22 AGM, simi lar to tha t pas sed a t the 2021 AGM, to aut hori se the Com pany an d its sub sidi arie s to : > make do natio ns to poli tical p ar ties o r independent election candidates > make donations to politica l o rganisations other than poli tical par ties > incu r polit ical ex pend iture, up to a n agg rega te limit of $ 2 5 0,00 0. Cor por ate poli tical c ontr ibutio ns in the U S are permit t e d in deﬁned circumstances under the Fir st Am endm ent of the U S Cons tituti on and are s ubje ct to both fe der al and s tate laws a nd re gulati ons. In 20 2 1, the Gro up’ s US le gal entities made contribu tions amounting in agg rega te to $ 1, 1 42, 200 (2020: $1 ,01 6,55 0) to national political organisations, state-level political part y committees and to campaign com mit tees of va riou s state c andid ates. N o corporate donations were made at the federal level a nd all c ontri butio ns were m ade onl y whe re allowe d by US fed eral a nd sta te law . We publicly disclose details of our corporate US po litic al con tribu tions , which c an be fo und on our w ebsite, www.astrazeneca-us.com/ sustainabil ity/ corporate-transp arency . The annual corporate contributions budget is rev iewed an d appr oved by the US V ice - Pre side nt, Cor pora te Aff airs a nd the Pr esid ent of ou r US busi ness to e nsur e robus t gover nanc e and over sig ht. US cit izens o r individuals holding valid green cards ex e rcised decision making ov e r the con tribu tion s and the f unds we re not pr ovided or re imbu rse d by any non -US le gal en tity. Suc h cont ribut ions do n ot con stitute p oliti cal don ation s or poli tica l expen diture f or the pur pos es of the C ompan ies Ac t 200 6 and were m ade wi thout a ny involveme nt of pe rso ns or en tities o utsi de the US. Signi cant ag reemen ts There are no signiﬁca nt agreeme nts to which the C ompany i s a par ty t hat take e ffe ct, al ter or te rmina te on a cha nge of co ntrol of t he Com pany fol lowing a t akeover bi d. The re are no pe rs ons with w hom we have c ontra ctual o r othe r arr ange ment s, who a re dee med by th e Dir ecto rs to be e ssen tial to ou r busin ess . Use of  na ncia l i nst r ument s Th e Notes to the F inanc ial St ateme nts, inc ludin g Note 28 from p age 1 8 0, include further information on our use of ﬁnancial instruments. Ins uran ce and in d emni tie s The Company maintaine d Directors’ and ofﬁcer s ’ liability insurance cov er throughout 2021 . T he Dire ctor s are al so abl e to obtai n ind epen dent l egal a dvic e at the exp ense of the C ompany, as nec ess ar y , in th eir ca pacit y as Directors. Th e Compa ny has e ntered i nto a dee d of ind emni ty in favou r of eac h Boar d memb er sin ce 200 6. The se de eds of in demn ity a re still in for ce and p rovide t hat the C ompa ny shall ind emnif y the D irec tors to t he fulle st ex tent pe rmit ted by law a nd the A rti cles , in resp ect of all l oss es ari sing o ut of, or in con nec tion wit h, the execut ion of the ir powe rs, du ties an d res pons ibili ties as D irec tors o f the Com pany or a ny of its sub sidia rie s. Thi s is in line w ith cur rent m arket p ract ice an d helps u s att ract and r etai n high- qua lity, skill ed Dir ector s. Compli ance re qu ireme n ts u nder Li st ing Ru le 9.8.4 Th e only ma tter to r epor t is th e shar ehol der waive r of divi dend s on page 21 4. Di rectors’ Rep ort Th e Dire ctor s ’ R epo rt, w hich ha s bee n prepare d in accordanc e with the requirements of the C ompa nies Ac t 200 6, comp ris es the following s ections: > Chair’ s Statement > Chief Executive O fﬁce r’ s Revie w > Disease A rea Review > Business Review > Risk Ov er vie w > Financial Revie w: Financial risk management > Corporate Governance: including the Corporate Governance Overview , Corporate Governance Repor t, No minat ion and Gov e rnance Comm ittee Report, Science Commi ttee Report, Sustainabi lity Committee Report and Audit Committee Repor t > Directors’ re sponsibi lity statement > Shareholder information > Sustainability supplementary information and h as be en app roved by the B oard a nd signed on its behalf . On b ehal f of the Boa rd A C N Ke mp Company Secreta ry 10 Febr uar y 2 02 2 215 Addit i onal In formation A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Financi al S tat eme nts Strate gic Report Corporate Gover nance Dire ctors’ Report External assurance Bu reau Ver ita s ha s prov ide d ind epen dent ex te rna l as su ranc e to a li mi ted le vel on t he fo l l owing sustain abili ty inf ormatio n con tained wi t hin this Annual Report: > C omm it ment to s oci ety, se e pag e 3. > K ey Performa nce Indic ators, includi ng Ou r su sta in abi li ty a nd Be a G reat Pl ace to Work , se e page s 12 to 15 . > Our sustain abili ty a pproa ch, inc lu ding Su st ain ab il ity s tra teg y , se e page s 30 a nd 31. > Bioethi cs, inc lu ding Clini cal trial trans paren cy , R ese arch use of h uman biol ogi ca l sam ples a nd A ni ma l res ear ch, se e page 3 4. > He althca re in low- and middle -income cou nt rie s, se e pag e 37 . > R esponsi ble s ales and ma rketing, se e page 3 7 . > A n ti-bribe r y and anti - c orrupti on, se e page 3 7 . > R esp ons ible s uppl y cha in , see p age 3 8. > H um an r ights , se e page 4 2. > E mplo yee re lat ion s, se e page 4 3. > Workplac e safet y and healt h, see page 4 3. > Sustainabili ty , incl uding Driving the sustainab ility ag enda, see pa ge 4 4. > A ccess to healt hcare, inc luding Equ itable ac ces s, A ord abi li ty an d p ric ing , He alt h sy ste m resi li ence , see p age s 44 a nd 45 . > Environm en tal p rotecti on, in cl udin g A mbi tion Z er o Carb on, P ro duct sustainab ility , Na tural res ourc es, see pa ges 4 5 and 4 6. > E th ic s and t ra nsp are ncy, se e page 47. > G ree nho use g as rep or ti ng, se e pag e 216 > T ask For ce on C li mate -re late d Fi na nci al Di scl osu res S tat ement , se e page s 217 to 222. BV Use d th rou ghout t hi s An nua l Rep or t to deno te the su stainabili ty info rmati on li ste d ab ove, w hic h has b ee n independently assu red by Bureau V er i tas. Ba sed o n the e vid enc e prov ide d and s ubje ct to t he sc ope , obje cti ves a nd li mi tat ions de ne d in th e f u ll as sur anc e s tat emen t, not hi ng ha s com e to th e att ent ion of Bu reau Veri tas c aus ing t hem t o bel ieve t hat t he sustainab ility inf orma tio n con tained wi t hin t his A n nua l Repo rt i s mate ri al ly mi sst ate d. Bu reau Ver ita s is a pr ofes sion al s er vic es co mpa ny th at has a l ong h isto ry o f prov idi ng in dep ende nt ass ura nc e ser vi ces i n env ir onm enta l, h eal th , saf ety, so cia l an d et hi cal m an agem ent a nd di sclo sur e. T he fu ll a ssu ra nce s tate ment , whi ch in clud es Bu reau Ver ita s’ sc ope of w ork, metho dology, ove rall opin ion, and limita tions and exclu si ons, is a vailable on our website, ww w .a straze neca.com. Gre enh ouse gas (GHG) r epor ti ng BV We have rep or ted on al l of the emi ssio n sou rces r equi red un der the Q uoted Companies GHG Emissions (Directors’ Repor ts ) Regulations 20 1 3. Thes e s ources fall within our c onsolidat e d Financial Statements. We do not h av e res pons ibilit y for a ny emis sion sou rces t hat are n ot incl uded i n our consolidated Financial Statements. Gl obal G HG em issi ons da ta for t he per iod 1 J anua r y 2021 to 31 D ece mber 2 021 1 T onnes CO 2 e 20 21 20 20 20 19 Emissions from : Scope 1 : Combustion of fuel a nd ope rat ion of facilities 2,5 245,8 82 24 0, 0 52 269, 64 7 Scope 2 (Mark et -based): Electricity ( net of ma rk et instruments) , he at, ste am an d cool ing pu rcha sed fo r own us e 3,5 2 1,1 3 5 3 2 , 218 13 8 , 26 1 Scope 2 (Location-based): Electricity , heat, steam and cooling purchased for own use 3,5 2 0 7, 0 0 5 2 28,7 27 24 8 ,0 54 Co mpany ’ s c hose n inten sit y mea sure men t: Scop e 1 + Sco pe 2 (Ma rket- ba sed ) emis sio ns rep or ted ab ove norm alis ed to mi llion U S doll ar reve nue 7 8 14 Sc ope 3 T o tal: Em issi ons f rom all 15 GH G Protoc ol Sc ope 3 Cat egor ies 6,581 ,7 49 5,985,733 5 ,7 16 , 412 Sc ope 3 in tensi ty me asu reme nt: Sc ope 3 e miss ions f rom al l 1 5 G HG Pro tocol S cop e 3 Categ orie s nor mali sed to m illio n US dol lar reve nue 161 18 3 19 5 Me gaWa tt h our s (M Wh) T otal energy consumption 4,5 1 ,7 3 7,1 2 4 1,699,480 1,848,804 1   R egu la rrev iewoft hed ataisc ar ri edouttoe nsu reac cu racy,co nsi sten cya ndre ectm ajorbu sin essc ha nges.T h isha sledto  ch ang esint heda taf rompre vio usyea rs .Them ajor ityofa djus tme ntsm adear enotma ter iali nd ivid ual ly,exc eptfor(i )Scop e3 cat egor y1pu rch ase dgood san dser vi ces(me tho dolog yup datet otra ns itionf romag loba lemi ssio nsfa ctord ata ba sefor es ti mat inge mis sion sbas edonsp end ,toacou ntr y- bas eddat ab ase ,the rebyi mpro vi ngacc ura cy,met hodup date sappl ied toc ur renta ndpre vio usyea rs);a nd(i i)Sc ope1,2a nd3em iss ionsf romA lex iont hatw asacq ui redd ur ing2 021(r epor ti ng bou nda r yex pan siont oinc ludet heacq ui redbu si ness ,ca lcu latet heem iss ionsa cros sal lsco pesi nacon sis tentm an ner, a ndinte gr atetopr evi ousye arsr epor ti ng). 2   I nclu dedi nth isse ct ionar eGHG sfro mdi rec tfue lcom bus tion ,pro cessa nden gi neer in gemi ssio nsatou rsite sandf romf uel  us einou rveh icle eet . 3   G HGsf romi mpor te delec tr ici tya reca lcu late dusi ngt heGHGP rot ocolS cop e2Guid anc e(Ja nua ry2 0 15)re qu ir ingd ual  rep or ti ngusi ngt woem iss ionsf acto rsfore achsi te–Ma rket- bas edan dLoc atio n-ba sed .Ou rcor por ateem iss ionsr epor ti ng a ndta rget sfol lowth eMa rket-b ase dappro ach . 4   T heagg reg ateof :(i)th ean nua lqua nt ityofe nerg yco nsu medf romac ti vit iesfo rwhic htheC ompa nyisr espo nsi ble,i nclu din g t hecom bus tiono ffue latafac ili tyort heop erat ionofa nyfac il itya nd(i i)th ean nua lqua nt ityofe nerg yco nsu medr esu lti ng f romt hepur cha seofel ect ri cit y ,h eat,s tea morcoo li ngbyth eCompa nyfori tsow nuse . 5   Un dert heComp an ies( Dir ec tors’R epor t)a ndLi mi tedL iab il ityP ar tne rsh ips( Ene rg yandC arb onRep ort )Reg ul atio ns2018 , t heComp anyne edst odis clos ewhatp ropo rt ionoft hi sgu rere late stoene rg yusei ntheU Ka ndos horea rea .For20 21, t heprop ort ionoft ota lgloba lene rg yande mis sion sorig in ati ngf romA str aZ ene ca’sUKa ndo shor eare afoot pr intwe reas  fol lows :ener gyu se371GW h(21%);Sc ope1s iteene rg yandro adee tem iss ions6 0kt CO 2 e(2 4%);Sc ope2sit eimp ort ed ene rg yemi ssio nsus ingM ark et-ba seda ccou nti ng0k tCO 2 e(0 %);Sc ope2sit eimp ort edene rg yemi ssio nsus ingL oca tion - ba sedac cou nti ng12k tC O 2 e(6%).  For more infor mation, see Envi ronmental protect ion f rom page 4 5. For m ore i nfor ma tion , se e our 2 021 S ust ai na bil it y Repo rt o n our we bsi te, w w w . as tra ze neca .co m/s ust ai na bil it y . We have use d the GH G Protoco l Corp orate Accounting and Repor ting Standard (revised edi tion). Emis sion f actor s for el ectr icit y have been derived from the Int e rnational E nergy Age ncy , US EP A e GRID, US G reen -e an d the Association of Issuing Bodies databases and for a ll othe r fuels a nd emi ssio n sour ces fr om the 20 06 IP CC Guid eline s for Na tiona l Greenhouse Ga s Inventories. Du ring 2021 , t he acqu isiti on of Al exion was com plete d and Sc ope s 1 , 2 and 3 e miss ions dat a has be en inte grate d to our re por ted foot print f or 2021 and a ll previ ous yea rs to 201 5. 216 As tr aZ enec a A nnu al Re por t & For m 20 -F I nfo rm atio n 20 21 Additiona l Informat ion Su stain ab ili t y supple menta r y i n for mat ion Ou r com mit ment to cl im ate cha nge Th e COVID - 1 9 pa ndem ic has d emon strate d the n eed to bu ild res ilien ce acr oss so ciet y , economies and healthcare systems globally . In si milar way s to the pan demic, t he thre at that climat e change poses also places societies at higher risk ﬁnancially , socially and e nviro nment ally , wit h many of it s impac ts dispropor tionat ely affecting vulnerable communities and emerging economies still str uggl ing to rec over fro m the pan demic. T he climate crisis also poses risks t o public health, with rising global temperature s increasing the preva lenc e of res pirato ry a nd car diovas cular disease, chan ges in w ater -borne illnesses, allergen distribution and concentration, as well a s ment al hea lth ef fec ts. He alth sys tem res ilien ce acr oss th e entir e value ch ain, fr om dis ease p reventi on to trea tment , has neve r been more impor tant. Th e commi tment s we have made t hroug h our ﬂ agsh ip $ 1 bill ion Am bitio n Zero Ca rbon pro gra mme ens ure tha t we are pl aying ou r par t in t ackli ng the cl imate cr isis a s well as the opportunities that transitioning to a low -c arbo n eco nomy co uld mea n for ou r business. We supp or t the T as k Force o n Climate -re lated Fina ncia l Disc losu res ( TCFD) fr amewor k and we have ma de disc losur es con siste nt with the fo ur TCFD rec omme ndati ons an d the 1 1 recomme nded disclosures. The bullet point lis t on Page 222 s et out s the req uire d disclosure s and explains where in this Annual Rep or t (or othe r relevan t docu ment) th e var ious di sclo sures c an be fo und. We ﬁr st ado pted the TCFD f ram ework in ou r 2020 An nual Re por t, an d conti nue to app ly it thi s yea r to desc ribe ac tivit ies co nduc ted in the yea r to 3 1 D ecem ber 20 2 1. All o ur bus ines s ope ratio ns worl dwide a re in sc ope, unl ess ot her wise s tated . The fr amewor k has b een i ntrod uced w ith a ris k - base d app roac h focus ing on th e most m ateri al ris ks and o ppor tu nitie s. Future p rior ities to b roade n the s cope to m edium - and low- risk a rea s are ind icate d in each s ecti on. For f ur t her i nfo rm atio n rela ti ng to ou r TC FD d isc losu re s, se e our w ebs ite w ww.a st raz ene ca .com . O ur Ca rbo n Dis clo sur e Pro jec t (CDP ) res pons e prov ide s f ur th er di sclo su res (2 02 0 pe rfo rma nc e) on our a ppro ach to c lim ate c ha nge an d is ava il abl e at ww w.cd p.ne t/e n. Cl imat e cha nge and ou r st rateg y for ph ysical risks Underst anding the potential impact of future climate scenarios, together wit h proactive mitigation, int e rvention plans and targeted inves tment , will fu ture pro of our b usine ss an d build resil ience to ensure our long-t erm ﬁnancial sustainability and continued supply of me dicine s to patie nts. It i s crit ical to under stand the physical climate cha nge risks to our w ork f orce, lo cal communities, our assets and supply t o patien ts. W orking in a prev entiv e w ay , we w a nt to minimise reactive behaviour and minimise interruptions fro m extreme weather ev ents acros s ou r op erations and va lue ch ain. In 2020, we s cree ned c limate im pact s acros s our o per ations a nd in 2021 we add ed ou r str ategi c suppl ier s ( d eﬁne d by cost of inte rrup tion an d stra tegic ro le to Ast raZe nec a) to as ses s what a wor st-c ase sc enar io (Representative Concentration Path way (RCP) 8.5 ) will loo k like in 203 0, 2050 an d 2 100. In add ition, t wo more o ptimi stic sc enar ios (R CP 2.6 and 4. 5) were mo delle d. By co mbinin g the res ults of t he clim ate ass ess ments w ith bus ines s cri tical ity , we pri orit ised 12 poten tially ‘at ris k’ site s for fur the r ass ess ment i n 202 1 . For f ur t her i nfo rm atio n, se e the s cen ar io ta ble o n pa ge 218. Physi cal cl imate as ses smen ts will b e expa nded i n 2022 an d 2023 to incl ude a de ep- dive ana lysi s of all str ategi c sites ir resp ective o f risk . W e w ill als o focus o n strategic upstream and dow nstream partners to und ers tand t heir re silie nce to cli mate change e.g . bulk drug manufacturing, batch/ Q A / QC te sting, di stri butio n centr es etc. As th e work pr ogre sse s, we will in crea se our kn owledg e base w ith reg ard to th e potenti al ﬁnancial impact of e x treme w eather events, and appropriate mitigation and intervention plans. Financial impacts, such as stranded assets, cost of interruptions of supply , and ca pita l investme nts, w ill be fu rth er as ses sed and , where m ateri al, they wi ll be dis clos ed. Cl imat e cha nge and ou r st rateg y for t ran sition r isk s and opp or tu nit ies Th e nature o f the ris ks and op por tuni ties we fac e depe nds no t only on th e physi cal as pec ts of cli mate cha nge, bu t also r egul ator y and com merc ial ch ange s in the ma rkets in w hich we ope rate, p ress ures to re duc e the car bon foot print s of spe ciﬁc m edici nes, a nd our abi lity to s hape a c ulture o f clima te actio n foc used o n de- car boni sing ou r value ch ain. T o re spon d t o the i denti ﬁed cli mate ri sks and oppor tun ities, we are taking enterprise - wide ac tions, a nd are c ommi tted to: > Achieving ne t - zero greenhouse gas (GHG) emissions by maximising our energy efﬁcie ncy , shif ting to r enewable energy sources, and inv esting in nature-based rem ovals to co mpen sate for a ny resi dual GHG footprint. > Building resilience by managing the physical ( sites, supply chain ) and transitional (regulatory , market and product) risks and opportunities from climat e change in the va lue ch ain thr ough adaptatio n and busines s continuit y p lanning. Through our Ambition Zero Carbon programme we are o n track to r educ e GHG em issi ons fr om our global operations by 98% b y the beginning of 2026 a nd halve o ur enti re value c hain foot print by 20 30, on th e way to a 90% re ducti on by 2045. O ur emi ssio n redu ction ta rgets h ave been ve riﬁe d by the Sc ienc e Bas ed T ar gets i nitiati ve and we wer e one of the ﬁr st seven c ompa nies wo rldwi de to have our net-zero, sci ence -ba sed S cope s 1 to 3 targ ets ver iﬁed u nder th eir new N et -Zero C orpo rate St anda rd. We were al so an ea rly su ppor ter of the U N-ba cked Ra ce to Zero. Near-ter m tar gets > achi eve 98% reduc tion in S cop e 1 and Sc ope 2 GH G emis sions by t he beg inning of 2026 f rom 201 5 ba seli ne > switch to a 100% fu lly ele ctri c vehicl e ﬂeet (E V1 0 0) by the en d of 2025 > use 100% ren ewable e nerg y (RE1 0 0) for powe r and he at by the en d of 2025 > double energy productivit y (E P1 00) from 201 5 to 2025 > launch ﬁrst next -gener at ion respiratory inhalers with near -zero cl imate impact > align supplier spend t o companies with approv ed science-based targets by end of 2025 > pla nt and stewa rd over 50 m illion tr ees by en d of 2025 as a nat ure- base d solu tion to enhance cl imate, e col ogical an d comm unity res ilien ce thr ough ou r Astr aZe neca Fo rest Global Initiativ e. Long- term ta rgets > achi eve 50% reduc tion in to tal Sc ope 3 emi ssio ns by 203 0 and 90% re duc tion by 2045 , from 201 9 b asel ine > bec ome ca rbo n nega tive for al l resid ual emi ssio ns fro m 2030 a nd scie nce -ba sed net-zero by 204 5 > transition to nex t -ge neration respiratory inhalers with near -zero cl imate impact by 203 0. Recognising that the healthcare syst e m represe nts approximat ely 4 % of global GHG emissio ns, AstraZene ca continues t o identif y and exploit oppor t unities to deliver patient - ce ntric, n et- zer o heal thca re. In 2021 , AstraZeneca established t he Sustainable He althc are Ro und T ab le unde r HRH T he Princ e of W ale s ’ Susta inable Markets Initiat ive (SMI). This SMI Sustainable He alt hcare Round T able was la unch ed at CO P26 and fo cuse s on the envi ronme ntal a nd clin ical b eneﬁ ts that c an be delivered through digital health, proactive supply chain management and taking a patient ca re pathways a ppro ach that i ntegr ates cli nica l and environmental considerations to accelerate the p rovisi on of net- zer o heal thcar e. Gove rna nce In Oc tobe r 2021 , the Bo ard es tabl ishe d the Sustainabili ty Committee t o monitor the ex ecution of o ur sustain ability stra tegy , ov e rsee communication of our sustainability activities wit h stakeh olde rs an d provid e input to th e Board and ot her Committees on sustainabi lity mat ter s. The m embe rs of th e Commi tte e are Na zne en Rah man (Cha ir of the C ommit tee), Sheri McCoy , Andreas Rummelt and Marcus Wallenberg. The la unch of the Su stainability BV 217 A st ra Zen eca A n nua l Repo rt & Fo rm 2 0- F In for mat ion 2 021 Addit i onal In formation Financi al S tat eme nts Strate gic Report Corporate Gover nance Tas k Forc e on Cl ima te- rel ated F in anc ia l Dis clo sur es St ate ment T a sk F orce on Clim a te - rela ted Fi nancial Disclosures St a temen t Com mit tee is an i mpor ta nt next s tep in advancing and deliv e ring our sustainability goals. The Sustainabil ity Committee met once in De cem ber 2021 for a n upda te on pro gres s re gardi ng our Cl imate Str ateg y and TCFD. For more infor mation on the Sustai nabilit y Committe e an d oth er Com mi tte es , see f rom p age 8 6. Ou r CEO is res pons ible to th e Board f or the management, dev elopment and performa nce of our business, including Astr aZeneca’ s Ambition Zero Carbon and climate-related ris ks and o ppor tun ities . Repo rti ng to the CEO, the E xecuti ve Vice -Pr eside nt (E VP), Sustainabilit y a nd Chief Compliance Ofﬁc er (CCO), is r espo nsibl e for the d eliver y of AstraZeneca’ s sustainab ility stra tegy , including our climat e -related strat egy . A num ber of s trateg ic grou ps have be en es tabli shed to s uppo rt d eliver y of ou r sustainabil ity and cli mate strategies: > In 2020, we e stab lishe d an Am bitio n Zero Car bon G ov er nanc e Grou p with execu tive- level ownership, accountable for the del iver y of our A mbiti on Zer o Carb on programme. The grou p includes As tra Zene ca’ s CEO; CFO; t he EV P for Su stain abili ty an d CCO; and E VP fo r Op erati ons an d IT . The A mbit ion Zer o Car bon G ov er nanc e Grou p met six ti mes in 2021 . > In 2020, a TCFD s teeri ng grou p was also establish ed with cross-functional membership (Corporat e Af f airs, In vest or Relations, Finance Risk and Reporting, R&D, Operations and Glob al Sustainab ility) to identify and proactively manage the physical and tran sit ion risks and opportunities posed t o AstraZeneca by clim ate cha nge. In 2021 , mem ber s of the group under t ook training on climate change and p rinc iple s for fut ure clim ate sce nari os. Th e outcom es fro m the sp ecia list gr oups a re rep or ted re gular ly to the Bo ard. T he Audi t Com mit tee was up dated o n prog ress i n Apr il and t he Sus tain abilit y Com mit tee was upd ated in D ece mber 20 2 1. The TCFD ste erin g group m et eigh t times i n 2021 with a foc us on the ( i) execu tion of cl imate ri sk as ses smen ts at pr iorit y site s in Ast raZ enec a’ s supply chain, (ii) mapping of t ransition risks and oppor tunities, (iii) integrating the ma nagem ent of cl imate ri sks and oppor tunities within the current gov ernan ce str uctu re and ( iv) how to str uctu re the TCFD Disclos ure in the annual repor ting process. Execution At a site l evel, the exec ution of r oadma ps to del iver aga inst o ur clim ate stra tegy an d to ma nage the p hysic al ris ks pose d by clim ate change are led by the accounta ble s it e lead, ex ecuting control mea sures (t echnica l o r organisational) as an integrated part of their existing risk management syst em. On a c omme rcial l evel, eac h fran chis e lead is accountable for int egrating transition risks in the ir str ategie s and ﬁ nanci al fore cas ts for eac h bra nd. By ma naging t he ris ks pose d by a lo w-carbon economy and healthcare syste m, eac h busin ess c an unlo ck pote ntial opp or tuniti es to sup por t the tr ansi tion to a low-carbon, patient -centric healthca re sys tem. Remuneration In 2021 , to i ncen tivise d eliver y of o ur enviro nmental, social and go vernance pr iori ties, d eliver y of ou r Amb ition Ze ro Car bon com mitme nt was in clude d in our exe cutive inc entive a rra ngem ents fo r the Per for manc e Sha re Plan ( PSP), with a we ightin g of 1 0%. Thi s unde rline s the imp or tan ce we plac e on re ducin g our Sc ope 1 an d Scop e 2 GHG emi ssio ns by 98% by 2026. For more infor mation, see Direc tors’ Remuneration Report f rom pa ge 98 . Ph ys ical risks and tem per atur e sc enari os by 210 0 T ran sition r isk s & oppor t un ities a nd sce na rios u sed +2°C ( RCP 2 .6) > RCP 2.6 l ays out a p athway a nd emissions trajectory that is generally aligned with t he objectives of the Paris Agreement to limit global w a rming t o well b elow 2 °C, pref era bly to 1.5°C by 21 00, compared to pre-industrial levels. > 1.65°C (IE A WEO Sustainable Develo pment Sc enar io (SD S) – equivalent to RC P 2.6). > T he IE A WEO SDS w as use d as th e prim ar y low- car bon fu ture s cena rio within the Climate Financial Driver Analysis (CFD A ) . Renewable Electricity Ge ner ation a nd T r ans por t Oil D ema nd ﬁgu res we re use d fro m the SD S. As a ‘we ll bel ow 2°C’ pa thway , th e SDS re pre sent s a gatewa y to the out come s ta rgete d by the Pa ris Ag ree ment . The SD S is ba sed on a s urge i n cle an en ergy p olic ies a nd inves tmen t that p uts th e ene rgy sys tem on tr ack fo r ke y Sustainable Development Goals (SDGs ). > 1.5°C (IE A WEO Net- Zero Emissions by 205 0 sce nari o (NZE) – equivalent to R C P 1. 9 ). > Wi thin th e CFDA , sen sitiv ity a nal ysis wa s car rie d out us ing ca rbo n pri ces fro m the IE A NZE e miss ion s scen ari o, to asce r tain t he impa ct tha t car bon pr ice s highe r tha n in Sta ted Poli cie s Scen ari o (STEPS ) would h ave. The NZ E is a no rma tive IE A sce nar io tha t shows a n arrow b ut ac hievab le pat hway for the global energy sector to achieve net -zero CO 2 em issi ons by 20 50, wit h advanced economies reaching NZ E in advance of other s. +2. 5°C (RC P 4.5 ) > RCP 4.5 is an in termediate scenario wit h emis sio ns pea kin g in 2040 a nd fal ling r apid ly the reaf ter u ntil 20 80. > 2.5°C ( IEA W EO St ated Poli cies Sc enar io – STE PS) – equivalent to RCP 4.5 . > T he IE A WEO STEP S was us ed as t he pri mar y hig h car bon fu ture s cena rio wit hin the C FDA. C arb on pri ces f rom ST EPS were u sed a s the pr ima ry carbon price regime. Renewable Electricity Generation and T ransport Oil De mand ﬁ gure s were a lso u sed. ST EPS pr ovide s a more c ons er vative be nchm ark fo r the fu ture, b eca use i t does n ot take i t for gr ante d that governments wil l reach all announc ed goals. +4°C ( RCP 8 .5) > RCP 8 .5 is a wor st-c ase s cen ario co nsis tent wi th no po licy c hang es to reduce emissions, where CO 2 co ncen trat ions i n the atm osph ere a re rou ghly d oubl ed by 20 50 and c ontin ue on th at pat h until 2100. > 4°C (I EA WEO business as usual) equivalent to RCP 8.5. > This high emissions ‘business as usual ’ scenario was no t modelled in detail bu t is expe cte d to give ri se to mor e sign iﬁca nt phy sica l impa cts an d del ayed but more uncertain / disruptive t ransition, potent ially leading t o higher overall co sts an d rep rese ntin g failu re to imp leme nt st ated p olici es. Time horizons > Pr ese nt day, 2030, 20 50, 21 00 . > Pre sent d ay , 20 25, 2030, 2 035 an d 2040. 218 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation T a sk f orce on Climate-rela ted Fi nancial Disclosures St a temen t c ont inue d Ident if y ing a nd man agi ng cl imate r isk a nd oppor tu nit y T o info rm the w ider e nterp rise r isk ma nagem ent pr oce ss of any sp eciﬁ c risk s and o ppor tu nitie s pose d by clima te chang e and / or th e tran sition to a l ow-ca rbo n ec onomy, w e have inte grate d clim ate asse ssments into the ov erall enterp rise risk man agement process. O ur ov era ll ap proac h to r isk m an agem ent an d a sum ma r y of ou r Pr in cipa l Ri sk s can b e fou nd fr om pag e 48 . Sc ope a nd de n ition s Sc enar io ana lysis h elps u s to under sta nd the pot ential impact of climate change on our b usin ess to inf orm ou r busin ess s trate gy and ﬁnancial planning. In line with the TCFD guidance, w e decided to u se a low/ me d ium/ high case scenario based on Representative Con cent ratio n Pathway sha red by Th e Intergov e rnmental Panel on Climate Change. For m ore i nfor ma tion , se e the t ab le on pag e 218. Assessment of physical risks In 2020, wo rkin g with env ironm enta l reso urce ma nagem ent exp er ts, ERM G roup, In c. (ERM), we con ducte d a scre enin g stud y of two fu ture clim ate sce nar ios to expl ore our p hysic al climate-related risks (ﬂoods, water scarcity , ext reme h eat, cycl ones a nd wild ﬁres). T hese scenarios were applied to mat e rial AstraZeneca site s with p redic tion s out fro m 2020 to 2030 , 2050 a nd 21 0 0. The eva luated s ites in clude d all busi ness-critical operatio ns sit e s , R&D hub s, IT ce ntres a nd othe r stra t eg ic hubs . Th e outcom e of thes e scre enin g studi es was combine d wi th a revenue- based asses sment for e ach si te t o ide ntif y mid- to l ong-te rm ris ks. A sim ilar st udy was c ondu cted in 20 2 1 to cover A lexio n R&D an d Ope ratio ns site s, and their strategic suppliers with suppor t fro m AECOM L imite d. This h as now be en integrated into the Astra Zeneca approach to as ses sing phy sica l climate r isks at s ites. Du ring 2021 , we ex tend ed our a cce ss to clim ate sce nar io data by u sing Ju piter , Inc. for s cree ning of r isks fr om clim ate haz ard s to all A stra Zene ca si tes in fu ture sc enar ios (RC P 2 .6, 4.5 a nd 8.5). We als o use d the W WF Water Ri sk Filte r t o as ses s site ris ks for dro ughts i n water str ess ed are as an d how these could be ampliﬁed b y climate cha nge . For f ur t her i nfo rm atio n rela ti ng to t he scr een in g as ses sme nts fo r mate ria l sit es, s ee ou r web site ww w .astrazeneca.com. Pri oriti es for 20 22 inclu de: > Identify oppor tun ities to take collective ac tions in h ot spot r egio ns, toge ther wi th st akehol der s, inclu ding p eer s, to man age water s tres s in a syste mic way . In 2021 , we c ondu cted a de ep dive a t 1 2 site s wit h high bu sine ss cri tica lity a nd pote ntial expo sure to c limate ch ange i mpact s in a wor st-ca se sce nar io (RCP 8 .5) by 2030 a nd 2050 . The as ses smen ts cover : > inven tor y of ha za rds > risk analysis > risk ev a luat ion > identiﬁcation of mitigation measures. Global Subject Matter Expe rts coordinated the se as ses sment s togeth er wit h loca l represe ntation from Manufacturing, Facilities Management, Safety , Health and En vironment and t he Ris k Manag emen t Net work. W here appropriate, the risk mitigation measures and intervention s were es calated t o site ma nagem ent an d captu red on t he loc al risk register . Measures and actions t o address the se ris ks are in clude d in the s ite maste r pla ns and b usin ess c ontinu ity p lans a s they are d evelop ed, and c aptur ed und er the mid- and long-t erm ﬁnancial planning for that site and function. Pri oriti es for 20 22/23 in clude a ll mate rial s ites in scope for the initial climate risk scree ning and t he Alex ion site s will be s ubje ct to det ailed site l evel physi cal cl imate imp act a sses sme nts. Du ring 2021 , we i nclud ed ne arly 3 50 stra tegic sup plie rs in a sc reen ing as ses smen t for phys ical clim ate ris ks. Sup plier s with a 12 month c ost of inte rrup tion of mo re tha n $200 mi llion an d with a cr itica l role in p atien t suppl y will be p rior itise d for fur th er as sess ment i n 2022. In 2021 , we i nclud ed vul nera bilit y to clim ate cha nge as a f orma l deci sion c riter ia for th e es tabli shme nt of fut ure inte rnal o r exter nal manufacturing capacit y . As ses sme nt of tr ans ition r isk s and oppor t unities T o meet th e Paris A greement commitments to be ne t -zero a nd res tric t globa l warm ing to 1 . 5 ºC, we ne ed to ta ke a produ ct, co mpany and h ealt hcar e system p ers pec tive to proactively manage the risks and opp or tuniti es po sed by the t rans ition to a low-carbon economy and healthcare s ystem. T o de liver ou r 2030 ca rbo n nega tive ambi tion, our p rodu cts as we ll as ou r busin ess w ill nee d to become carbon n eutral. Howev er , we also ne ed to rec ogni se that, g iven the l imited pe riod of excl usiv ity we have fo r innovati ve me dicin es, the G HG footp rint of o ur cur rent po rt folio of p rodu cts wil l not full y reﬂe ct our 2030 footprint. Many innov ative treatments tha t will make up o ur 203 0 por tfo lio are s till in de velopment and w e can prioriti se sustainability and efﬁciency in d esign, bot h in ter ms of pr oces s and p roduc t des ign, as well a s the sup plie r netwo rk for ma nufa cture and d elive ry. That m eans we a re resp onsi ble for our choices in raw mat erial sourcing, manufacture and formulation of A P Is, along with device and packaging selection. In Nove mber 20 2 1, we launc hed a su pplie r - foc used Powe r Purch ase Ag reem ent (PPA) pro gra mme (Ene rgize) wi th pee rs in th e pharmaceu t ical industr y to accelerate access to ren ewable p ower for ou r supp lier s. We beli eve our pat ients a nd soc iet y will re quire pr oduc ts that h ave the sma lles t possible environmental impact, without sa criﬁc ing me dica l efﬁ cacy o r safet y . A s technologies and healthcare systems e volv e, so too s houl d circu lar sol ution s to : > des ign out wa ste an d pollu tion > keep p rodu cts an d mater ials in u se > regenerate natural syst e ms. For thi s to happ en, our s cien tists e mbra ce ca rbon n eutr al des ign, mig rate away fr om fos sil fue ls (whe re pos sibl e) and em brac e a cir cular m inds et to use ma teria ls (minim ise by de sign, re use, re cycle, re cover ) . T o hel p our scientists prioritise what en vironmenta l as pect s to focu s on, we use li fe- cycle as ses smen ts to look a t the envi ronme ntal imp act of ou r prod ucts. T he GH G footpr int for mos t me dicine s lies in our upstream supply chain; the exception is for t he res pirato ry pMD I por tf olio wh ere the G HG footp rint li es with the patient use. As th e wide r heal thca re system l ooks to deliver patient -c entric net - zero healthcare, this w ill pre sent s ome ri sks for A stra Zene ca to man age, as we ll as so me opp or tuniti es to deliv e r bet t e r patient and societal out comes wit h a lower GHG f ootpr int for th e heal thca re se ctor . A stra Zen eca is p ar t of the Sc ope 3 emi ssio ns of he althc are pr ovider s; we are par t of th eir pu rcha sed go ods an d ser vic es footprint. Some healthc are pro viders have alr eady s et out th eir net-zero am bitio ns. For exam ple, the N HS has e sta blish ed tar gets to procure medicines on ly from su ppliers with clim ate tar gets a ligne d with, o r more ambitious than their o wn, and they ha ve goals to red uce the f ootpr int of re spir ator y prod ucts by 50% over the n ext seve n year s. The refor e, the transition t o next - generation propellants wit h a near- ze ro glob al war ming pote ntial wit hin our A mbiti on Zero C arbo n stra tegy is no t onl y red ucing o ur GHG fo otpri nt, it is a lso mitiga ting some of t he tran sitio n risk s we face in the m arket a nd will p rotec t our reven ue. T o be tter u nder sta nd the ﬁn ancia l con seq uenc es of the tr ans ition in to a low-carbon economy to o ur business, we sta r ted to work wi th ERM. R isks an d opp or tuniti es were a sse sse d at an en terp rise level a nd pro duct-s peci ﬁc level fo r the top 10 br ands w here li fe- cycle as ses smen t (LCA) data is available, representing approximately 50% of T ota l Revenu e with exa mples f rom all o ur dise ase a reas . 219 A st ra Ze neca A n nua l Rep ort & Fo rm 2 0- F In for mat ion 2 021 Addit i onal In formation Financi al S tat eme nts Strate gic Report Corporate Gover nance Tas k Forc e on Cl ima te- rel ated F in anc ia l Dis clo sur es St ate ment Ris k or oppor tun ity Ti me ho ri zon Shor t/ Mid /Long Po tenti al imp act How i t is ma nag ed Ph ysical risks Increase d fr equency of extreme weather andclimat e-related natural disasters. > Detailed site-level climate risk asse ssments hav e now b een c ondu cted a t 1 2 si tes ( Wuxi, S öde rt älje, Maihara, Chennai, W estchester , Guadalajara, Gothenburg, Cairo , Canovanas, Mount V e rnon, Be nsa lem an d T aiz hou) to ver if y the sc ree ning results from 2020 . Outcomes ind icate potential for: > in cre ased e xpos ure to ex trem e hea t events a nd an i ncre ase d nee d for co olin g to main tain G MP compliance > heavy rainfall causing local ﬂooding and / or inducing landslides > hi gh win d events t hat ca n dam age si te structures. > Pote ntia l risk s rela te prim ari ly to dis rupt ion or delays in a sin gle m anufacturing site , product distributio n, and/ or product im pairment du e t o broken cold chain logistics, along with associated increased liability insurance premiums and reputational damage. However , in vestment in at-r isk si tes, th e des ign of ou r supp ly ch ains a nd leve ls of inve ntor y hel d mea n that we do n ot cu rren tly for ese e a mate rial b usin ess i mpac t ar isin g from t hese s hor t-ter m events . > Three case studies underpin t his conclusion by ex emplifying some typical risks, the consequences an d ass ocia ted mit igat ions: S öde rt älje in S wede n, Ma ihar a in Jap an and C anova nas in Pu er to Ric o. For more infor mation, see ww w .astrazeneca.com/sustainability/reso u r ces.html > We wil l cont inue to ex pand o ur sit e asse ssm ent s an d busi nes s impac t as ses smen ts in 202 2. > Identiﬁed risks hav e been addressed in t he local business continuity plans or planning of t echnical mitigations inte gra ted into t he site m aste r pla ns. Any i nvest ment s re quire d are i ntegr ated i nto the n orma l mid- a nd lo ng-te rm ﬁnancial planning process. Mitigation examples include inc rea sed c ooli ng cap acit y to cove r per iods o f extre me he at, drainage systems to handle increased volumes o f precipitation or strengthening o f buildi ng resilience to stand up ag ains t inc reas ed wi nd spe ed. > Bu sine ss re sili enc e has be en in crea sed to m itig ate our exp osur e to extr eme we athe r events l ike hur ric ane Ma ria at Can ovana s (Pue rto R ico, 201 7 ), an ex tende d per iod of h eat in Sö der tä lje (Sw eden , 201 8) a nd wate r scar cit y in Che nna i (India, 201 9). > Fo r examp le, our s ite in Ca novan as has t aken p roac tive ste ps to inc rea se its r esil ienc e and mi tiga te the ri sks po sed to ou r busi nes s oper atio ns by ins tall ing it s own hea t and powe r pla nt to red uce re lian ce on th e loca l powe r netw ork complemented with on -sit e solar panels and emergency ge nera tors ( $1 2 mi llion) a nd ren ovatio ns of the t wo ma in manufacturing and warehouse build ings t o comply with the l ates t build ing co de ($9 m illio n). > In 20 21 , phy sica l ris ks have be en ma ppe d in the br oade r sup ply c hain b ase d on loc atio n and th en matc hed w ith cli mate sc ena rio s of RCP 2.6, 4. 5 and 8. 5. Sup plie rs wit h hig h cri tica lit y ( co st of 1 2 mo nth inte rru ptio n more th an $20 0 mill ion) an d expos ure to si gniﬁ can t futur e clim ate ha zar ds wil l be con tac ted in 202 2 to ens ure tha t they bu ild climate re si lience within their business continuity plans. > Cl imati c ris k ass ess ment s have be en inc lude d in the s ite eval uati on cri teri a for inve stme nt in new o per atio ns in 2021. T ran sition r isk s and opp or tu nit ies Increased demand for sustaina ble low Global Warming P otential (GWP ) products and ser vices from healthcare providers in some countries may result int he pote nti al for greensubstitution of me dici nal products wi th a hig hGWP (e. g. anaesthetics and respirator y pr oducts ). Business oppor tunities will e x ist with increased fu ture d ema nd fo r low GWP alternatives a nd where earlier diagnosis and clinical int er v ention ca n red uce t he ca rbo n footprint of healthcare pathway s. > Some healthcare providers and professionals are actively looking t o substitut e medicinal products ba sed on t heir G HG foo tpri nt to red uce th eir own Sc ope 3 fo otpr int, as p ar t of the ir net-zero t arg ets. > O ne exam ple is N HS Eng land a nd its t arg et for net-zer o by 2045, w ith an a mbit ion to re ach an 80% re duc tion by 20 36 to 20 39. Thi s coul d impa ct ma rket ac ces s and re venue i n some c ount rie s for hig h GWP pr oduc ts whe re al terna tives w ith a lowe r GHG fo otpr int exi st. Futu re reve nue fro m our pMDI inhaled medicines portfolio could be ‘ at risk’ should substit ution become widespread before the transition t o our next-generation near -zero GWP p MDIs . The se ris ks are c urre ntly l ow , l imite d to a few c ountr ies , and an y impac t is like ly to oc cur in a ti mefr ame wh en we have l ost excl usiv ity f or so me ‘at ris k’ br ands . > T ra nsit ionin g to low GWP r espi rator y pr odu cts as pa rt of A str aZe nec a Ambi tion Z ero Ca rbon , and understanding the positive impac ts that disease prevention, digital, early diagnosis and clin ical inte rve ntio n can h ave on the c arb on foot prin t of sp eciﬁ c pati ent ca re pat hways, wi ll prov ide business oppor tunit ies to improve the standard of ca re an d clini cal o utcom es wi th a lower environmental footprint. > A s par t of our $1 b illio n Astr aZe nec a Amb itio n Zero Ca rbo n commitment, w e wil l transition to near -zero G WP propellants ac ross o ur as thma a nd COPD p rodu cts b etwe en 2025 and 2 030. > A str aZe neca h as lif e- cycle a sse ssm ents ( LCAs) in pl ace fo r key br ands (r esp irato ry a nd wid er) th at inc lude s the GH G footp rint to he lp ass ess a nd ma nage r isks a nd ta rget i nter venti ons to re duce t he envi ronm enta l foot prin t of our p rodu cts. > In 20 21 , we have a lso la unch ed an i nter nal Pro duc t Sustainability Index (PSI) to proactively assess and manage the e nviro nme ntal fo otpr int of o ur pro duc ts. Th e PSI ca pture s GH G and wate r inte nsit y met ric s per pr odu ct, pe r pati ent an d pe r annu m, as wel l as me asur es of % re newab le powe r and re sour ce ef ﬁci ency u sed to m ake that p rodu ct. > Pat ient s whos e trea tmen t is opt imise d are m ore li kely to have a l ower cli mate im pact ove ral l, thro ugh re duce d rel iever pMD I use a nd fewe r unsc hed uled h ealt hca re inte rve ntion s. We a re working with academics and healthcare agencies to un der stan d the env iron ment al im pact o f resp irato ry c are pathwa ys for patients with controlled and uncontrolled as thma a nd the o ppor tun itie s for im prove d clini cal c are wit h a lower e nviro nmen tal fo otpr int. T he out put of th ese environmental and clinical studies was communicated at sc ienti ﬁc co nfere nce s and v ia pee r - revi ewed li terat ure i n 2 0 21. > Early diagnosis and cl inical int e rvention c an p ro vide business opp or tuni ties to i mprove t he sta nda rd of ca re and c lini cal ou tcome s with a l ower env iron ment al foo tpri nt. In 20 2 1 , a t COP 26, AstraZenec a launche d the Sustainable Healthcare Round T able under HRH T he Prince of Wales ’ Sustainable Ma rkets I nitia tive (SM I). The i niti ative fo cuse s on the env iron ment al and c lini cal b eneﬁ ts tha t can be d elive red through digital health , proactive supply chain management an d taki ng a pat ient c are pa thways ap pro ach tha t inte grate s clinical and environmental considerations to accelerate the provision of net -z ero healthcare. Key Low risk Medium risk High risk Oppor tu nity T ime ho ri zon f or imp act Shor t - term: 1–3 year s Mid-term: 3–7 years Long-te rm: 7–25 yea rs 220 A st raZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Addit ional Infor mation T a sk F orce on Clim a te - rela ted Fi nancial Disclosures St a temen t c ont inue d Ris k or oppor tun ity Ti me ho ri zon Shor t/ Mid /Long Po tenti al imp act How i t is ma nag ed T ran sition r isk s and opp or tu nit ies co ntinue d Rev iew of t he US, E U, UK and o ther national F-Gas Regulations and their impact on respirator y medicines us ed to tr eat a sth ma an d COP D. > T he US an d EU F-G as revi ews ca rr y the po tenti al ri sk that s ome F- gas es us ed in pM DI- bas ed respiratory products could be subjec t to emission restrictions from wh ich the y are current ly ex empt (EU: 70% ph ase dow n tar get by 20 30). Th e los s of the medicinal e xemption, or lack of a long-term phased transition, cou ld prev e n t or l imit a vailability of products in our pMDI-inhale d m edicines por tfolio should these restrictions apply bef ore the transition to our nex t -gene ration ne ar - zero GW P pMDIs. > Inhaler device selection is a critica l co nsideration as p atie nt nee d or pr efere nce f or a spe ciﬁc d evic e t ype wil l inﬂu ence a dhe renc e to trea tmen t whic h in tur n impa cts c linic al ou tcome s. Fail ure to ma inta in a pat ient- cen tric a ppro ach in t he sho rt- to mid-term could result in unnecess ary adverse respiratory events a nd hospitalisations that could co me with a n inc reas ed GH G footp rint . > Pat ient a dvoc acy as ses ses b oth cli nica l and environmental out c omes : > A s par t of the $1 b illio n Astr aZe nec a Amb ition Z ero Carbon commitment, AstraZeneca will transition to low GWP p rope llan ts in it s asth ma and C OPD pr oduc ts be twee n 2025 an d 2030. > We ar e advoc atin g a phas ed tr ansi tion p eri od to at le ast 203 0 if the m edic inal e x em ption i s lif ted to en sure p atie nt sa fety a nd pr ovide s ufﬁ cie nt time f or the re gul ator y ap proval a nd tra nsi tion to a lter native l ow GWP pr opel lant s. Carbon pricing and future environmental ta x ation. > T here i s unce rt ain ty over t he fut ure env iron ment al policy and ﬁscal landscape in many co untries whe re we op era te. We antic ipate i ncre ase d regulation and ot her dev elopments related t o carbon pricin g, br oader a djustment ta x es, and broader environmental taxation o ver the me di um to lo ng term . > Ca rbo n pric ing ba sed o n the IE A Net-Ze ro ec onom y fore cast w hich f ollow s the 1 . 5ºC warming path way ($ 1 30/tCO 2 by 20 30). > Our AstraZenec a A mbit ion Zero Car bon commitment will help t o mitigat e some exposure t o future carbon pricing an d envir onme ntal t ax ation f or our o per atio ns and o ur wid er val ue cha in. Ma nage d cor rec tly , t his pr ese nts a commercial opportunity where peers have yet to establish a pat h to dee p dec arbo nis ation a nd ne t -ze ro. > We ar e bein g posi tive ad vocat es for s cien ce- bas ed ta rget s to add ress climate change across our industry and supply ch ain via t rade a sso ciat ions a nd net wor ks. We con tinu e to monitor r egulatory and market developments in carbon pr icin g to infor m our s trate gy . Supply-demand of renewable energy (p ower and he at). > Ac ces s to cle an hea t alte rnat ives to na tura l gas e. g. biomet hane generally requir es higher investment. > Par t icipation in renew able energy programmes an d adopt ion of e nerg y ef ﬁcie ncy me asu res to re duce o per ating c ost s and exp osu re to fut ure fossil fuel price/carbon price increases. > A stra Zen eca i nvests a ppr o xim atel y $25 milli on pe r annu m in na tura l res ourc e redu ctio n pro gram mes , inclu ding t hose that impro ve energy efﬁciency. A bsolute natural resource reductions, including those that reduce our GHG emissions, are a primary metric alongside return on inv e st ment. Since 201 5, we have i nveste d $1 30 m illio n and de live red a 9% re duct ion in e nerg y use a nd 59% red ucti on in ou r GHG em issi ons. T his re duc es ou r expos ure to in crem ent al cos ts associated with some renew able alt ernatives. > Re newab le powe r impl eme nted by 20 20 at all s ites wi th a 2% pre mium. I n 2021 , th e pre mium in cre ase d to 3.5% . > We joined the Renew able Thermal Collaborative in 202 0 to unlock oppo rtunities for re ne wable biomethane in the US a nd UK ma rkets to p rep are for a t ran sitio n by 2025. > Pr ojec t sta rte d with p eer s in ph arm aceu tica l indu str y (En ergi ze) to ena ble ac ces s to ren ewable e ner gy in su pply ch ains w ith a st ar t in the US a nd the EU, a nd pla ns to exp and in to les s matur e mar kets. Ch ang e in raw m ater ial or sourcing cost. > Costs associated with new low-car bon technology as th e bus ines s nee ds to co mply w ith exp ecte d new and emerging legislation for lower emissions technology (and me et stakeholder expectations for proactively de creasing emissions ). > Similar increased operational costs in the supply ch ain may a lso have a n ef fect o n pri cing a nd co sts of raw materials including packaging. > There could be a signiﬁcant r isk a ssociated with inc rea sed c osts f or usi ng hig h car bon tr ansp or t modes. > Mo re ef ﬁci ent bu ildin gs wil l redu ce co sts; improved facilities management wil l lead t o lower costs for r epair and r eplacements. > Us e of lowe r - emis sio n sour ces of e ner gy will re duce c ost s and wil l redu ce exp osur e to fos sil fuel and carbon price changes. > Us e of mor e efﬁ cie nt pro duct ion an d dist ribu tion processes wil l reduce operational and logistical co sts fr om usi ng mor e ef ﬁcie nt pro ces ses . > Ca rbo n cost s are p rope rly fa ctor ed into e ngin eer ing feasibility , options appraisal and capit al expenditure decision making. Engagement wit h contract manufacturing organisations (C MOs) and other supply chain partners cove rs is sue s such a s thei r tra nsiti on to the l ow-c arb on economy . > Ensuring the early opportunities for gaining re gulat or y ap proval s for new a nd em ergi ng tra nsp or t mode s and technologies so that logistic s continuit y is maintained. > En suri ng the c osti ng for d rugs c ons ider s pote ntia l inc rea ses a sso ciate d with t rans itio n risk s (such a s cos t of fu els a nd cha nges t o appr oval me chan isms). > Ma ny of the r isks a sso ciate d with i ncre men tal co st exp osur e are no t uniq ue to Ast raZ ene ca. T hey wil l also be f aced by o ur pe ers a nd the w ide r heal thca re se ctor. > Engagement ensuring that sustainable performance is positively recognised within procurement is being explored. Key Low risk Medium risk High risk Oppor tu nity T ime ho ri zon f or imp act Shor t - term: 1–3 year s Mid-term: 3–7 years Long-te rm: 7–25 yea rs 2 21 A str aZ ene ca A nnu al R epor t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation Financi al S tat eme nts Strate gic Report Corporate Gover nance Tas k Forc e on Cl ima te- rel ated F in anc ia l Dis clo sur es St ate ment In 2021 , we h ave focus ed on a pM DI pro duct in ou r resp irator y po rt foli o due to its r elative high carbon intensit y , strategic impor tance to the bu sine ss, a nd bein g the ini tial foc us for the next - generation propellant transition as par t of o ur Amb ition Ze ro Car bon st rateg y . In an i nitia l Climate Fi nanc ial Dr iver A nalys is, risks and opportunities were identiﬁed during the tr ansi tion ph ase wh ere th e curre nt pro pell ant will b e subs titute d to a low-ca rbo n alte rnat ive by end of 20 2 5. Th e ﬁnanc ial implications of t ransitioning to next-generation propellant s a re included in our ﬁnancial forecas ts, which inform our impairment assessments. Pri oriti es for 20 22 inclu de: > Deﬁne a methodology for ensuring that t he climate risks associated with the franchise are fully integrated into business planning. > Dete rmine t he tran sitio n risks f or othe r high ca rbon i ntensi ty pr oduc ts bas ed on th e pilot ass essment. > Consolidate into Climate Financial Driver An alysi s repo rt (qu antit ative) to be in clude d in the a nnua l repo rti ng pro ces s for 2022. > Initi ate work to un der stan d car bon inte nsit y for A lexio n produ cts, t heir po tentia l expo sure to tr ansi tion r isks, a nd iden tif y pote ntial o ppor tun ities w here th eir us e can reduce the environmenta l footprint of exis ting he althc are pa thways. > Cond uct a st udy on how c limate c hang e imp acts di ffe rent di sea se are as and a ny future needs from patient groups. Outcome of the physical and transitional assessments In ma ny case s miti gation m eas ures a re alr eady i n place to a ddre ss the ri sks an d oppor tunities presented by climate change, inc ludin g those p osed by t he tran sitio n to a low-carbon economy and the provision of net- zero healthca re . For m ore i nfor ma tion , se e the R is k suppl emen t avai la ble on our website, ww w .a straze neca.com / a nnualrep ort2 021. As a re sult o f the ana lysis , the ris k ‘Failu re to mee t regu lator y expe cta tions o n environmental impac t, including climate cha nge’ is ma nage d as a st anda lone ri sk to the G roup’ s ris k land scap e. Bas ed on cu rren t as ses smen ts, clim ate ris k is not exp ecte d to have a mate ria l impac t on our cu rre nt business model. Therefore climate change is no t seen a s a Prin cipal R isk for t he Grou p and i s not dis clos ed as a Pr incip al Ris k in the e arli er Ri sk Over view s ecti on. Thi s TCFD st ateme nt has b een sh are d with the B oard a nd Audi t Commi ttee . For m ore i nfor ma tion , se e our S ust ai na bil it y Re por tava ila ble on ou r w ebs ite, ww w .astrazeneca.com/s ustainability . Mon itori ng our pr ogr ess Th e climate e merg ency i s a publi c heal th emergency . It is cha nging our planet irreversibly , with w arming reaching cr itical tolerance thresholds for he alth . Human health and t he hea lth of the p lanet a re de eply inte rcon necte d. We have an opp or tunit y now to re set how we li v e and c reate a m ore sus tain able wo rld – tog ether a nd with out de lay . We repo rt o n our GH G emis sion s and pro gres s towards m id- an d long -term ta rget s in lin e with the Wo rld Re sourc es Ins titute GHG P rotoco l guida nce fo r deﬁnin g and calculating our GHG footprint, which is disclosed sep arately in the Sustain ability Data Summary Report. F ul l det ai ls of ou r GHG f oot pri nt ar e di sclo sed i n ou r Sus ta in abi lit y Dat a Su mm ar y Rep or t 20 21, ww w .astrazeneca.com/s ustainability/reso u rc es.html Th e per for manc e repo rt is r eﬂec ting how we ll we have be en abl e to deca rbo nise th e busin ess and by t hat, re duce ex posu re to tran sitio n ris ks and u nlock f uture o ppor tun ities fo r the Com pany an d the wid er hea lthc are se ctor . Du ring 2021 , we we re rec ogni sed fo r our effor ts in sustainability a cross our strategic priorities. This included the follo wing: > Inau gura l 2021 T e rra Ca r ta Sea l award > Dow Jones Sustainability Inde x constituent > FT SE4Goo d Index S erie s con stitue nt > Fina ncial T ime s 202 1 Euro pean C limate Lea der fo r redu ction of G HG emi ssio ns > CDP D ouble A L ist fo r Climate a nd Water Se curi ty for t he six th con secu tive year > Cor pora te Knig hts Glo bal 100 Mos t Sustainable Corporations in the W orld. For m ore i nfor ma tion , se e our S ust ai na bil it y Repo rt available o n o ur websi te, ww w .astra zen eca.com/ sustainab ility . T he bul let p oin ts be low pro vid e an ex pla nat ion o f wher e in t his A n nua l Repo rt (or ot her r elev ant d ocu ment o r loc atio n in re spe ct of s upple ment ar y in for mat ion) t he vari ous T CFD rec omm ende d d isc lo sur es ca n be fo und : > G overna nce > I s th e Boa rd’s ove rsig ht of cl im ate -rel ate d ris ks a nd opportunities d escribed? Pages 73, 89 , 90 a nd 217 . S ust ai na bil it y Rep ort pa ges 8 a nd 19. > Is managemen t ’ s ro le in assess ing and managing climate-r ela ted ris ks an d oppo rt un it ies d isc lose d? Page s 6, 15 , and 217 . Su st ain ab il ity R epor t pa ges 8 a nd 19. > S trate gy > A re c li mate -r elat ed r isk s and opport unitie s t he organisat i on has ide nti e d o ver t he sh ort , med ium a nd lon g ter m dis clo sed? P ages 8 , 30 , 45 t o 46 , 22 0 to 2 21. Su sta in abi lit y Re por t pag es 20 t o 22 . Su sta in abi li ty Dat a Su mm ar y pag es 5 to 8 . > I s th e imp act of t he cl im ate -re late d ri sk s and o ppor t un itie s on t he or gan isa tion’s bu si ness , st rate gy, an d  nan cia l pla nn ing de scr ib ed? Pag es 4 8, 217 , 2 19, 2 20 to 2 22 . > I s th e resi li ence o f the o rga nis at ion’s st rat eg y desc ri be d, t ak ing i nto consideration di erent cl imate-rel a ted sc ena ri os, i nclu din g a 2°C o r lowe r sc ena ri o ? Pa ges 4 8, 2 18 and ww w .astrazeneca.com/s ustainability/ resou rces. html > R isk management > A re t he or gan is atio n’ s pro ces se s for i dent if yi ng a nd ass es sing cli mate-related ris ks describ ed? Pag es 4 8, 91, 217 to 2 22 . Su st ain ab il ity R epor t pa ges 8 a nd 19. > I s th e orga ni sat ion’s pro ces s for managin g clima te-re lated risks di scl ose d? Page s 217 to 22 2 . Ri sk Sup plem en t p age 5 . Sustainab ility Re por t pag es 8 an d 19. > I s it de scr ib ed how t he or gan is atio n’ s pro ce ss for i dent if yi ng an d ma nag ing cl im ate -rel ate d ris ks i s inte gr ated i nto t he org an isat ion’s ove ral l ri sk ma nag eme nt? Page s 217 to 2 22 . Su st ain ab il ity R epor t pa ges 8 a nd 19. > Metri cs an d Tar gets > I s th ere d isc losu re of t he me tr ics us ed by t he or gan is atio n to as ses s cli mate-related ris ks and opportu nities in l in e wit h its s tr ateg y a nd ri sk ma nag eme nt proc es s ? P age s 48 an d 90 . > D oes t he or ga nis ati on di sclo se it s Sc ope 1, S cop e 2 an d, if a ppro pri ate, Sc ope 3 g re enh ouse g as (GH G) em iss ion s, an d rela ted r isk s? Pag e 21 6. Su stainabili ty Repo r t pa ges 2 0 to 22 . Su st ai nab il ity D ata Su mm ar y pag es 5 to 7. > Does the or ganisation describe t he ta rge ts us ed to m an age cl im ate -rel ate d ris ks a nd oppor tun ities and per formanc e aga in st t arg ets? Pa ges 4 5 to 46 , 48 and 216. Sustainabili ty Repo r t pa ges 2 0 to 22 . Su st ai nab il ity D ata Su mm ar y pag es 5 to 8 . For m ore i nfor ma tion , se e our Sustainab ility Re port a n d Sustain abili ty Dat a Su mm ar y ava il able o n our w ebs ite, ww w .astrazeneca.com/s ustainability . 222 A str aZ ene ca A nnu al Re por t & For m 20 -F I nf orm ati on 20 21 Addit i onal In formation T a sk F orce on Clim a te - rela ted Fi nancial Disclosures St a temen t c ont inue d As tra Zene ca, the A stra Zen eca lo got ype, an d the As tra Zene ca symb ol are a ll trad e marks o f the Gro up. Th e followin g medi cine na mes wh ich ap pear i n itali cs in th is Annu al Rep or t are tr ade ma rks of the G roup: T rade mark Andex x a Dali resp Losec 4 Soli ris Arimidex 1 Da xas Lo kelma Stre nsiq Atacand 2 Epanov a Lumox iti Sy mbicor t Atacand HCT Ev usheld Lyn pa r za S ymbicor t Turb uhaler Atacand Plus 2 Far xig a Mo vantik S ymlin BCise Fasenra Mov entig S ynagis 4 Bevespi Aerosphere Faslodex N exium Ta gr is so Brez tri F luenz Onde xx ya Top ro l-X L Brez tri Aerosphere F luMist Onglyza Tur buhaler Br ilinta Forx iga O rpath ys Ulto miris Br ilique Ge nuair Pri los ec V axzev ria By dureon Imnz i Pul micor t Vimovo 5 Bye tta Ire ssa Qter n Xigduo Calque nce Kanuma Saphnelo Zola dex Casode x 1 Kombigl yze Seloke n Cosude x Kombo glyze Seroquel 3 Cre stor Koselugo Se roque l XR 3 1  A str aZ ene cadi vest edt heset radem ar ksinan um berofE uro pea n,A fr ica nan dothe rma rket stoJuv iséP ha rma ceut ica lse ec tiv e19Dec em ber2 0 19. 2  A str aZ ene cadi vest edt heset radem ar ksinE ur opetoC hepla pha rme ec tiv e28Se ptem be r2018,a ndinm oret han7 0othe rma rket see ct ive31De cem ber2 02 0. 3  A str aZ ene cadi vest edt heset radem ar ksinE ur opea ndRus siat oChepl apha r mee ct ive13D ece mbe r2019. 4   E ec ti ve25Ja nua ry2 019,As tr aZ enec asoldit sri ghtsto S ynagis int heUStoS obi,a k aSwe dis hOr pha nBiov it ru mAB( pu bl).A bbViet ran sfe rre ditso wne rsh iprig htstot hi str adem ark  toMe dI mmu neL LC ,ee ct ive1Ju ly20 21. 5  A str aZ ene cadi vest edt hegloba lri ghts(e xclud ingt heUSa ndJap an)f orth ist radem arkt oGrü nen th al,e ec ti ve3De cem ber2 018. Th e followin g medi cine na mes, w hich a ppea r in ita lics in t his An nual Re por t, ar e trade m arks li cen sed to the G roup by th e entit ies se t out be low: T rade mark Licensor or Owner Antic al in Pieris A G Duak l ir Almirall, S.A . Ek lira Almirall, S.A . Enher tu Daiichi Sankyo Compan y, Limited Li nzess Iron wood Pharmaceut icals, Inc. Te zs pir e Amgen, Inc. Tudor za A lmirall, S.A . Th e followin g medi cine na mes, w hich a ppea r in ita lics in t his An nual Re por t, ar e not owne d by or lice nse d to the Gro up and a re owne d by the ent ities s et out b elow: T rade mark Owner mess enger RNA The rapeutics Moderna Covushield Se rum In stit ute of In dia 223 A st raZ ene ca A nnu al R epor t & For m 20 - F In form at ion 20 21 Addit i onal In formation Financi al S tat eme nts Strate gic Report Corporate Gover nance T rade M ark s T rade Ma rk s Ma rket de nit ions Region Country US US Europe A lbania * Czech Republic Hungar y Luxembourg Se rbia and Montenegro * Au str ia Denmark Iceland * M al ta Slovakia Belgium Estonia * Ireland Netherlands Slovenia Bosnia and Herzegovina * Finla nd Israel Nor way Spain Bulgaria France Italy Poland Sweden Croatia G erma ny Lat via * Portugal Switzerland Cyprus Greece Lithuania Romania UK Established ROW Aus tralia Canada Japan New Zealand Emerging Mark ets A lgeria Costa Rica Ira q Pakistan * Syria Argentina Cu ba J ama ic a Palestine Ta i w a n A rub a Dominican Republic * Jordan P anama Thailand Bahamas Ecuador Kazakhsta n Pe ru T rinidad and T obago * Bahrain * Egy pt Kuw ait Philippines T unisia Barbados El Salv ador Lebanon Qatar Tu r k e y Belarus * G eor gi a L ibya Russia Ukr aine Belize Gu atema la Malaysia Saudi Arabia Uni ted Ar ab Emi rate s Be rm uda Honduras Mexico Singapore Ur uguay Bra zil Hong K ong Morocco South Africa Venezuela * Chile India Nicaragua South K orea Vietnam China Indonesia O ma n Sri Lanka * Y emen * Colombia Iran O t her A frica Su da n * Q 3 2021 I QVI A , IQV IA M ida s Qu ant um Q 3 2021 d ata a re not av ai la ble or A st raZ ene ca doe s not su bsc ri be fo r IQV IA q ua rt erly d ata fo r the se cou ntr ies . The a bov e ta ble is no t an e xha ust ive l ist of a ll t he cou ntr ies i n wh ich A st raZ ene ca ope rate s, a nd exc ludes c ount ri es wi th re venue i n 20 21 of les s th an $1 m il lion . Est abli shed M arkets m ean s US, Europ e and Es tabl ishe d ROW . Nor th A mer ica me ans US. Ot her Es tabli she d ROW mean s Austr alia a nd New Ze alan d. Ot her Eme rgin g Market s mean s all Eme rging M arket s ex cep t China . Ot her Af rica in clud es An gola, B otswan a, Ethio pia, G hana , Kenya, Ma uriti us, Moz ambi que, Nam ibia , Nige ria, E swatini, T a nzan ia, Uga nda, Z amb ia an d Zimba bwe. As ia Are a comp rise s India , Indo nesi a, Mal aysia , Philipp ines, S inga pore, S outh Kore a, Sr i Lan ka, T ai wan, Th ailan d and Vi etnam . US eq uiva lents T e rms u sed i n this A nnu al Rep or t US equivalent or br ief des cription Accrua ls Accrued expenses Called-up share capital Issued share capital Creditors Liabilities/pay ables De btors Receivables and prepaid expenses Earnings Net income Employee share schemes Employee stock beneﬁt plans Fixed a sset inv estments Non-current investments Freehold O wne rsh ip with a bso lute ri ghts i n per petui ty Loans Long - term debt Prepayments Pr epaid e xpenses Proﬁt Income Share premium account Additional paid-in capital or paid- i n surplus ( not distributable) Shor t -term investments Redee mable se curities a nd shor t -term deposits 224 A str aZ ene ca An nua l Rep ort & For m 20 - F In for mat ion 2 021 Add itional Infor mation Gl os sar y The following ab bre viations and e x pressions hav e the meanings give n below w hen us ed in thi s Annu al Rep or t: Abb Vie – AbbVie I nc. Acerta Pharma – Ace rt a Phar ma B. V . Act avis – Act avis plc. ADC – antib ody dr ug co njuga te(s). ADRs – American Depositar y R eceipts. ADSs – American Depositary Shares. AGM – an Ann ual Ge ner al Mee ting of th e Compa ny . AI – ar tiﬁcial intelligence. Al exio n – Ale xion Pharmaceuticals, Inc. Almirall – Almi rall, S. A . Amgen – Am gen In c. Amplimmune – Amplimmune, Inc . AN DA – an a bbrev iated new d rug a pplic ation, w hich is a m arket ing app roval ap plica tion fo r a gene ric dr ug sub mit ted to the FDA . Annual Report – this A nnua l Repo rt a nd Form 20 -F I nform ation 20 2 1. API – active pharmace utical ingredient. Ardea – Arde a Bios cien ces, In c. Ar ticles – the Ar tic les of A sso ciatio n of the Co mpany. Astellas – Astel las Pha rma In c. Astra – Ast ra AB, b eing th e comp any with w hom the C ompany me rged in 1999. AstraZeneca – the Co mpany a nd its su bsidi arie s. AstraZeneca HealthCare Foundation – a Del aware, US no t -fo r - proﬁt co rpor ation a nd a 501 (c)(3) en tity, sepa rate fro m Astr aZe nec a Pharmaceuticals, or ganised for charitable purposes, including to pro mote pub lic aware nes s and e ducat ion of he althc are is sue s and suppor t eligi ble non-proﬁt organisations in alignment with its mission. Th e Founda tion ha s rece ived $ 30 milli on in con tribu tions to d ate from As tra Zene ca to supp or t the Conne ctions for Cardiovasc ular Health SM programme. Atn ahs – Atna hs Pha rma UK Ltd. biologic(s) or biologic medicine(s) – a c lass o f drug s that ar e produce d in living cells. BMS – Bris tol-M yers S quibb C ompany. Board – the B oard of D irec tors o f the Com pany . Bureau V erit as – B ureau Ver itas U K Limite d. Ca elu m – Caelum Biosciences, Inc. CD P (for me rly t he C arb on D isc los ure P roj ect ) – a not- for -proﬁt organisation that runs the global disclosure syst em for in vestors, companies, cities, states and regions t o manage their en vironmental impacts. CEO – the Chi ef Exe cutive O fﬁ cer of th e Compa ny . CER – con stan t ex cha nge ra tes. CFO – th e Chief Fi nanci al Of ﬁce r of the C ompany. Cheplapharm – Cheplapharm Arzneimit tel GmbH. Circassia – Circassia Pharmaceuticals PL C CKD – chro nic ki dney dis ease . CLL – chronic lymphocytic leukaemia. Co de of E thi cs – the G roup’s Code of Et hics, s ee pag e 4 7 . Compan y or Parent Compan y – Astr aZe neca PLC (fo rme rly Ze neca Gro up PLC (Ze neca)). Complement-biology platform – cap abili ties to tr ansl ate the bio logy of t he com pleme nt syste m, a par t of th e immun e system com pris ed of pr oteins t hat is e ssen tial to the b ody’s defe nce ag ains t infection, int o inno vativ e medicine s that target and inhibit the dys regu lated c omple ment s ystem c asca de that i s a k ey dri ver of man y devastatin g diseases. COPD – chronic obst ructive pulmonar y d isease. C OVA X – the vac cines p illar o f the Acc ess to COV ID- 19 T o ols (A ct) Acc ele rator . C OV A X is c o-le d by CEPI, the C oaliti on for Ep idemi c Preparedness Innovations ; Gavi, the Vaccines Alliance ; and the WHO , work ing in c ollab orat ion with d evelop ed and d evelop ing cou ntr y vacc ine ma nufac ture rs, UNI CEF , th e W o rld Ba nk and o ther s. C O V I D -1 9 – t he of ﬁcial W HO nam e for the di seas e caus ed by the 201 9 novel c oronav irus . Covis – C ovis Pha rma B. V . CV – card iovascul ar . CVR M – Cardio vascular , Renal & Met abolism . Daiichi Sankyo – D aiich i Sank yo, Inc. or a c ompa ny within the D aiich i Sank yo gro up of com panie s. DDR – DNA da mage r espo nse. Deﬁniens – Deﬁniens A G. Dire ctor – a direc tor of the C ompa ny . DOJ – the Uni ted St ates De par tme nt of Just ice. DTR – UK D isclo sure G uidan ce and Trans pare ncy Rule s. earnings per share (EPS) – proﬁt fo r the yea r afte r ta x and non-c ontrolling int e rests, divided by the weighted av e rage num ber of O rdina ry S hare s in iss ue dur ing the ye ar . E BIT DA – Rep or ted Proﬁ t before t ax p lus net ﬁ nanc e expen se, sha re of af ter ta x los ses o f joint ve nture s and as soci ates an d charges for depreciation, amor t isation and impairment. EFPI A – Europe an Fed erat ion of Pha rmac euti cal Ind ustr ies an d Associations. EGFR – ep ider mal gr owth fa ctor re cepto r . EMA – Europe an Me dicin es Age ncy . ESG – en vironmental, social and governance. ESMO – Europ ean S ocie ty for M edic al Onc olog y . EVP – Executive Vice-Presi dent. EU – the Euro pean U nion. 225 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Addit i onal Infor mation Finan cial State ments St rate gic Re por t Corporate Governa nce Gloss ar y FDA – t he US Food a nd Dr ug Admi nistr ation, w hich is p ar t of the US De par tme nt of Hea lth an d Human S er vice s Agen cy , whi ch is the regulatory authorit y f or all pharmaceuticals (including biologics and vacc ines) a nd med ical de vice s in the US. FibroG en – FibroG en, In c. FRC – the UK Fi nanc ial Rep or ting Co uncil. GA AP – G ene rally A ccep ted Acc ounti ng Princ iple s. GHG – greenhouse gas. GLP1 – glucagon-like peptide - 1 . gross margin – the ma rgin, a s a perc ent age, by whi ch sal es excee d the c ost of s ales , calcu lated by di vidin g the dif fere nce b etwe en the two by t he sale s ﬁgur e. Group – As tra Zene ca PLC and it s subsi diar ies. Grünenthal – Grün enthal Gr oup . GSK – GlaxoSmithKl ine plc . GWP – glo bal war ming p otentia l. HCPs – healthcare practitioners. HF – hear t fa ilure. HMRC – He r Maje sty ’ s Reve nue & Cus toms, th e UK ta x autho rit y . H TA – health t e chnology assessment. IA – the Gro up’ s Inte rna l Audit S er vice s func tion. IAS – Int e rnational Accounting S tandards. IASB – International Accounting Standards Board. ICS – inhaled oral cor t icosteroid . IFPM A – International Federation of Pharmaceutical Manufacturer s and Associations. IFRS – International F inancial Repor ting Standards or International Fina ncia l Repo rt ing Sta ndar d, as the c ontext r equir es. Innate Pharma – Innate Pharma S.A. IO – i mmuno- oncology . IP – intell ectu al pro per ty. IQV IA – IQVIA S oluti ons HQ L imited . Fo r mo re in for mat ion, se e p age 22 8. Ironwo od – Ironwood Pharmaceuticals, Inc . IS – information services. ISAs – Inter nati onal St anda rds on A uditin g. IT – inf ormation technology . KPI – key pe rf orma nce in dicato r . krona or SEK – refer ence s to the cur ren cy of Swed en. K yowa Kirin – K yowa K irin In terna tiona l plc, a sub sidia r y of K yowa Hak ko Kiri n Co., Ltd. L ABA – long-ac t ing beta2 -agonist. LAMA – long-acting musc arinic antagonist. LC M pr oje cts – signiﬁc ant life-cycle management projects (as dete rmin ed by pote ntial re v enu e gene rati on) , o r line ex tensi ons. Lilly – Eli Lill y and Co mpany. Luye Pharma – Luye Ph arm a Group. mAb – monoc lona l antib ody , a b iolog ic that i s spec iﬁc, me aning it bi nds to an d att acks one p ar ticul ar ant igen. major market – US , Europe , Japan a nd Chin a. M AT – movi ng annu al tota l. MedImmune – Me dImmune , LLC (formerly MedImmune, Inc .). mRNA – Mes seng er RN A. MI – myocardial infarction. Moderna – Moderna Therapeutics, I nc. MSD – Merc k & Co., Inc., whic h is know n as Mer ck in the US a nd Can ada, a nd MSD in o ther te rrito ries . n /m – not me aningful. Na sd aq – Nasdaq Global Select Market. Nasdaq Stockholm – pre viously the St o ckholm St ock E x chan ge . New Medicines – Roxadu stat , K oselugo, E nhe rtu , T agrisso , Imﬁnzi , Ly nparza , Cal quence , Fa rx iga , Brilinta , L okelma , Fas en ra , Beve spi a nd Brez tri . NME – new mol ecul ar enti ty . Nova rt is – Nova rt is Phar ma AG. NRDL – Natio nal Re imbur sem ent D rug Li st, Chi na. NS CLC – non- small cell l ung cancer . NYS E – the New Y ork S tock E x cha nge. OECD – the Organisation for Economic Co-operation and Development. OMICs – refer s to a ﬁel d of stud y in biol ogy en ding in ‘omi cs’ , such as genomics, proteomics or metabolo mics. operating proﬁt – sale s, les s cos t of sale s, les s ope ratin g cost s, plus operating income. Ordinar y S hare – a n ordin ar y shar e of $0.25 e ach in th e share c apit al of the C ompa ny . Orphan Drug – a dr ug tha t has be en ap proved fo r use in a re lative ly low-i ncide nce in dica tion (an o rpha n indic ation) an d has be en rewa rded wit h a peri od of ma rket exclus ivit y; the pe rio d of ex clu sivit y and t he avail able or phan i ndic ation s var y betwe en ma rkets. Paediatric Ex clusivity – in th e US, a six-mo nth per iod of excl usivi ty to mar ket a dru g which i s awarde d by the FDA in ret urn for c er tai n pae diatr ic clin ical s tudie s usin g that dr ug. Thi s six-mon th per iod ru ns fro m the date of r elevan t patent ex pir y . A nalog ous pr ovisio ns are avail able in c er tain o ther te rrito ries (s uch as Eu rope an Supp leme nta ry Protection Certiﬁcate (SPC ) paediatric extensions) . 226 A st ra Zen eca A nnu al Re por t & Fo rm 20 - F In for mat ion 2 021 Add itional Infor mation Glo ss a r y c ont inue d PA R P – an oral po ly ADP - ri bose polymerase . P D - L1 – an anti-programmed death-ligand 1 . Pearl Therapeut i cs – Pearl Therapeutics, In c. PFS – pr ogre ssio n-fre e sur vival. T he len gth of tim e durin g and af ter the tr eatme nt of a dis eas e, such a s canc er , th at a pati ent live s with the dis ease w ithou t it get ting wo rse. PhRMA – Pha rma ceuti cal Re sea rch an d Manuf actu rers o f Ame rica . Phase I – th e phas e of clini cal re sea rch whe re a new dr ug or tre atme nt is tes ted in sm all gr oups of p eopl e (20 to 80) to che ck that t he dru g can ach ieve app ropri ate con centr ation s in the bo dy , de term ine a safe dosage range and identify side effects. This phase includes health y volu ntee r stu dies . Phase I I – the pha se of cli nica l rese arch w hich in clude s the co ntroll ed clin ical a ctivi ties c onduc ted to evalu ate the ef fec tiven ess of th e drug i n pati ents w ith the di seas e unde r stud y and to be gin to dete rmin e the saf ety p roﬁle of th e drug. P hase II s tudie s are t ypic ally c onduc ted in sma ll- or m edium -size d grou ps of pati ents a nd can b e divid ed into Pha se IIa stu dies , which te nd to be de signe d to ass ess d osing re quire ments , and Pha se IIb st udies , which te nd to as ses s safet y and efﬁcacy . Phase III – t he pha se of clin ical r esea rch wh ich is pe r forme d to gath er add ition al infor mati on abou t ef fecti venes s and s afet y of the dr ug, of ten in a co mpar ative se ttin g, to evaluate th e overal l bene ﬁt / ris k proﬁl e of the d rug. Pha se III stu dies u sual ly incl ude bet wee n severa l hund red and several thousand patients. Pieris Pharmaceuticals – Pie ris Pha rmac euti cals, I nc. pMDI – pressurised metered-dose inhaler . po und s te rli ng, £ , G BP or p enc e – refe renc es to the cu rre ncy of the UK . primary care – gene ral he althc are p rovide d by physic ians w ho ord inar ily have ﬁr st con tact w ith pati ents a nd who m ay have conti nuing ca re for the m. Proof-of -Conce pt – da ta dem onst ratin g that a ca ndida te drug r esult s in a cli nica l chan ge on an ac cep table e ndpo int or su rro gate in pat ients wit h the dise ase. P r oTA C s – a pr oteol ysis ta rgeti ng chim era , which i s a heterobifunctional small molecule composed of two activ e domains and a l inker ca pabl e of remov ing spe ciﬁc u nwanted p rotein s. PTE – Paten t T e rm E xten sion, a n exten sion of u p to ﬁve year s in the ter m of a US pate nt rela ting to a dr ug whic h comp ens ates for d elays in ma rketin g resul ting fr om the ne ed to obt ain FDA ap proval. T he ana logo us rig ht in the EU is a n SPC. Pu lse S ur vey – a n Astr aZe neca e mploye e opini on sur vey , wh ich se eks employees’ views o f the business. PwC – Pricew ater houseCoopers LLP . R&D – re sea rch an d develop ment . R&I – Respirator y & Immunology . Rare Disease – t he EU deﬁn es a dis ease o r cond ition a s rare i f it af fec ts fewer th an 1 in 2,00 0 peop le with in the ge nera l popu latio n and in the U S, the Or phan D rug A ct deﬁn es a ra re dise ase a s a disea se or con ditio n that af fec ts les s than 20 0,00 0 peo ple in th e United S tates . Redeemable Preference Share – a redee mable preference share of £1 eac h in the sh are ca pita l of the Co mpany. Regulatory Exclusivity – any of th e IP righ ts ari sing fr om gen erat ion of clinical data and includes Regulatory Data Protection, P ae diatric Exc lusiv ity a nd Orp han D rug st atus. RNA – ribonucleic acid. Roche – F . Hof fma nn-L a Roc he AG. ROW – re st of worl d. RSV – respirator y syncy tial virus. RWE – Real-W orld Evidence. SABA – short-acting beta2-agonist. Samsung Biologics – Sam sung Bi ologi cs Co., Ltd. sales platforms – previo usly r eferr ed to as G rowt h Platf orms , consisting of Emerging Markets, Japan, Oncology , C VRM, Respiratory & Imm unolo gy , On colo gy and R are Di sea se. Sanoﬁ – Sa noﬁ S. A. /Sano ﬁ Pasteu r , Inc. Sarbanes-Oxle y Act – the US S arb anes -Ox ley Act of 20 02. SEC – the US Securities and Exchange Commission , the gov e rnmental age ncy tha t regu lates th e US sec uriti es indu str y and s tock ma rkets. SEK – Swedis h kron a (or kro nor). SET – Seni or Exec utive T ea m. SG& A c ost s – se lling, ge ner al and a dminis trati ve cost s. Sobi – Swedis h Orp han Bi o vit rum AB. SPC – supplementary protection certiﬁcate. specialty care – speciﬁc h ealthcare provided b y medical specia l ists who d o not gen era lly have ﬁr st con tact w ith pati ents . Spirogen – Spirogen Sàrl. SoC – sta ndard o f care. T rea tment t hat is ac cepte d by medi cal exp er ts as a p rope r treat ment fo r a cer tai n typ e of dise ase a nd that is w idel y us ed by hea lthca re prof essi onal s. Ta k e d a – T aked a Pharm aceu tica l Comp any Limi ted. TCFD – T ask Force on Climate-related Financial Disclosures. T erSera – T erSe ra Therape ut ic s LLC. T ot al Reven ue – the su m of Produ ct Sal es and C olla bora tion Reve nue. TSR – total s hare holde r retur n, bei ng the tot al retu rn on a sh are over a pe riod of t ime, inc ludin g divid ends re investe d. UK – Unite d Kingd om of Gr eat Br itain a nd Nor th ern Ir elan d. UK Corporate Governance Code – th e UK Cor pora te Govern ance Co de publi she d by the FRC in Ju ly 201 8 that s ets ou t stan dard s of goo d pra ctice i n corp orate g overna nce for t he UK. US – Unite d State s of Ame rica . US d oll ar , US $ , USD o r $ – refer ence s to the cu rren cy of the US. Vaxzevri a – COVID - 1 9 Vac cine As tra Zene ca. VBP – v a lue-based pro curement. Viela Bio – Viela Bio, Inc . WHO – W orl d Heal th Org aniza tion, th e Unite d Nation s’ spec ialis ed age ncy for h ealt h. ZS P harma – ZS Phar ma, In c. 227 A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 Addit i onal Infor mation Finan cial State ments St rate gic Re por t Corporate Governa nce Gloss ar y Caut iona ry stat ement r ega rdi ng for ward -look ing st atements Th e purp ose of thi s Annu al Rep or t is to prov ide info rmat ion to the me mbe rs of the Com pany . The C ompa ny and it s Dire ctor s, employees, agents and advisers do not acc ept or a ssu me resp onsi bilit y to any othe r pe rso n to whom thi s Annu al Rep or t is show n or in to whose h ands i t may com e and any such responsibility or liability is expressly dis claim ed. In or der , amo ng othe r thing s, to util ise the ‘s afe har bour ’ provis ions of t he US Privat e Securities Litigation Reform Act o f 1 9 95 and t he UK Com pani es Act 20 06, we a re providing the following cautionar y s tat e ment: This Annual Repor t contai ns certain forward- loo king s tatem ents wi th res pect to t he operations, per formance and ﬁnancial condition o f the G roup , including, among other things, statements about expected revenues, margins, earnin gs per share or othe r ﬁnan cial o r other m easu res. Fo rwa rd- looking stateme nts are statements relating to the f uture w hich ar e base d on info rmati on avail able at t he time su ch sta temen ts are made, including information relating to risks and uncer tainties. Although w e believ e that the fo rwa rd-l ookin g state ment s in this A nnua l Report are b ased on reasonable assum ptio ns, the m atte rs dis cuss ed in th e for ward- look ing st ateme nts may be i nﬂuen ced by fa ctor s that cou ld cau se actu al outc omes a nd re sults to be ma teria lly dif fer ent fr om thos e pred icted. The forward-look ing s tat e ments reﬂect knowledge and information a vailable at the date of t he pre parat ion of thi s Annu al Rep or t and the Company under tak es no obligation to upd ate thes e for ward- look ing st ateme nts. We iden tif y the for war d-loo king s tatem ents by usi ng the wor ds ‘antic ipates’ , ‘b elieve s ’ , ‘e x pects’ , ‘intends’ and similar expressions in su ch sta temen ts. Imp or tant fa ctor s that cou ld cau se actu al res ults to di ffe r mater ially fro m those c onta ined i n for ward- look ing st ateme nts, ce rt ain of wh ich ar e beyond o ur control, include, among other things: > the ri sk of fai lure or d elay in de liver y of pip eline o r launc h of new me dicin es > the ri sk of fai lure to me et reg ulator y or ethical requirem ents for medicine development or approv al > the ri sk of fai lures o r delay s in the qua lit y or ex e cution of the our commercial strategies > the i mpact of pricing, af fordability and competitiv e pressures > the ri sk of fai lure to ma intai n suppl y of compliant, quality medicines > the ri sk of ille gal tr ade in ou r medi cine s > the im pact of r elian ce on thi rd-p ar ty go ods and services > the ri sk of fai lure in in forma tion te chnol ogy or cybersecurity > the ri sk of fai lure of cr itic al pro ces ses > the ri sk of fai lure to co llec t and ma nage dat a in line wi th leg al and r egula tor y requireme nts and strategic objectives > the ri sk of fai lure to at trac t, devel op, en gage an d reta in a diver se, ta lente d and capabl e w ork force > the ri sk of fai lure to me et reg ulator y or ethical expectati ons on envir onmental impact, including climate change > the ri sk of the s afet y and ef ﬁca cy of marketed medicines being questioned > the risk o f adv erse outcome of litigation and/or go vernme ntal i nvestigations > the ri sks rel ated to IP pr otect ion of our products > the ri sk of fai lure to ach ieve stra tegic pla ns or me et ta rgets o r expec tati ons > the ri sk of fai lure in ﬁn anci al con trol or the o ccur renc e of frau d > the ri sk of unex pec ted dete rior ation in our ﬁnancial position > the impact that the COVID- 1 9 global pan demi c may have or c ontinu e to have on th ese ri sks, on t he Grou p ’ s a bilit y to con tinue to mi tigate t hese r isks, a nd on the Group ’ s operations, ﬁnancial results or ﬁnancial condition. Ce rt ain of the se fac tors a re dis cuss ed in mor e deta il, witho ut limi tatio n, in the Ri sk Supplement ( at www.astrazeneca.com/ ann ualre por t20 2 1) and re pro duce d in As tra Zene ca’ s For m 20- F ﬁling fo r 2021 (availa ble on th e SEC webs ite ww w . sec.gov). Noth ing in thi s Annu al Rep or t shou ld be construed as a proﬁt f orec ast. I nclusion of Re por ted per form anc e, Core n anci al measu res and con sta nt exc ha nge rate gro wt h rates Astra Z eneca’ s determination of non-GA AP me asure s toget her wi th our pr esen tatio n of them within our ﬁna ncial information may dif fer f rom sim ilar ly title d non- GA A P me asure s of othe r comp anie s. St atement s of compet itive pos ition, g row th rates and sale s In thi s Annu al Rep or t, except a s other wi se st ated, ma rket info rmat ion reg ardi ng the po sition o f our bu sines s or pr oduc ts rela tive to its o r their c ompe titio n is base d upo n pub lishe d sta tistic al sa les dat a for the 12 mon ths en ded 30 S eptem ber 2021 obt aine d fro m IQVIA , a lea ding sup plie r of stat istic al dat a to the pha rmac euti cal in dustr y . Unl ess oth er wise n oted, for th e US, dis pens ed new or to tal pr escr iptio n data an d audi t ed sa les da ta are t aken, re spec tively, from IQV IA National Prescription Audit and IQVIA National Sa les Per spe ctive s for the 1 2 mon ths en ded 31 Dece mbe r 2021 ; s uch da ta are n ot adjusted for Medicaid and similar rebates. Exc ept as ot her wise s tate d, these m arket sha re and i ndus try d ata fr om IQVIA have b een de rived by c ompar ing ou r sale s revenu e with com peti tors’ an d total ma rket sa les reve nues for th at per iod, a nd except a s other wis e st ated, grow th ra tes are g iven at CER . For th e purp oses o f this An nual Re por t, un less othe rw ise st ated, re feren ces to th e world pharmaceutical marke t or s imilar ph rases are to the 50 c ountr ies c ontai ned in th e IQVIA dat abas e, whic h amoun ted to app roxima tely 93% (in val ue) of the c ountr ies au dited by IQVIA. Changes in data subscriptions, ex change rates and subscripti on cov erage, as we ll as res tate d IQVIA dat a, have le d to the re sta temen t of total ma rket val ues for prior y ear s. A str aZ eneca web sites Information on or accessible through our websites, including ww w .astr azeneca.com, and www .astrazenecaclinicaltri als. com and on any we bsite s refer ence d in thi s Annu al Rep or t, doe s not for m par t of an d is not incorpo rated int o this Annua l Repor t. Ex ter na l /t hi rd-p ar t y web sites Info rmati on on or a cce ssibl e throu gh any thir d-pa rt y or ex tern al webs ite doe s not for m par t of a nd is not i ncor pora ted into th is Annual Repor t. Fig u res Figu res in p aren these s in ta bles a nd in the Financial Stateme nts are used to represent negative numbers. Supplement s For de taile d info rmati on on our D evelop ment Pipe line, Pate nt Ex pirie s and Key Ma rketed Pro ducts , and Ri sk, se e our web site, ww w .astra zeneca.com/annualrepor t202 1 . 228 A st raZ ene ca A nnu al Rep or t & Form 2 0- F In for mat ion 20 21 Addit i onal Infor mation Impor tant in f or ma t i on f or read ers of t his A nnual Repor t A A str aZ ene ca An nua l Rep ort & For m 2 0- F I nfor mat ion 2 021 [ Sec tion] / [S ect ion] Addit i onal Infor mation Finan cial State ments St rate gic Re por t Corporate Governa nce Page H ead ing De sig n an d pro duc tio n Super union, London. w ww.super un ion.com Bo ard ph otog rap hy Ma rc us Lyon SE T photo gr aphy Sc ot t N ib auer Gr aha m Ca rlow Ph il ip My not t Os si Pi isp ane n T his A nnu al Re por t is pri nte d on He aven 4 2 w hic h is Fore st St ewa rds hip Counc il ® (F SC ® ) -c er ti ed v irg in  bre. T hi s pro duc t is ma de of mate ria l fr om we ll- man age d, FS C ® - cer ti e d for est s and ot her co ntro lle d sour ces . It is pri nte d i n t he UK by P ure pri nt usi ng its pure pri nt ® env ir onm enta l pr int ing te ch nolog y, a nd ve get abl e i nk s were u sed t hro ughou t. P ure pri nt is a Car bon Neut ra l ® co m pa n y. Bo th th e m anu fac t ur ing mi ll a nd the pr int er are re gi ste red to th e En vi ron ment al Ma na geme nt Sy ste m IS O 1 4 001 an d a re FSC ® ch ain -o f-c ust ody ce rt i ed. A A st ra Zen eca A nnu al Re por t & For m 2 0 -F In for mat ion 2 021 Add itional Infor mation Re gis tere d o ce a nd cor porate headq uar ters A str aZ enec a PLC 1 Fra nci s Cric k A v enue Ca mbr idge Bio medi cal C ampu s Ca mbr idge C B2 0A A UK Tel: + 44 (0 )20 3749 50 0 0 Th is A nnua l Rep or t i s a lso ava ila ble on ou r websi te, ww w .ast r azeneca.com/annualreport 2021 W ha t s c i e n c e c a n d o Astr aZen ec a Develo pment Pipeli n e a s a t 1 0 F e b r uar y 202 2 Refe rence s to Notes and page nu mb ers, and capit al ised ter ms not de ne d i n t hi s supple ment c an be fou nd in A stra Z eneca’ s A nnua l Rep ort a nd Form 2 0 -F I nfor mat ion 2021 at w w w . ast raz enec a.com /an nua lrep or t2 021. A str aZ eneca -sp onsor ed o r - di rec ted tr ia l New Molecular Entities (NMEs) and signiﬁcant indications Re gulator y su bmis sion d ates show n for as sets i n Phase III a nd beyo nd. As dis clos ure of co mpou nd infor mati on is bal ance d by the bu sines s nee d to mai ntain c onﬁd entia lit y , infor mati on in rel ation to s ome com poun ds liste d here h as not b een di sclo sed at t his time. Pha se I Compound Me chanism Area Under Investigation Oncology A ZD0466 BCL2 /xL PP haematological malignancies A Z D13 9 0 A TM inhibitor glioblastoma A ZD2936 PD1 / TI GIT bispeciﬁc mAb PP solid tumours A ZD4 573 C DK9 inhib itor haematological malignancies A ZD5991 MCL 1 inhibitor haematological malignancies A ZD76 48 DN APK PP haematological and solid tumour s A ZD 7789 P D1 / TIM3 bispeciﬁc mAb solid tumours A ZD8205 B7 - H4 TOP1i ADC solid t umours A ZD8701 +/ - Imﬁnzi FOXP3 +/- PD -L 1 PP solid tumours Imﬁnzi + adav ose rtib PD -L 1 m Ab + Wee1 inhib itor PP solid tumours IPH 5201 CD39 PP solid tumours M E D I 11 9 1 I L1 2 m R N A PP solid tumours MEDI57 52 + Lenvatinib PD - 1/CTL A- 4 bisp eci ﬁc mA b + VEGF advanced renal cell carcinoma MEDI92 53 rNDV IL 1 2 solid tumours T agrisso + ( Koselugo o r s a volitinib ) TAT T O N EGFR i nhib itor + (M EK inhi bitor o r MET i nhibi tor) PP advanced EGFRm non-smal l cell lung cancer CVRM A ZD 2373 Podocy te hea lth nephropathy A ZD2693 NASH resolution non-alcoholic steatohepatiti s A ZD3366 CD39L3 cardio vascular d isease A ZD3 427 Rela xin ThP cardi ov ascular disease AZD5462 Rela xin mimetic cardiov ascular disease A ZD75 03 ASO non-alcoholic st eatohepatitis MED I83 67 avb 8 chronic kidney disease Respirator y & Immunology A ZD4604 Inhaled JAK 1 inhibitor asth ma AZD5055 Porcupine inhibit or idiopathic pulmonary ﬁbrosis A ZD8630 Inhaled TSLP mAb asthma Rare Disease A L X N 17 2 0 anti-C5 bi speciﬁc m inibody generalised myasthenia gravis A L X N18 2 0 anti-properdin bispeciﬁc haematology AL XN 1 850 next-generation asfotase alfa h yp ophosphatasia Ot her A Z D 4 0 41 o rexin 1 re cep tor ant ago nist PP opioid use disorder M ED I 0 618 PAR 2 ant agon ist mA b osteoarthritis pain M E D I13 41 alpha synuclein m Ab PP Parkinson ’s disease M E D I18 14 amyloid beta mAb PP Alzheim er’ s disease Pha se II Compound Me chanism Area Under Investigation Oncology adavosertib Wee 1 inhibit or PP ovar ian c ance r , s olid tu mour s, ute rin e sero us ca ncer A ZD01 71 + Imﬁnzi + C Tx ant i-LI F mAb + PD -L 1 m Ab + CTx 1L metast at ic pancreatic duc tal ade nocarcinoma A ZD4573 + Calquence CD K9 inhi bitor + B TK inhi bitor hae mat olo gical malignancies AZD5305 P ARP1 Sel solid tumours camizestran t selective oestrogen receptor degrader oestrogen r eceptor +ve breast cancer capivasertib A KT inhibit or PP prostate cancer ceralaser t ib A T R inhibitor solid tumours Imﬁnzi (p lat for m) COAS T PD -L 1 mA b + mul tiple n ovel on colo gy the rap ies PP non-small cell l ung cancer Imﬁnzi (p lat for m) HUDSON PD -L 1 mA b + mul tiple n ovel on colo gy the rap ies p ost IO n on- smal l cell l ung ca nce r Imﬁnzi (p lat for m) Ne oCOA ST PD -L 1 mA b + mul tiple n ovel on colo gy the rap ies PP non-small cell l ung cancer Key PP Par tnere d product 1 Deve lopment P ipeline De velopment P ipe li ne as at 1 0 F eb r uar y 2 022 Compound Me chanism Area Under Investigation Imﬁnzi + FOLF OX + bev acizumab COLUMBIA 1 PD -L 1 mA b + CT x + V EGF 1st -line metastatic microsat ellite-stable colorectal cancer Imﬁnzi + L ynparza ORION PD -L 1 mA b + P A RP inh ibito r PP 1 st-line me tastatic non-small cell lung cancer Imﬁnzi + monalizumab PD -L 1 m Ab + N K G 2a mAb PP solid tumours MEDI57 52 PD- 1/ CTLA- 4 bispe ciﬁc m Ab solid tumours ole clu mab + CT x or Imﬁnzi + oleclumab + CT x CD73 mA b + CT x or P D-L 1 m Ab + C D 73 m Ab + CTx metastatic pancreatic ca ncer P o s t -1L T agrisso (pl at form) ORCHARD EGFR inhibitor + multiple novel oncology therapies EG FRm non -sm all ce ll lun g canc er T agrisso + savo litin ib S AVAN N AH EGFR i nhib itor + ME T inhi bito r PP advanced EGFRm non-smal l cell lung cancer CVRM A ZD 4 831 myeloperoxidase he ar t failu re wit h a pres er ved ej ect ion fr acti on A Z D 5718 FL AP coronary artery disease/ chronic kidney disease A ZD8233 hypercholesterolemia cardi ov ascular disease A ZD8 601 V EGF-A PP cardio vascular d isease A ZD9977 + Far xiga/Forxig a MR mo dulato r + SGL T2 in hibi tor he ar t fail ure wi th chro nic k idney d isea se cotadutide GLP- 1 /glucagon dual agonist t ype -2 dia betes , obe sit y and N ASH, di abet ic kid ney dis eas e ME DI6 570 L OX -1 m A b cardio vascular disease toz or akimab I L- 3 3 m A b diabetic kidney d isease zibot e n tan + Far xiga/Forxig a ZENITH-CKD E T A ant agon ist + SG L T2 chronic kidney disease Respirator y & Immunology A Z D 14 0 2 Inhale d IL -4Ra PP asthma A ZD7 98 6 DP P1 PP chronic obstructiv e pulmonary disease bra zikumab EXPEDITION I L- 2 3 m A b u lcerative colitis navafe ntero l MABA PP chronic obstructiv e pulmonary disease toz or akimab I L- 3 3 m A b COPD/ atopic dermatitis/ asthma / COVID- 19 Rare Disease AL XN20 50 oral fact or D inhibitor paroxysmal nocturnal haemoglobinuria danicopan (AL XN2040 ) fac tor D in hibi tor geographic atr ophy Other MED I7352 NGF / TNF bispeciﬁc mAb osteoar thritis pain and painful diabetic neuropathy Phase III/Piv ota l Phase II/Registr ation (listed until launched in all applicable major regions) Compound Mechanism Area Under Investigation Estimated Filing Acceptan ce Additional information US EU Jap an China Oncology camizestrant + CDK4/6i SEREN A-6 selective oestrogen re ceptor degrader + CDK4/6 inhibitors 1 L HR+ HER 2- ESR1 m b rea st can cer 2023+ 202 3+ 2023+ camizestrant + palbociclib SEREN A-4 selective oestrogen re ceptor degrader + CDK4/6 inhibitor 1 st-l ine HR+ HER 2- bre ast c ance r 2023+ 20 23+ 2023+ 2023+ capivaser tib + abiraterone CAPItello-28 1 AK T inhibitor + abiraterone PTEN deﬁcient metastatic hormone sensitiv e prostate cancer PP 2023+ 20 23+ 2023+ 2023+ ca pivas er tib + CT x CAPItello-290 AK T inhibitor + C Tx 1 st-line me tastatic triple negative b reast cancer PP 2023 2023 2023 20 23+ capivaser tib + fulvestrant CAPItello-291 AK T inhibitor + fulvestrant 2nd- line a nd beyo nd in AI r esi stan t loca lly advanced (inoperable) or metastatic breast cancer PP 2023 2023 2023 20 23+ capivaser tib + fulvestrant + palbociclib CAPItello-292 AK T inhibitor + fulvestrant + CDK4/6 inhibitor 1 st-l ine tri plet i n ear ly rel apse /E T resi sta nt locally advanced (inoperable) or metastatic breast cancer PP 2023+ 20 23+ 2023+ 2023+ datopo tamab de rux teca n TROPION-Lung01 TROP2 targeting antibody drug conjugate 2L + NSCLC without actionable genomic mutations PP 2023 2023 2023 20 23+ datopo tamab de rux teca n# TROPION-Brea st0 1 TR OP-2 targeting antibody drug conjugate 2-3L H R+ HER2- br eas t canc er PP 2023+ 20 23+ 2023+ 2023+ Pha se II continu e d 2 Development Pip eline De velopment P ipe li ne c ont inue d Compound Mechanism Area Under Investigation Estimated Filing Acceptan ce Additional information US EU Jap an China Imﬁnzi +/- tremelimuma b + C Tx POSEIDON P D - L1 m A b +/- CTL A- 4 mA b + CT x 1 st-l ine non -sm all ce ll lun g canc er PP Accepted Ac cepted Submitted 2023+ Imﬁnzi + tremelimuma b H I M A L AYA PD -L 1 mA b + CTL A- 4 mA b 1 st-line hepat ocellular carcinoma PP H1 2 02 2 (Orphan Drug Designation) H1 2 02 2 (Or phan designation) H1 2 02 2 2023+ Imﬁnzi + tremelimuma b + SoC NILE PL -L 1 mA b + CTL A- 4 mA b + So C 1 s t -line uroth elial cancer PP 2023 2023 2023 20 23+ Imﬁnzi +/- tremelimuma b + CRT ADRIA TIC P D - L1 m A b +/- CTL A- 4 mA b + CRT 1 st-line limited-stage smal l-cell lung cance r PP 2023 2023 2023 20 23 K oselugo/ selumetinib SPRINT MEK inhibitor paediatric neuroﬁbromatosis type- 1 PP Launche d (Priority Review , Breakthrough Therap y , Orphan Drug Designation) Launched (Breakthrough Therap y , Orphan designation) Submitted (Or phan Dr ug) H2 2022 L ynparza + Imﬁnzi + bevacizumab DuO-O P AR P inhibi t o r + PD -L 1 mA b + VEG F inhibitor 1 st-lin e o varian cancer PP 2023+ 20 23+ 2023+ 2023+ L ynparza + Imﬁnzi DuO-E P AR P inhibi t o r + PD -L 1 mA b 1 st-line endometrial ca ncer PP 2023+ 20 23+ 2023+ 2023+ monalizum ab + cetuximab INTERLINK - 1 NKG2a m Ab + EGFR m Ab 2L+ rela pse d meta sta tic he ad and n eck squamous cell cancer PP 2023+ 20 23+ 2023+ N/A savo litin ib + Imﬁnzi S A M E TA MET inhibitor + PD -L 1 mA b 1 st-line papillary renal cell carcinoma PP 2023+ 20 23+ 2023+ CVRM eplontersen ligand- conjugated antisense patients with heredita ry transthyretin- mediated amyloid polyneuropathy PP H2 2022 (Orphan Drug Designation) eplontersen ligand- conjugated antisense pat ient s with h ere dita ry o r wild -typ e transth yretin-medi ated amyloid cardiomyopathy PP 2023+ (Orphan Drug Designation) 2023+ roxadustat O LY M P U S ROCKIES hypoxia- inducible factor prolyl hydro x ylase inhibitor anaemia in chronic k idne y disease/ e nd-stage renal disease PP Launched Respirator y & Immunology bra zikumab INTREP ID I L- 2 3 m A b Crohn’ s disease 2023+ 20 23+ 2023+ 2023+ Fasenra CALIMA SIROCCO ZOND A BISE BORA GREGALE MIR ACL E I L- 5 R m A b severe uncontrolled asthma PP Launched Launched L aunched 20 23 PT 027 ICS/SABA a sthma PP H1 2 02 2 Saphnelo TUL IP 1 & TUL IP 2 AZ ALEA (China) T y pe I IFN re cepto r mA b systemic lupus ery thematosus PP Launched (Fast T r ack, Orphan Drug Designation) Accepted Launched 2023 + Te z s p i r e (te zep elu mab) N AV I G AT O R DIRECTION TSLP mAb severe uncontrolled asthma PP Launched (Priority Review) Accepted Ac cepted 20 23+ Rare Disease acoramidis (A LXN 2060) oral TTR stabilize r transthyretin am yloid cardiomyopat hy PP 2023 A L X N18 4 0 bis-choline tetra- thiomolybdate Wilson d isease H2 2022 (Orphan Drug Designation) H2 2022 (Or phan designation) H2 2022 C A E L- 10 1 ﬁbril-reac tiv e mAb AL amyloidosis 2023+ (Fast T r ack, Orphan Drug Designation) 2023+ (Or phan designation) 2023+ danicopan (ALXN2040) factor D inhibitor paroxysmal nocturnal haemoglobinuria with extravascular haemolysis 2023 (Orphan Drug Designation) 2023 (Or phan designation) 2023 Phase III/Piv ota l Phase II/Registr ation (listed until launched in all applicable major regions) continued 3 Development Pip eline De velopment P ipe li ne c ont inue d Compound Mechanism Area Under Investigation Estimated Filing Acceptan ce Additional information US EU Jap an China Ot he r an d COVI D-19 Evus hel d ( A Z D 74 4 2 ) C O V I D -1 9 L AAB combination pre venti on and t reat ment of C OVID - 1 9 Prophylaxis FDA Emergency Use Authorisation submission ap proved Ap proved (Emergency Use) H1 2 02 2 H1 2 02 2 H2 2 022 nirsevimab R S V m A b -Y T E passive RSV immun isation PP H2 2022 (Fast T r ack Designation, Breakthrough Therap y Designation) H1 2 02 2 (PRI ME) 2023 2023 (Breakthrough Therap y Designation) Va x zev ri a SARS- Co V-2 COVID v accine PP EMA a nd Jap an Conditional Marketing Authorisation H1 2 02 2 L aunched Launched Signiﬁcant Life-cycle Management Re gulator y su bmis sion d ates show n for as sets i n Phase III a nd beyo nd. Proje cts in P hase III u nles s other wi se noted . Compound Mechanism Area Under Investigation Estimated Filing Acceptan ce Additional information US EU Jap an China Oncology Calquence ASCEND BTK inhi bitor relapsed/refract ory chronic lymphoc ytic leukaemia PP Launched (Breakthrough Therap y , Orphan Drug Designation) Launched Launched 2023 Calquence ELE V A T E- TN BTK inhi bitor 1st -line chronic lymphocytic leukaemia PP Launched (Breakthrough Therap y , Orphan Drug Designation) Launched H2 2022 2023+ Calquence + R-CHOP ESC AL ADE BTK inhibitor + R- CHOP 1 st-l ine dif fu se lar ge B ce ll lym phom a 2023+ 2023 + 2023+ 20 23+ Calquence + venetoclax + obinutuzumab AMPL IFY BTK inhibitor + B C L- 2 inhibitor + anti-CD20 mAb 1 st-line chronic lymphocytic leukaemia PP 2023+ 20 23+ N /A 2023+ Calquence ECHO BTK inhi bitor 1st -line mantle cell lymphoma PP 2023 (Orphan Drug Designation) 2023 2023 2023 + Enhertu DESTIN Y -Breast02 HER2 targeting antibody drug conjugate HER2-positi ve, unres ectable and/ or metastatic breast cancer pre-trea ted with pr ior st and ard of c are HER 2 the rap ies, including T - DM 1 PP H2 2022 H2 2 022 N /A N /A Enhertu DESTIN Y -Breast03 HER2 targeting antibody drug conjugate HER2-positi ve, unres ectable and/ or metastatic breast cancer subjects previously tre ated w ith tra stuz umab a nd ta xan e PP Accepted (Breakthrough Therap y Designation, Priority Review) Accepted Submitted H1 20 22 Enhertu DESTIN Y -Breast04 HER2 targeting antibody drug conjugate HER2-lo w, unresectable and/or metastatic breast cancer subjects PP H1 2 02 2 H1 2 02 2 H1 20 22 H2 2022 Enhertu DESTIN Y -Breast05 HER2 targeting antibody drug conjugate HER2-positiv e post - neoadjuv ant high-risk breast cancer PP 2023+ 20 23+ 2023+ Enhertu DESTIN Y -Breast06 HER2 targeting antibody drug conjugate po st-E T HER2-l ow/HR+ br eas t canc er 2L PP 2023+ 20 23+ 2023+ 2023+ Enhertu (p lat for m) DESTIN Y -Breast07 HER2 targeting antibody drug conjugate HER2 + breast cancer PP Pha se II Enhertu (p lat for m) DESTIN Y -Breast08 HER2 targeting antibody drug conjugate HER2 -low breast cancer PP Pha se I Enhertu DESTIN Y -Breast09 HER2 targeting antibody drug conjugate 1 st-lin e HE R 2 -positive breast cancer PP 2023+ 20 23+ 2023+ 2023+ Enhertu DESTINY -Breas t 1 1 HER2 targeting antibody drug conjugate neoadjuv ant H ER2 -positiv e breast cancer PP Phase III/Piv ota l Phase II/Registr ation (listed until launched in all applicable major regions) continued 4 Development Pip eline De velopment P ipe li ne c ont inue d Compound Mechanism Area Under Investigation Estimated Filing Acceptan ce Additional information US EU Jap an China Enhertu DESTIN Y -Gastric01 HER2 targeting antibody drug conjugate HER2-ov erexpressing advanced gastric or gastroesophageal junction adenocarcinoma pat ient s who have p rog res sed on t wo pr ior treatment regimen s PP Phase II. EU subm ission includes data from Gastric02 Ap proved (Priority Review , Breakthrough Therap y , Orphan Drug Designation) Accepted Ap prove d 2023 + Enhertu DESTIN Y -Gastric04 HER2 targeting antibody drug conjugate 2nd-line HER2-positive gastric PP 2023+ 20 23+ 2023+ 2023+ Enhertu DESTINY -Lung01 HER2 targeting antibody drug conjugate HER2-over -expres sing or - mutated, unresectable and/or metastatic non-small cell lung cancer PP Pha se II Breakthrough Therap y Designation Enhertu DESTINY -Lung04 HER2 targeting antibody drug conjugate 1 st-l ine non -sm all ce ll lun g canc er PP 2023+ 20 23+ 2023+ 2023+ Enhertu D E S T I N Y- P a nTu m o u r 0 1 HER2 targeting antibody drug conjugate HER2-expressing solid tumour s PP Pha se II Enhertu D E S T I N Y- Pan T umour02 HER2 targeting antibody drug conjugate HER2-expressing solid tumour s PP Pha se II Imﬁnzi PE ARL P D - L1 m A b 1 s t -line metastatic non-small c ell lung cancer PP H2 2022 H2 2 022 H2 2022 H2 2022 Imﬁnzi + CRT P ACIFIC-2 PD -L 1 mA b + CRT locally-advanced (Stage I II) non-small cell lung cancer PP H2 2022 H2 2 022 H2 2022 Imﬁnzi post-SB RT P ACIFIC- 4 P D - L1 m A b post-SB RT St age I/ II non -sm all ce ll lun g canc er PP 2023+ 20 23+ 2023+ 2023+ Imﬁnzi + CRT P ACIFIC- 5 ( China) PD -L 1 mA b + CRT locally-advanced (Stage I II) non-small cell lung cancer PP 2023 Imﬁnzi + C Tx neoadjuvant AEGE AN PD -L 1 mA b + C Tx locally-advanced (Stage I I -II I) non-small cell lung cancer PP 2023 2023 2023 20 23+ Imﬁnzi + C Tx M E R M A I D -1 PD -L 1 mA b + C Tx St age II -III ad juvan t non- sma ll cel l lung cancer 2023+ 20 23+ 2023+ 2023+ Imﬁnzi MER MAI D-2 P D - L1 m A b Stage I I-III premetastatic non-smal l cell lung cancer 2023+ 20 23+ 2023+ 2023+ Imﬁnzi + CRT KUNLUN PD -L 1 mA b + CRT locally advanced oesophageal squamous cell carcinoma PP 2023+ 20 23+ 2023+ 2023+ Imﬁnzi + C Tx T O PA Z-1 PD -L 1 mA b + C Tx 1 st-l ine bil iar y tra ct ca ncer PP H1 2 02 2 (Orphan Drug Designation) H1 2 02 2 H1 2 02 2 H1 20 22 Imﬁnzi + FLOT MA T TERH ORN PD -L 1 mA b + C Tx neo-adjuvant/adjuvant gastric cancer PP 2023+ 20 23+ 2023+ 2023+ Imﬁnzi + VEG F + TA C E E M E R A L D -1 PD -L 1 mA b + VEG F + T ACE locoregional hepatocellular carcinoma PP H2 2022 H2 2 022 H2 2022 202 3 Imﬁnzi + VEG F EMER A LD-2 PD -L 1 mA b + VEGF adjuvant hepat o cellular carcinoma PP 2023 2023 2023 20 23 Imﬁnzi CALL A P D - L1 m A b locally-adv anced cer vi cal cancer PP H2 2022 H2 2 022 H2 2022 H2 2022 Imﬁnzi + C Tx NI AGA RA PD -L 1 mA b + C Tx muscle in vasive bladder cancer PP 2023 2023 2023 N /A Imﬁnzi + E V +/ - treme VOLG A P D - L1 + nectin- 4 targeting antibody drug conjugate +/- CTL A4 muscle in vasive bladder cancer 20 23+ 2023+ 2023 + N /A Imﬁnzi POTO MAC P D - L1 m A b non muscle in vasive bladder cancer PP 2023+ 20 23+ 2023+ N/A Imﬁnzi (p lat for m) MAG ELL A N PD -L 1 mA b + multiple nov el oncology therapies +/- CT x 1 st-line me tastatic non-small cell lung cancer PP Pha se II Imﬁnzi (p lat for m) BEGO NIA P D - L1 m A b with paclitaxel and multiple nove l oncology therapies 1 st-line me tastatic triple negative breast cancer PP Pha se II L ynparza OlympiA P ARP inhibitor ge rmli ne bre ast c ance r gen e adju vant breast cancer PP Accepted (Priority Review) Accepted Submitted (Or phan Drug Designation) 2023 L ynparza (basket) M K-73 3 9 - 0 0 2 / LY N K 0 0 2 P ARP inhibitor homologous recombination repair gene mutation PP Pha se II Signiﬁcant Life-cycle Management continued 5 Development Pip eline Development Pip eline De velopment P ipe li ne c ont inue d Compound Mechanism Area Under Investigation Estimated Filing Acceptan ce Additional information US EU Jap an China L ynparza + abiraterone PROp el P AR P inhibi t o r + NH A prostate cancer PP H1 2 02 2 Acce pt ed H1 2 02 2 20 23+ L ynparza LY N K - 0 0 3 P ARP inhibitor platinum sensitive 1st -line colorecta l ca ncer PP 2023 2023 2023 20 23 L ynparza # MONO- OLA 1 P ARP inhibitor 1 st-l ine bre ast c anc er ge ne wild -ty pe ov arian cancer PP 2023+ 20 23+ 2023+ 2023+ T agrisso L AUR A EGFR inhibitor St age III E GFRm no n-s mall c ell lu ng can cer 2023 2023 2023 2023 T agrisso + C Tx FL AUR A 2 EGFR inhibit or + C Tx 1 st-line advanced EGF Rm non-smal l cell lung cancer 2023 2023 2023+ T agrisso +/- CT x neoadjuvant Ne oADAU RA EGFR inhibit or +/- CT x St age II /III re sec tab le EGFR m NSCLC 2023+ 2023+ 2023 + 2023 + T agrisso ADAU RA EGFR inhibitor ad juvan t EGFRm n on-s mall c ell lu ng ca nce r Launched (Breakthrough Therap y Designation, Priority Review) Ap proved Submit t e d Launched CVRM Brilinta/Brilique THALES P 2Y 12 re ceptor antagonist acute ischaemic str oke or transient ischaemic attack Launched N /A Ac cepted Bydureon B Cise (autoinjector) G L P -1 re ceptor agonist type-2 diabet es Launche d L aunched N /A H2 202 2 Farxig a/F o rxiga DAP A- CKD S G LT- 2 inhibitor renal outcomes and cardio vascular mortality in patients with chronic kidney disea se Launched (Fast T r ack Breakthrough Therap y Designation) Launched Launche d (Priority Review) Accepted Farxig a/F o rxiga DAP A-MI S G LT- 2 inhibitor pre venti on of he ar t failu re an d cardiovascular ( CV) death follo wing a my ocardial infarction 2023+ 20 23+ N /A N /A Farxig a/F o rxiga DELIV ER S G LT- 2 inhibitor wor sen ing he ar t fail ure or CV d eath i n patie nts with chronic hea rt failure (HFpEF) H2 2022 H2 2 022 H2 2022 H2 2022 Lok elma DIALIZE-Outcomes potassium binder CV out c omes in pat ients on chronic haemodialysis with h yperkalaemia 2023+ (Fast T r ack) 2023+ N /A 2023+ Lok elma ST ABILIZE- CKD potassium binder hyperkalaemia in chronic kidney disease 2023+ 2023 + 2023+ 2023+ roxadustat hypoxia- inducible factor prolyl hydro x ylase inhibitor anaemia in m yelodysplastic syndrome PP 2023+ 2023+ roxadustat hypoxia- inducible factor prolyl hydro x ylase inhibitor chemotherapy induced anaemia PP Pha se II Xigduo XR/Xig duo S G LT- 2 inhibitor / metformin FDC type-2 diabet es Launched Launched H1 2 02 2 Respirator y & Immunology Breztri /T rix eo ( P T0 10) K ALO S L AGOS LABA /LAMA / ICS asthma 2023+ 2023+ 202 3+ 2023 + Fasenra RESOL UTE I L- 5 R m A b chronic obstructive pu lmonary disease PP 2023+ 20 23+ 20 23+ Fasenra A RR OYO I L- 5 R m A b chronic spontaneous urticaria Ph ase II Fasenra FJ OR D I L- 5 R m A b bullous pemphigoid 20 23+ 2023+ 2023+ 20 23+ Fasenra HILLIER I L- 5 R m A b atopic dermatitis Pha se II Fasenra MAHALE I L- 5 R m A b non- c ystic ﬁbrosis bronchie ctasis 20 23+ 2023+ 2023+ Fasenra MANDARA I L- 5 R m A b eosinophilic granulomatosis with poly angiitis 2023 2023 2023 2023+ Fasenra MESSI NA I L- 5 R m A b eosinophilic esophagitis 2023 2023 2023 Fasenra N AT R O N I L- 5 R m A b hypereosinophilic syndrome 2023 2023 2023 20 23+ Fasenra OSTRO ORCHID (China/ Ja pan) I L- 5 R m A b nasa l poly ps PP Accepted 20 23+ 20 23+ Saphnelo T y pe I IFN re cepto r mA b lupus nephritis PP Pha se II Signiﬁcant Life-cycle Management continued 6 Development Pip eline De velopment P ipe li ne c ont inue d Compound Mechanism Area Under Investigation Estimated Filing Acceptan ce Additional information US EU Jap an China Saphnelo TULIP-SC T y pe I IFN re cepto r mA b systemic lupus ery thematosus (subcutan eous) PP 2023+ 20 23+ 2023+ Te z s p i r e (te zep elu mab) TSLP mAb chronic obstructive pulmonar y disease PP Pha se II Te z s p i r e (te zep elu mab) W A YPOINT TSLP mAb nasal polyps PP 2023+ 20 23+ 2023+ 2023+ Rare Disease And exxa (A L XN 2070) anti-factor Xa reve rsa l urgent surgery Phas e II And exxa (A L XN 2070) anti-factor Xa reve rsa l acu te maj or ble ed Launched (Accelerated approv al) Launched Accepted (Or phan dr ug) Ultomiris ( A L X N12 10 ) anti- complement C5 m Ab dermatomyosit is Phase II/ III Ultomiris ( A L X N12 10 ) anti- complement C5 m Ab generalised myasthenia gravis Accepted (Priority Review) Accepted Accepted Ultomiris ( A L X N12 10 ) anti- complement C5 m Ab neuromyelitis optica spectrum disorder H2 2022 H2 202 2 H2 2022 Ultomiris ( A L X N12 10 ) anti- complement C5 m Ab haematopoietic st em cell transplant– associated thrombotic microangiopath y 2023+ (Orphan Drug Designation) 2023+ 20 23+ Ultomiris ( A L X N12 10 ) anti- complement C5 m Ab subcutaneous, paroxysmal nocturnal haemoglobinuria and atypical haemoly t ic uraemic syndrome Accepted (Orphan Drug Designation) H1 2 02 2 Ultomiris ( A L X N12 10 ) anti- complement C5 m Ab complement-mediat ed thrombotic microangiopathy 2023+ 20 23+ Signiﬁcant Life-cycle Management continued 7 Development Pip eline De velopment P ipe li ne c ont inue d W ha t s c i e n c e c a n d o Astr aZen ec a Pat ent E xpir i e s o f Key M arketed Products 2021 Refe rence s to Notes and page nu mb ers, and capit al ised ter ms not de ne d i n t hi s supple ment c an be fou nd in A stra Z eneca’ s A nnu al Repor t a nd F or m 2 0 -F In form ation 2021 at w w w . ast ra zenec a.com /an nua lrep or t2 021. Paten ts cover ing our p rodu cts ar e, or may be, c halle nge d by third pa rt ies. G ener ic pro duct s may be la unche d ‘at ris k’ and ou r patent s may be revoke d, circu mvented o r found n ot to be infr inge d. The ex pir y dates s hown be low inclu de gra nted SP C/PT E and/or Pae diatr ic Exc lusiv ity p erio ds (as ap prop riate). In Eur ope, the ex act SPC s ituat ion may var y by co untr y as di ffe rent Pate nt Of ﬁce s gra nt SPCs a t diff eren t rates. E xpi ry d ates in mulberr y relat e to new molecular entit y patents, the remaining dates relate t o other patents. The e xpir y dates of relevant re gulat o ry data exclus ivit y per iods a re not re pres ented i n the tab le bel ow . A nu mber of o ur pro duct s are sub ject to g ener ic co mpeti tion in on e or mor e market s. Fo r mo re in for mat ion, ple ase se e R is k Ov er vie w f rom pa ge 4 8 a nd the R isk sup plem ent at w ww.a st raz ene ca .com /an nua lr epo rt 20 21. Ma ny o f o ur pro duct s ar e s ubj ec t t o c ha lle nges by th ir d pa rt ie s. Det ai ls of m ate ria l cha lle nge s b y t hi rd pa rt ies ca n be fou nd in Note 30 to t he Fi na nci al St atem ents f rom page 18 9. Key ma rkete d products Description US China EU 1 Japan US Product Sales ($m ) Aggregate Product Sales Ex - U S ($ m) 20 21 2020 2 019 20 21 20 20 2 019 Oncology Calquence (acalabruti nib ) A se lec tive inh ibito r of Bru ton’ s ty ros ine ki nase i ndic ated fo r the tr eatme nt of ch roni c lymphocytic leukaemia (CLL) and mantle cell lymphoma (MCL) and i n dev elop ment for the treatment of multiple B-cell malignancies. 2026 – 203 2 , 2032– 2036 20 32, 203 6 2032 , 203 6 2 2032 1, 0 8 9 5 11 16 2 14 9 11 2 Enhertu 3 (trastuzumab deruxtecan ) A HER 2-di recte d ant ibod y drug c onju gate (A DC) in dica ted for t he tre atme nt of unresectable or metastatic HE R2-positiv e bre ast c anc er fol lowin g two or m ore pr ior an ti-H ER2 ba sed r egim ens, a nd lo call y advanced or metastatic HER2 - posit ive gastric or gastroesophageal junction adenocarcinoma following a prior trastuzumab-base d re gimen . 2033 20 33 – 2035 20 33 – 2035 4 – – – 17 – – Faslode x (fulvestrant) An injectable oestrogen receptor antagonist, us ed for t he tre atme nt of hor mon e rece ptor positiv e advanced br east cancer that has progres sed f ollowing treatment with prior endocrine therapy . 20 21 5 expi red 20 21 2025 –2026 30 55 3 28 4 01 525 564 Imﬁnzi (durvalumab ) A human monoclonal ant ibody that blocks PD -L 1 int erac tion w ith PD - 1 an d CD80 o n T -cells, countering the t umour’ s immune- evading tactics and inducing an im mune re spon se. It is c urr entl y indic ated f or the tre atme nt of un rese cta ble S tage I II non -sma ll cell lun g cancer ( NSCLC ), e xtensive-stage small ce ll lung c anc er an d previ ousl y trea ted pa tient s with adv anced bladder cancer . 20 31 2030 2030 20 33 1, 2 4 5 1 ,18 5 1, 0 41 1 ,1 6 7 857 428 Iressa (g eﬁti nib) An e pide rma l grow th fa ctor re cep tor -t yros ine kinase inhibitor (EGFR- TKI) that ac ts to block sig nal s for ca nce r cell g rowt h and su rv ival in advanced NSCLC . expi red 6 2023 2023 20 23 11 14 17 172 25 4 406 K oselugo (selumetinib) An inhibitor of mitogen-activated protein ki nase s 1 and 2 ( MEK 1 /2). MEK1 /2 pr otein s are upstream regulator s of the extrace llular signal-related kinase (ERK) pathw ay . Both ME K an d ERK ar e crit ical c omp onen ts of the RAS -regulat ed RAF-MEK-ERK pathw ay , which is of ten a ctiva ted in di ffe ren t typ es of ca nce rs. 2023 , 2023 –2026 2023 , 2026 –202 9 2023 , 2026 –202 9 2023 , 2023 –2029 10 4 38 – 4 – – Lumoxiti (mo xetumomab pasudoto x -tdfk) A CD2 2 -d irec ted cy totoxi n and a ﬁr st-in -c lass tre atme nt in th e US for ad ult pa tien ts with relapsed or refractor y hair y cell leu kaemia. 2022 – 2 024 , 2031–2032 20 31 2022 , 20 31 20 31 1 1 – – – – L ynparza 7 (olaparib) An oral poly ADP -r i bose pol ymerase (P ARP) inhibitor that blocks DNA damage response (DDR) in cells/tumours harbouring a deﬁciency in homologous recombination r epair , such as mu tatio ns in BR CA 1 an d/or BRC A2. It i s indicated f or platin um-sensitive r elapsed ovar ian c ance r , re gar dles s of BRC A statu s, 1 st-l ine ma inten ance t reat ment o f BRCA- mutated (BRCAm) a dvanced ov a ri an cancer , f or germline BRCAm ( gBRCAm) HER2-negativ e, metastatic breast cancer and f or gBRCAm metastatic pancreatic cancer . 2022 – 2 024 , 2028 *, 2024– 2031 20 21 – 20 24 , 2024– 2029 20 21 – 2029 , 2024– 2029 20 21 – 2029 , 2024– 2034 1,0 8 7 876 626 1, 2 61 900 572 1 Pa tent Ex pi rie s of Ke y M ar kete d Pro duct s Pa ten t Ex piries of Key Ma r keted Products Key ma rkete d products Description US China EU 1 Japan US Product Sales ($m ) Aggregate Product Sales Ex - U S ($ m) 20 21 2020 2 019 20 21 20 20 2 019 Orpathys (sa voli tini b) An o ral, p otent a nd hig hly se lec tive ME T TKI that blocks atypical activation of the MET re cepto r ty rosi ne kin ase pa thway . 203 0 203 0 203 0 203 0 – – – 16 – – T agrisso (osimertinib) An EG FR- TKI i ndic ated f or the ad juvan t treatment of patients with early-stage EGFR-m utated NSCLC and for locally advanced or metastatic EGFR-mutated NSCL C. 2032 , 2035 2032 2032 , 2035 203 4 , 2035 1,7 80 1, 56 6 1, 2 6 8 3,235 2,76 2 1,9 2 1 Zoladex 8 (goserelin acetate implant ) A luteinising hor mone-releasing hormone (LH RH) a goni st use d to tre at pro state c anc er , breast cancer and cer tai n benign gynaecological disorder s. 2022 2 021 2021 20 21 13 5 7 935 883 806 CVRM Brilinta / Brilique (ticagre lor) An o ral P 2 Y1 2 pl atele t inhi bitor f or acu te coronar y syndromes (ACS) (ticagrelor 90mg) or continuation the rap y in high-risk patients (ti cagr elor 6 0m g) with a hi stor y of myo card ial inf arc tion (M I). An o ral P2Y1 2 pla telet i nhib itor for t he preve ntio n of athe roth romb otic eve nts in adult pat ients with acute coronar y syndromes (ACS) or high-risk patients with hist o ry of myocardial infarction (MI), high-risk patients wit h coro nar y ar ter y di sea se (CAD) o r stro ke. 20 24 9 , 2021–203 6 20 21 10 20 24 , 20 21 2023 – 20 24 , 2025 –203 0 735 73 2 710 737 861 871 Bydureon / Bydureon BCise (e xenatide XR injectabl e suspension) An i njec tab le glu cago n-li ke pepti de-1 (GLP- 1 ) receptor agonist a vailable as a single-dose tray , a single-dos e p en or auto-injector device ind icate d for u se in ad ults wi th ty pe -2 diab etes. 2022– 2028, 20 31 11 2021–2028, 2029 11 2021–2028, 2029 11 2021–2028, 2029 11 321 382 4 59 64 66 90 Byetta (e xenatide injection) An i njec tab le GLP-1 rec eptor a goni st ind icate d for a dult s with t ype -2 dia bete s. expi red expi red 20 21 exp ired 26 37 68 30 31 42 Cre stor (rosuvastatin calcium) A st atin fo r dysl ipid aemi a and hypercholesterolaemia. 2021–2022 12 20 21 ex pired 2023 80 92 10 4 1, 016 1, 0 8 8 1 ,174 Far xi ga / For xig a (dapagliﬂo zin) A so dium -glu cos e cotr ansp or ter 2 (SG L T -2 inh ibito r) ind icate d for ad ult pa tien ts with t yp e-2 dia bete s or in ad ults w ith or wi thou t typ e-2 dia bete s with h ear t fai lure wi th re duce d eje ctio n fraction or chron ic kidney disea se . 2025 , 2025 –2040 2023 , 2028 20 27 2 024 – 2 025 , 2028 644 456 434 1,7 70 1,0 4 9 74 8 K ombogly z e / K ombiglyze XR 13 (saxagliptin / metformin) Combines sa xaglipti n and metformin as e ithe r K ombog lyze – for t yp e-2 dia bete s, or K ombiglyze XR – an ex tend ed re leas e tab let for t yp e-2 dia bete s. 2023 , 2025 20 21 , 2025 20 21 – 2026 , 2025 4 32 56 – 92 82 87 Lok elma (sodium zirconium cyclosilicate) An insoluble, non-abs orbed sodium zirconium sil icate , form ulate d as a powd er for o ral su spen sion , that ac ts as a h ighl y sele cti ve potassium-r emov ing agent for the treatment of h yperkalaemia. 2032– 2035 2033 –20 34 20 32 14 2032– 2037 11 5 57 13 60 19 1 Onglyza (saxagliptin) An o ral di pept idyl p epti das e 4 (DPP- 4) inhib itor for t yp e-2 dia bete s. 2023 , 2028 20 21 , 2025 20 24 , 2025 4 56 11 0 230 17 9 222 20 9 Roxadustat 15 An oral hypo xia-inducible factor prolyl hydro x ylase inhibitor (HIF-PHI) indicat e d for the t reat ment of a nae mia fr om chr onic kidney disease. 20 24 , 2024– 2034 20 24 , 2024– 2033 4 4 – – – 174 – – Qtern (dapagliﬂo zin/ sa xagliptin ) A once-daily oral treatment combination of dapagliﬂozin and saxagliptin indicated for use in ad ults w ith t ype -2 diab etes . 2025 , 2025 –2029 2023 20 27 2 024 – 2025 4 5 6 37 22 12 Xigduo / Xigduo XR (dapagliﬂo zin/ metformin) Combines dapagliﬂozin an d met formin as either Xigduo – to improv e glycaemic control in adults wit h typ e-2 di abe tes who a re ina dequ atel y co ntrol led o n met form in alo ne or Xigdu o X R – an ex tend ed re leas e tab let fo r adult s with t ype -2 diab etes wh o are in ade quate ly controlled on met formin alone. 2025 , 2025 –203 0 2023 20 28 2 024 – 2 025 , 203 0 88 11 3 10 3 498 340 2 57 2 Pa tent Ex pi rie s of Ke y M ar kete d Pro duct s Pa ten t Ex piries of Key Ma r keted Products c o ntinue d Key ma rkete d products Description US China EU 1 Japan US Product Sales ($m ) Aggregate Product Sales Ex - U S ($ m) 20 21 2020 2 019 20 21 20 20 2 019 Respiratory & Immunology Bev espi Aerosphere (glycopyrrolat e/ formot erol) A combination o f a long-acting muscarinic antagonist (LA MA) and a long-acting beta2-agonist (LABA) used for the long- term ma inten ance t reat ment o f air ﬂow ob stru ctio n in C OPD. 203 0– 2031 203 0 203 0 20 30 –2034 39 44 42 15 4 – Breztri Aerosphere (PT01 0) (budesonide/ glycopyrrolate/ formot erol) A ﬁx ed-dose triple combination of an inhaled co rti cos teroi d (ICS ) , a L AMA a nd a L ABA , us ed for t he lon g-ter m main tena nce tr eatm ent of C OPD. 203 0– 2031 203 0 203 0 20 30 –2034 11 5 5 – 88 23 2 Daliresp / Da xas (roﬂumilast) An oral phos phodiesterase-4 inhibit or for adu lts wi th seve re COPD to d ecre ase t heir number of e xace rbations. 2023 –2024 2023 2023 expi red 2 07 19 0 18 4 20 27 31 Duaklir/Brimica 16 (aclidinium/ formot erol) A ﬁxe d-d ose co mbin atio n of a LA MA an d a L ABA fo r the ma inte nanc e trea tmen t of COPD. 2025 , 2022– 2029 2022– 2027 2025 , 2022– 2029 2025 , 2021–2029 – – 3 77 69 74 Fasenra (ben ralizumab) A monoclonal ant ibody for add- on maintenance tre atme nt of pa tient s with s evere a sthm a age d 1 2 yea rs an d olde r , a nd with a n eos inop hilic phenotype, which di rectly targets and depletes eosinophils by re cruiting natural killer cells and inducing apoptosis (prog rammed cell death) . 20 24 , 2028 –203 4 20 21 , 2028 2025 , 2028 –203 4 2025 , 203 4 790 603 482 468 346 222 Pulmicort (budesonide) An inhaled corticosteroid for maintenance treat ment of as thma. expi red expi red expi red expi red 72 71 11 0 890 9 25 1 ,356 Saphnelo (anifrolumab) A ﬁrst-in-class fully human monoclonal antibody for m ode rate to se vere sys temi c lupu s er y them atos us (SLE ) tha t bind s to subu nit 1 of the t yp e I IFN rec epto r , blo cki ng the ac tivi ty of t ype I IFN s. T yp e I IFNs s uch a s IFN- alph a, IFN -be ta and I FN-k appa a re cy toki nes invo lved in regulating the in ﬂammator y pathwa ys imp lica ted in S LE. 2025 –2029 , 2033 –20 36 2025 –2029 2025 –2029 , 203 6 2025 –2029 , 2033 –20 36 8 – – – – – Symbicort (budesonide/ formot erol) A combination o f an i nhaled cortico st e roid a nd a fa st-on set L ABA to t reat a sthm a and / or C OPD ei ther a s Symbi cort T urbuhaler o r Symbi cort pMDI (pressurise d metered- dose inhaler). 2022– 2029 17 expi red 18 expi red 18 expi red 18 1,0 6 5 1,0 2 2 829 1,6 6 3 1 ,699 1 ,666 T udorz a/ Eklira/ Bretaris 16 (aclidinium) A L AMA f or the m ainte nanc e tre atmen t of C OPD. 2025 , 2022– 2029 2022– 2027 2025 , 2022– 2029 2025 , 2021–2029 18 6 2 44 54 70 Rare Disease Soliris (eculizumab) A C5 in hibi tor for t he trea tmen t of par oxys mal nocturnal haemoglobinuria, atypical haemoly tic uraemic syndrome, generalised myasthenia gravis and neuromyelitis optica spectr um disorder . 20 27 19 , 2025 –2029 20 27 20 20 27 , 2029 1,0 6 8 – – 806 – – Ultomiris (ravulizumab) A lon g-a cting C 5 inhi bitor f or the tr eatm ent of paroxysmal nocturnal haemoglobinuria and atypical haemoly t ic uraemic s yndrome. 2035 , 203 6– 2042 2035 , 203 6– 2042 2035 , 203 6– 2042 2035 , 203 6– 2042 3 81 – – 307 – – Strensiq (asf otase alfa) A ta rgete d enz yme r epla cem ent the rapy f or patients with hypophosphatasia. 2025 – 20 29 , 2035 –20 38 2025 – 2 031 , 203 6 2028 , 2035 –20 36 297 – – 81 – – Kanuma (se beli pase a lfa) A re comb inan t form o f the hum an L AL en zym e, the e nzy me re plac emen t ther apy is fo r the treatment of lysosomal acid lipase deﬁciency . 20 31 2 0 31 2 031 , 2026 –20 3 7 20 31 32 – – 30 – – And exxa/ Ond exxya (andexanet a lfa ) A fac tor Xa i nhibi tor reve rsa l age nt. 20 28 , 203 0– 2037 2028 , 203 0– 2035 2028 , 203 0– 2037 2028 , 203 0– 2035 50 – – 18 – – 3 Pa tent Ex pi rie s of Ke y M ar kete d Pro duct s Pa ten t Ex piries of Key Ma r keted Products c o ntinue d Key ma rkete d products Description US China EU 1 Japan US Product Sales ($m ) Aggregate Product Sales Ex - U S ($ m) 20 21 2020 2 019 20 21 20 20 2 019 Other Fluenz Te t r a / FluMis t Quadrivalent (li ve atte nuate d inﬂuenza vaccine) A live a tten uate d vacci ne ind icate d for ac tive imm unis atio n for the p reven tion of i nﬂue nza dis eas e caus ed by in ﬂuen za A sub typ e vir uses an d typ e B viru ses c onta ine d in the va ccin e. 2025 –2026 20 25 2025 2 025 21 27 70 20 226 225 93 Linzess (linaclotide) A gua nyla te cycla se- C ago nist f or the t reatm ent of irritable bo wel syndrome with constipation (IBS- C ) in adults. 4 2024, 2029 4 4 – – – – – – Nexium 23 (esomeprazole) A pr oton pum p inhi bitor u sed to t reat acid-related diseases. expi red expi red expi red expi red 12 8 16 9 218 1 ,19 8 1, 3 2 3 1, 26 5 Synagis (palivizu mab) A hum anis ed m Ab us ed to pre vent se rio us lowe r resp ira tor y trac t dise ase c ause d by re spir ator y syn cyt ial vi rus (R SV ) in pae diatr ic patients at high risk o f acquiring RS V disease. 2023 22 expi red 2023 20 23 23 47 46 3 87 3 25 312 Va x zev ri a ( Ch A dO x 1-S [Recombinant]) An a denov ira l vecto r vacci ne, ba sed on a wea kene d vers ion of th e com mon co ld vir us, for activ e immunisation against COVID- 1 9. 2032 2032 2032 2032 64 – – 3,8 53 2 – Evus hel d (tixagevima b co-packaged with cilga vimab) A combination o f two long-acting antibodies, deve lope d for th e preve ntion a nd tre atme nt of C O V I D -1 9. – – – 85 – – * Dat e repre sent s ex pir y of a p end ing S PC/ P TE a nd /or Pae di atr ic Ex clus ivi ty p erio d. 1 Ex pi ry i n majo r EU m arke ts, w hic h inc ludes t he U K. 2 T he pat ent is th e s ubj ect of a pen di ng oppos iti on pro cee di ng at t he Eu rop ean Pat ent O ce (E PO). 3 A str aZ ene ca ha s rec orded $1 93m of Col la bor ation R eve nue in re lat ion to t hi s Pro duc t in 20 21 as p er Note 1 o n page 146 a nd re cord ed $9 4m of Co lla bor atio n Reve nue in r elat ion to t hi s P roduc t in 2 020 . 4 A str aZ ene ca doe s not hav e com merc ia lis ati on righ ts. 5 Se tt led w it h var iou s gene ric co mpa nies f or lic ens ed ent r y date s of 25 M arc h 2019 or la ter. 6 I n the U S, Iress a has s even y ear s’ Or pha n Dr ug ex clus ivi ty to 1 3 Jul y 202 2. 7 I n addi tion t o any pr oduc t sa les, A st ra Zen eca h as a lso re cord ed $ 40 0m of C olla bo rati on Reve nue in r elat ion to t hi s Pr oduc t in 2 021 as p er Not e 1 on page 14 6 and r ecor ded $ 46 0m of Col la bora tion R evenu e in re lat ion to t hi s Pro duct i n 20 20. 8 R ights l ice nse d to TerS era i n t he US. I n add iti on to an y produ ct sa les , As tra Z enec a has a ls o reco rded $ 35m of C oll abo rati on Rev enue in r ela tion t o th is P roduc t in 2 020 a s pe r Note 1 on p ag e 14 6. 9 Se par ate se tt leme nts w ith A N DA ch al lenge rs for a l ice nse d ent ry d ate cor re spon din g to th e exp ir y of US Pa tent No . RE 46 ,2 76, su bjec t to re gu lat ory a pprov al. 10 T he pate nt was i nva lid ate d dur ing i nva lid atio n proc eed in gs at th e CN IPA. T he pa tente e has a ppea led t hat d eci sion . 11 Pat ent ex pi ry d ate rel ates t o BCise . 12 A set tl ement ag ree ment i n t he US pe rm itt ed W at son La bora tor ies, I nc. and Ac ta vis , Inc. (t oget her, Watso n) to be gi n se lli ng its ge ner ic vers ion of Crestor a nd it s rosu vas tat in z inc p roduc t f rom 2 May 2 016. 13 Kom boglyze / Kombiglyz e XR r evenu e is in clude d in t he Ongly za rev enue g ure . 14 T he pate nt is t he su bjec t of a pe ndi ng opp osit ion pro cee di ng at t he EP O. The p atent ee suc ces sfu ll y defe nded t he pat ent i n tha t proc eed ing , but t he oppo nent s have ap pea led . 15 A str aZ ene ca ha s rec orded $ 6m of C oll abo rati on Reve nue in r elat ion to t h is Pr oduc t in 2 021 as p er Not e 1 on page 14 6 and r ecor ded $ 30m o f Coll ab orat ion Rev enue i n rel atio n to th is P roduc t in 2 020 . 16 R ights t o Duaklir/Brimica a nd Tu d o r z a / Eklira/ Bretaris sold t o Cov is Ph ar ma Gm bH . 17 Pat ent ex pi ry i nfo rma tion r elat es to t he Symbi cort pM DI p roduc t, i nclu din g any g ra nted Pa edi atr ic E xclu siv ity t er m. 18 Pat ent ex pi ry i nfo rma tion r elat es to t he Symbi cort T urbuhaler pro duct. 19 Se tt led w it h biosi mi la r ma nuf act ure r Am gen for a l ice nse d ent ry d ate of M arc h 202 5, or l ater, su bjec t to re gu lat ory a pprov al. 20 T he pate nt was r evoke d dur i ng oppo sit ion pro cee di ngs at t he EP O. The p aten tee ha s app eale d th at dec isio n. 21 R ights l ice nse d to Da iich i Sa n kyo C ompa ny , Ltd . 22 R ights so ld to Sw edi sh Or pha n Biov itr u m A B ( publ ). 23 A str aZ ene ca ha s rec orded $ 75m of Col la bor ation R eve nue in re lat ion to t hi s Pro duc t in 20 21 as p er Note 1 o n page 146 . 4 Pa tent Ex pi rie s of Ke y M ar kete d Pro duct s Pa ten t Ex piries of Key Ma r keted Products c o ntinue d W ha t s c i e n c e c a n d o Astr aZen ec a R isk Su pp lemen t 202 1 Refe rence s to Notes and page nu mb ers, and capit al ised ter ms not de ne d i n t hi s supple ment, can be found in Ast ra Zene ca’ s An nua l Rep ort a nd Form 2 0 -F I nfor mat ion 2021 at w w w . ast raz enec a.com /an nua lrep or t2 021. R isk s and u ncer t aint ies In thi s sec tion, we de scr ibe the r isks an d unce rt ainti es that we c onsi der ma teria l to our bu sines s, in th at they may h av e a sig niﬁca nt ef fect o n our ﬁnancial condition , results of operations, and / or reputation. Th ese ri sks are n ot liste d in any pa rti cula r orde r of prio rit y . We bel ieve that th e for ward- look ing sta temen ts abo ut Ast raZe nec a, ide ntiﬁe d by word s such a s ‘antici pates’ , ‘be lieves’ , ‘expe cts’ an d ‘intend s’ , a nd that i nclud e, amon g other t hings , futur e prosp ect s in the Fin anci al Review o n pag e 52 , are b ase d on rea sonab le as sumpti ons. H ow ever , for ward -loo king s tateme nts invol ve inher ent ri sks and u nce rt aintie s such a s thos e sum mari sed b elow . They r elate to even ts that m ay occu r in the fu ture, th at may be in ﬂuenc ed by fac tors b eyond ou r contr ol and th at may have ac tual ou tcome s mater ially d iffe rent f rom ou r expec tati ons. T herefo re, othe r risk s, unkn own or not c urre ntly co nsid ered m ateri al, cou ld have a material adverse effect on our ﬁnancial condition, results of ope rations and/ or reputation. Prod uct p ipelin e risks I mpact Fai lure or delay in th e de liver y of ou r pipeli ne or l aunch of new medic ines Our continued success depends on the development and successful launch of innovat ive new drugs. The dev elopment of pharmaceutical product candidates is a complex, risky and le ngthy p roce ss invo lvin g sign iﬁca nt res ourc es. A p roje ct may f ail at a ny stag e of the pr oces s due to va rio us fac tors , incl uding: f ailu re to obt ain th e requ ired r egul ator y or ma rketin g app rovals , unfavo urab le cli nica l ef ﬁcac y data , safe ty co nce rns, f ailu re to demonstrate adequate c ost - effective beneﬁts to regulatory authorities and/or payers, and the emergence of competin g products. M ore det ai ls of pro jec ts th at hav e s u ere d s et back s or fa ilu re s du ri ng 20 21, can be fou nd in th e Di sea se Ar ea Rev iew fr om pa ge 16 . La unch a ctiv itie s may be d elaye d by a numb er of fa ctor s, inc ludi ng: adve rse ﬁ ndin gs in pr e- clin ical o r clin ical s tudi es, re gula tor y dema nds , pric e neg otiat ion, la rge -sc ale natural disasters or global pa ndemics, competitor activity and technology transfer . In addition to developing products in-house, we continue to e xpand our portfolio through licensing a rrangements and strategic collaborations which may n ot ulti mately be successful. Fail ure or d elay in d evelo pmen t of new pr oduc t can dida tes co uld da mage th e rep utat ion of ou r R&D c apab iliti es, a nd mate ria lly adve rs ely af fec t our f uture b usi ness a nd re sult s of ope rati ons. S ee al so Fail ure to ac hieve st rate gic pl ans or m eet t arge ts or ex pec tati ons on page 5 1 . De lays to la unch es ca n lead to e x ce ss exp ens es in th e manu fact ure of pr e-l aunc h prod uct s tocks , mar keting m ater ials a nd sa les fo rce tra inin g. For th e launc h of pro duc ts tha t are se aso nal in n ature, d elay s in regulatory approv als or manufacturing may dela y launch t o the next se ason w hich , in tur n, may si gniﬁ cant ly red uce th e retur n on co sts inc urr ed in pr epa ring fo r the la unch f or that s eas on. Fur the rmo re, in im muno -o ncol ogy in p ar ticu lar, spee d to mar ket is c riti cal gi ven the la rge nu mber o f clini cal tr ial s bein g cond ucte d by com peti tors. D elay of la unch c an al so ero de the te rm of p atent exc lusi vit y . Competition from o ther pharmaceutical companies means that w e may have to p ay a sign iﬁca nt pre mium ove r boo k or ma rket val ues fo r our acquisitions. F ailure to complete collaborative p ro jects in a timely , co st-ef fec tive ma nne r may lim it our a bilit y to ac ces s a grea ter po rt foli o of pr oduc ts, I P , tec hnol ogy a nd sha red ex per tis e. In ma ny cas es we make mi lestone pa yments in adv ance of t he commercialisation of the pr oduc ts, wi th no as sur ance o f rec oupin g cos ts. Fai lure to meet reg ul ator y or et hic al req ui rement s for medic ine developm ent or approv al We are s ubje ct to law s and re gula tion s that c ontro l our ab ilit y to mar ket ou r pharmaceutical products. Our develo pment prog rammes must meet many standards in or der to p rove tha t our pr oduc ts ar e safe, e ffe ctive a nd of hi gh qua lit y . Th ese st anda rds va ry by c ount ry a nd reg ion. H ealt h auth orit ies, s uch a s the FDA in th e US an d the EMA i n the EU, ca n refu se to gra nt ap proval f or our p rodu cts , or they m ay re quire u s to con duct a ddit iona l clini cal t rial s or sci enti ﬁc tes ting fo r our pr oduc ts, or p rovid e addit iona l data b efor e they wi ll app rove our p rodu cts fo r mar keting . The EU Cli nica l T ri als Re gula tion, w hich i s inte nded to c reat e a favour able e nviro nme nt for co nduc ting c linic al tr ials w hile ma inta inin g high s tand ard s for pat ient s afet y , c ame in to application on 31 Januar y 2022. E MA expects pharmaceutical companies to submit pr oduc t data i n Iden tiﬁc atio n of Med icin al Prod uct s (IDM P) form at, pr ese nting a signiﬁcant challenge to the industr y as the requirements are complex. Ma ny facto rs in ﬂuen ce a he alth au thor it y’ s d eci sion to a pprove o r reje ct a ma rketi ng application f or a pharmaceutical product. T hese include: advances in science and technology; new laws, regulations and policies ; different standards for e valuating sa fety a nd ef fec tiven ess by h eal th auth ori ties; a nd inp ut fro m the ge ner al pub lic an d public interest groups. De lays in r egul ator y app roval s coul d impa ct our a bili ty to ma rket ou r pr oduc ts and m ay adve rse ly af fec t our reve nue. I n addi tion, p ost- approval re qu irements, including additional clinical trials, could result in in crea sed c ost s. We see k to man age the se ri sks, b ut pol icym akin g by go vernments and health authorit ies is unpredictable at times, and unforeseen circumstances, such as public health emergencies, may strain healt h aut hority resources. These fact ors may delay the approv al of ou r prod uct s. Foll owing a pprov al, a hea lth au thor it y may req uire u s to cond uct a dditi onal c lini cal tri als o r scie ntiﬁ c testi ng to add res s conc ern s rai sed af ter o ur pro duc ts have be en us ed by pat ients in t he marketplace. New d ata may i mpac t a pro duct ’ s a ppr oval sta tus or l ead to l abel ling ch ange s that m ay limi t the us e of a pro duct . Whi le we sup por t tra nsp aren cy ef for ts to ma ke clin ical t rial d ata mo re publicly accessible, inappropriate or incorrect independent analyses may d amag e a prod uct ’ s i ntegr it y and ou r Comp any’s rep utat ion. Risk 1 R isk Commercialisation r isks I mpact Fai lure s or del ays in the qu al ity or exec ution of the Group’ s comm ercia l strat egie s Th e succ ess ful la unch o f a new ph arma ceu tica l prod uct i nvolves s ubst anti al inve stme nt in sa les a nd mar ketin g acti vitie s, lau nch s tocks a nd othe r are as. We may ultimately be unable to achieve comme rci al success for v ar ious reas ons, including: dif ﬁc ultie s in ma nufa ctur ing su fﬁc ien t quan titie s of the p rodu ct ca ndid ate for de velop ment or c omme rcia lis ation i n a time ly man ner; t he imp act of p rice c ontr ol me asur es imp ose d by go vernments and healthcare authorities ; the outcome of negotiat ions with thi rd-p ar ty pa yers; e ros ion of IP r ight s, inc ludin g infr inge men t by third p ar tie s; failu re to sh ow a dif fere ntiat ed pro duc t proﬁl e and c hang es in pr esc ribi ng hab its. Fail ure to exec ute our c omm erci al str ateg ies or f ailu re to ach ieve the leve l of sal es an ticip ated to r ecou p laun ch and d evelo pmen t inves tmen t, could materially adv er sely impact ou r busine ss or results of ope rations. Th e abili ty to s ucce ssf ully c arr y ou t busi nes s in eme rgin g mar kets ca n be mo re challenging than in es tablished mark et s. Such challenges may include: volatility in economic or political climates; inadequate protection against crime (including counterfeiting, corruption and fraud) and inadvertent breaches of local and international la w . Failure to leverage pot e nt ial opportunities or appropriately manage ri sks in e merg ing ma rkets , may mat eria lly ad vers ely af fe ct our reputation, business or results of operations. The commercialisation of biologics and rare disease t herapies is often more comple x tha n for sm all mo lec ule ph arm aceu tica l pro duct s, pri mar ily du e to dif fere nce s in the mo de of adm inis trati on, te chni cal as pec ts of th e prod uct, a nd ra pidl y chan ging distribution and reimbur sement environments. Failure to effectively commercialise biologics and rare disea se the rap ies c ould p revent u s rea lisin g the fu ll valu e of a sign iﬁca nt pr opor tio n of our p ipel ine, a s well as r esul t in del ays to lau nch an d mater ial w rite -of fs. P rici ng, aor da bilit y , acc ess and comp etit ive press ure s Op era ting in m ore th an 1 00 c ount rie s, we are s ubje ct to po litic al, so cio -ec ono mic and ﬁnancial factors around the w orld. A sustained global economic downt urn may adversely impact our business. Gl obal p res sure s to redu ce he alth care s pen ding m ean ma ny of our ke y marke ts experience the implementation o f various controls, reimbursement mechanisms or cost - con tainment m easures for pharmaceutical products, inc luding : > drug pricing s ystem reforms > restrictive reimbursement policies > payer consolidation in the US > price transparenc y > reference pricing > expedited approv al of generic drugs and introduction o f policies which encourage generic utilisation > cost tran sparency . A sum mar y of th e prin cipa l asp ect s of pri ce re gulat ion an d how pr icin g pres sur es are af fec ting o ur bus ines s in ou r most i mpor ta nt ma rkets i s set ou t in the Im pac t sec tion to t he right. Geopolitical tensions and the es calation of trade disputes ma y lead t o sanctions, su ch as th e unila tera l impo siti on of ta rif fs, o r non- tari ff b arr ier s. Pri ce co ntrol m eas ures c ould h ave a rel ativel y high i mpac t on our R are D isea se por tfolio , given higher annual prices of orphan medicines and small patient populat ions. Deterioration of , or lack of improvement in, socio-e conomic conditions, could adv ersely affect supply and/or distribution in affected countries, an d the ab ilit y or wil lingn ess o f custo mer s to purc has e our me dici nes , pu ttin g pre ssur e on pr ice an d/or vol umes . This c ould a dver sel y aff ect our b usi nes s or res ults of o per atio ns – for ex ampl e, thos e hea lth sys tems m ost seve rel y impac ted by d owntur n may se ek al tern ative ways to s ett le the ir debt s at a dis cou nt. Ot her cu stom ers m ay cea se to tr ade, wh ich may r esul t in los ses f rom w ritin g off d ebts , or a re duct ion in d eman d for pr oduc ts. A dow nturn m ay exac erb ate pre ssu re fro m gover nmen ts and o ther he alth care p ayer s on med icin e pric es an d volum es of s ales , and ma y ca use a sl owdown in g row th, or s ales d ecli ne, in s ome ma rkets . For ex ampl e, in the U S, any fu ture c hang es to the A ffo rdab le Car e Act (ACA ) , or a ny sign iﬁca nt spe ndin g red ucti ons or c ost c ontro ls af fec ting Medicare, Medicaid or other publicly funded or subsidise d health programmes, could adv ersely affect our business and ﬁnancial results. Additionally , in the US, consolidation and integration of dru g dis trib utor s, ret ail ph arm acy ch ains , priva te insu rer s, ma nage d car e organisations and other purchasing orga n isations may continue to have a n eff ect o n phar mac euti cal ma nufa ctur ers , incl udin g Astr aZenec a. An othe r examp le of co mmer cia l pres sure i s pri cing c ontr ol in Chi na; 1 1 9 medicines, includi ng AstraZeneca medicines, were adde d to the Nat iona l Reim bur sem ent Dr ug Li st (NR DL) i n Marc h 2021 , w ith an aver age pr ice r educ tion o f 5 1 %. Volu me- bas ed pro cure men t (V BP) was a lso ex pand ed in 20 2 1, pla cing d ownward p res sure o n the pr ice of medicines that ha ve lost ex clusivity and are facing local competition from Generic Quality Consistency Evaluation ( G QCE)-valida ted products. In Eur ope, go vernments continue t o implement and expand price co ntrol m eas ures f or me dicin es. T he EU has a lso c ommi tte d to int rodu cing a j oint he alt h techn olog y ass es smen t (HT A ) revi ew , w hich may dela y reimbursement decisions. In ot her ma rket s, the re has b een a t rend towa rds r igor ous an d consistent applicati on of p ricing regulations, including reference pricing and group purchasing. Th e impl emen tati on of ta rif fs or n on-t ari ff ba rri ers m ay inc reas e the cost to supply medicines, or reduce th e vo lumes sold in markets, adversely impacting our ﬁnancial results. 2 Risk R isk c ont inue d Sup ply ch ai n and b usi nes s exec ut ion ri sk s Imp act Fai lure to mai nta in supply of c omplia nt, q ual ity med ici nes Manufacturing and supply difﬁculties, dela ys and interruptions, including: > Pr oduc t dem and si gniﬁ cant ly in exce ss of w hat ha s bee n fore cas ted, or s uppl y chai n dis rupt ions (e.g . due to na tura l disa ster s, COV ID- 19), may lea d to supp ly sho rt age s. > D elays i n cons tru ctio n of new fac ilit ies or t he expa nsio n of exis ting f acili ties to s upp or t fu ture de man d for ou r prod ucts , incl udin g new ty pes o f medi cine. > T he ina bilit y to sup ply p rodu cts du e to a pro duct q uali ty fa ilure ( inc ludin g a fail ure to ma nufa ctur e in acc orda nce wi th Go od Man ufac turi ng Pra ctic es (GM P) or oth er regulations) or regulator y compliance action, such as licence withdraw a l , product recall or product seizure. > Reliance on third-part y s uppl iers for active ingredie nts, packaging components etc. Difﬁculties with manufacturing a nd supply , forecasting, distribution or thi rd-p ar ty su ppli ers , may re sult i n prod uct sh or tag es, wh ich may l ead to lo st pro duct s ale s and m ater ially a dver sel y aff ect o ur rep utat ion an d reve nues . Even sli ght va riati ons in c omp onen ts or an y par t of the ma nufa ctur ing pr oce ss may le ad to a pr oduc t that i s non- co mplia nt an d does n ot me et qua lity s tan dard s. Th is cou ld lea d to rec alls, spoilage, product shortage, regulatory action and/ or reputational harm. In th e event of i nsol vency o f third -pa rt y sup plie rs, i t would b e dif ﬁcul t to sub stit ute in a ti mely m anne r or at a ll. I llega l trade i n t he Group’ s med ici nes The illegal trade of our pharmaceutical products, including counterfeiting, tampering, the ft a nd ille gal d iver sion (w here p rod ucts a re fou nd in a ma rket wh ere we d id not se nd the m and w here t hey are n ot app roved to b e sold ) may le ad to a los s of pu blic co nﬁde nce in t he inte grit y of ou r medi cine s. Illegal trade could m at e rially adver sely affect our reputation, ﬁnancial pe rfo rma nce, a nd po se a dire ct ri sk to pat ient s afet y . I n addi tion, co ncer n abo ut thi s issu e may ca use so me pat ient s to stop t akin g thei r medicines, with consequent risks t o their health. If we a re foun d liab le for b reac hes in o ur sup ply ch ain, a utho riti es may take action , ﬁnancial or otherwise, that could restrict the distribution of our products. Rel ia nce on t hi rd- par t y good s a nd s er vice s We sp end app ro ximately $20 billion each y ear with t rade suppliers. The sp end sup por ts th e len gth of ou r value c hain f rom di scove ry to m anu factu re an d commercialisation of our medicines. Many of our busi ness-critical operat ions, includi ng certain R&D processe s , IT systems, HR, ﬁnance, tax and accounting servic es, are outsourced to third-par ty providers. We are t here fore he avil y relia nt on th ese th ird pa rt ies, n ot jus t to deli ver tim ely an d high-quality goods and services, but also t o comply with applicable laws and regulations and adhere to our ethical business e xpectations of third-party providers. Th e failu re of su ppli ers to d elive r time ly goo ds an d ser vic es, a nd to the re quire d level o f qual ity, or the f ailu re of sup plie rs to co ope rate wi th each other , could mat erially adversely affect our ﬁnancial condition o r results of op erations. A n y breach of security , whether phy sical, cyber or d ata re lated , or fai lure of t hese t hird pa r ties to o per ate in a way th at is consistent wit h law s or regulations, may lead to regulatory penalties, materially affect the results of operations and adver sely impact our reputation. Fail ure to su cce ssf ully ma nag e eithe r the in tegr atio n of outs our ced se rv ices o r the tr ansi tion p roc ess of i nsou rcin g ser vic es fr om third parties may lead to business disruption. 3 Risk R isk c ont inue d Sup ply ch ai n and b usi nes s exec ut ion ri sk s continu ed I mpac t Fai lure in i nfor matio n te ch nology or cyb erse cu rit y We are d epe nden t on ef fec tive IT sy stems t o supp or t crit ical b usin ess f unc tion s. They provide an essential means o f safeguarding a nd communicating data, including cr it ical or s tric tly co nﬁde ntia l infor mati on, th e conﬁ dent ialit y an d integ rit y of whi ch we rel y up on. We mus t ensu re pe rso nal da ta tha t we or our t hird -par t y provi der s man age is protected and complies with increasingly stringent global privacy laws. Examples of str ict ly con ﬁden tial i nfor matio n that we h old in clud es cli nica l tria l rec ords , per son al inf orma tion, i ntell ectu al pr oper t y , R& D dat a, and c omp lian ce info rma tion. T he size a nd complexity of our IT syst e ms, cloud utilisation, and t hird-par ty v e ndors w e engage, co ntinu e to incr eas e sign iﬁca ntly. As a re sult , such sy stem s are po tenti ally v ulne rabl e to se rv ice in terr uptio ns an d secu rit y bre ache s fro m att acks by m alic ious t hird pa rt ies o r intentional or inadver tent ac t ions by our employees or v endors. Signiﬁcant changes in the b usin ess f ootpr int o r in the im plem ent ation o f the IT s trate gy co uld le ad to a tem pora r y loss o f capa bili ty. Any s igni ﬁca nt disr upti on to the se IT sy stems ( inc ludin g bre ache s of dat a sec uri ty or cy ber se curi ty , fa ilure to i ntegr ate new a nd exi sting IT syst em s ) or failure to comply with additional requirements under applicable law s, could harm our reputati on and mat er ially adversely af fec t our ﬁn anci al co nditi on or re sul ts of op erat ions . While w e invest he avily in t he pro tect ion of ou r data a nd IT , we may b e unab le to pre vent br eakdow ns or b reac hes w hich c ould re sul t in dis clos ure of conﬁdential information, da mage to our reputation, r egulatory penalties or s anc tions o r ﬁna ncia l loss . The i nabil ity to b ack up a nd re store d ata ef fec tivel y coul d lead to p erm ane nt los s of dat a that c ould i n turn r esul t in non-compliance with applicable laws and regulations, and otherwise harm our business. We increa sing ly use t he int e rnet, digital content, social media, mobile applications, the I nter net of T hing s (Io T ), ar tiﬁ cial i ntelli gen ce, an d other f orm s of new tec hnol ogy to pr oce ss our d ata an d com muni cate in terna lly a nd exte rna lly. Th e acce ssi bili ty an d inst anta neo us nat ure of in tera ctio ns with s uch media may exacerbate t he risk o f unauthorised data loss from AstraZene ca. This c ould lead to the unauthorised or unint entional public disclosure of conﬁdential inf ormation which may damage our reputation, adv er sely affect our business or r esults of operations, and expose us t o legal risks and/or additional legal obligations. Similarly , the in voluntar y public di sclosure of c ommercially sen sit ive information co uld adv ers ely af fec t our b usin ess o r resu lts of o per ation s. In add itio n, neg ative p osts , or com men ts abo ut us (or, for exa mple , the sa fety o f our pr oduc ts) on s ocia l medi a webs ites o r other d igit al channels, could harm our reputation, brand image or goodwill. Privacy legislation in various jurisdictions includes obligations t o report data protection breaches, whether int entional or inadv e rtent, t o regulators and affected individuals within expedited timeframes. Ex ped ited re por tin g, of ten be fore th e natur e and im pac t of a data bre ach c an be f ully un der stoo d, cou ld cau se rep utat iona l dam age an d a loss o f publ ic tru st tha t may be di spro por tio nate to th e exte nt of th e brea ch. We and o ur ven dor s coul d be sus cep tible to t hird -par t y or inte rna l att acks o n our i nfor mati on se curi ty sys tems . Such a tta cks ar e of ever-in crea sing l evels of so phis tica tion an d are m ade by gr oups a nd ind ividu als w ith a wid e ran ge of mot ives and expertise, including organised criminal groups, ‘hacktivists’ , nation states, employees and other s. Occ asionally we experience intrusions, including as a result of computer-related malware. Al thou gh we mai ntai n cybe rse cur ity i nsur anc e, the re can b e no gua ran tee tha t our in sur ance c overa ge limi ts wil l prote ct ag ains t any fu ture cl aim or t hat su ch ins ura nce pr oce eds w ill be pa id to us in a timely manner . Fail u re of critical pro cesses Une xpec ted eve nts an d/or eve nts beyo nd our c ontr ol cou ld re sult in t he fai lure of cr itic al pro ces ses w ithin t he Com pany o r at thir d par tie s on who m we are re lian t. The business faces t hreats to busines s continuity from many d irections. Examples of mat erial threats include: > D isru ptio n to our bu sine ss or t he glob al ma rkets i f ther e is ins tabi lit y in a par ti cula r geographic region, incl uding as a result of w ar , terrorism, pandemics, armed conﬂicts, riots, unstable governments, civil i nsurrection or social unrest. > Na tura l dis aste rs in ar eas o f the wor ld pro ne to ext reme w eathe r event s, whi ch may inc rea se in fr eque ncy o r sever ity a s a resu lt of cl imate c hang e, and s uch ph eno mena as earthquak es. > C ybe r thre ats sim ilar to t hose d eta iled i n the ‘Fai lure in i nfor mati on tech nolo gy or cybersecurit y ’ section above . Cr yst alli sati on of su ch mate ria l thre ats may h eigh ten ce rt ain ot her ri sks, su ch as t hose r elati ng to the d elive ry o f the pip elin e or lau nch of ne w medicines or the manufacture and su pply of me dicines, and may l ead to lo ss of rev enue a nd have an a dver se imp act o n our ﬁnancial results. 4 Risk R isk c ont inue d Sup ply ch ai n and b usi nes s exec ut ion ri sk s continu ed I mpac t Fai lure to colle ct and ma nage dat a i n lin e w ith le gal and reg u lator y r eq ui rements a nd s trate gic objec tive s AstraZeneca is obliged t o meet legal, regulator y a nd ethical requirements when it co llec ts, sh are s and ut ilise s per so nal inf orma tion a nd is re quir ed to op era te a priva cy framework, deploying p eople, pro cesses and t e chnology t o manage and mitigate privacy risks. T he COVID- 1 9 pandemic has exacerbated priv acy risks, cha nging prac tices relating t o the c ollection and sharing of se nsitiv e health data, including our e mplo yee s ’ he alth d ata, a nd ac cele rate d thir d-pa rt y due d ilige nce of C OVID - 19 rela ted sup plie rs. Fail ure to de mons trat e how Ast raZ ene ca me ets the se ob liga tions c ould cause reputational damage, signiﬁcant regulatory sanctions, reduced ab ilit y to utili se pe rso nal da ta for s cie ntiﬁc a nd bu sine ss pu rpos es an d prevent access to wider industry data-sharin g initiatives. Given the evol ving ex ter nal an d inter nal d ata env iron ment i t is imp or tan t that As tra Zene ca en sure s that t here i s a con siste nt leve l of eng agem ent of se nior d ata own ers hip an d stewar dsh ip acro ss th e dif fere nt bus ines s areas, aligned to the data risk proﬁle. Evolv ing third-party relationships beyond the traditional vendor/ supplier model and the i ncre ase d use of d igit al sol utio ns and a ppli cati ons re pre sent s pri vacy ch alle nges . In addition, there is increasing regulatory interest in em erging technologies, including a mov e towards regulations relating to the utilisation of Ar tiﬁcial I ntelligence (AI) and dat a othe r than p er sona l data . Thi s will re quir e appr opr iate up dates to A str aZe nec a’ s ap proa ch and c apa bilit ies in t hese a rea s. Par tne rs hips wi th ent itie s such a s sma ller b iotec h com pani es an d st ar t -up s in hub s and e merg ing ma rkets , pote ntial ly wit h less m atur e privacy regulations a nd var ying et hical standards, may impact our ability to de monstrat e compliance with core pr iv acy requirements. In addition, great e r relianc e on third-par ties means less direct ov e rsight of day -to- day con duc t and co mpli ance , with a ne ed fo r enha nce d third-part y risk m anagement. We con tinue t o see re gula tor y devel opme nts th at imp act th e abili ty fo r per son al data to be shared freely across international borders. Recent examples include data localisation requirements in China’ s new personal information law , alongside new EU re gula tor y guid ance f ur ther l imiti ng the a bilit y to tr ansfe r per son al da ta fro m the EU to the r est of t he wor ld. Re spon ding to t hese d evelo pmen ts in the s hor t ter m will r equi re additional controls around personal information transfers, including the use of contractual commitments with third-parties and the deplo yment of ad ditio nal te chni cal m easu res . Long te rm we may s ee a tre nd to mo re loc al dat a stor age an d acc ess in clud ing re gion al dat a cen tres . Fai lure to att ract , develop, engage and ret ai n a d iverse , t ale n ted a nd c apable work force We rel y heavi ly on re cru iting a nd ret ain ing ta lente d emp loyee s with a di vers e ran ge of sk ills a nd cap abil itie s to mee t our st rateg ic obj ecti ves. There is int ense competition for well-qualiﬁed indiv iduals, as t he supply of people with ce rt ain sk ills o r in spe ciﬁ c geog rap hic re gion s may be li mite d. Th e inab ilit y to att rac t and re tain h ighl y-sk illed p er sonn el may we aken our s ucc ess ion pl ans fo r cri tica l posi tion s in the m ediu m term, m ay materially adv ersely affec t the implementation of our strategic objectives, and could u ltimately impact our business or results of operations. Th e succ ess ful de live ry of o ur bus ine ss obj ecti ves is d epen den t on hig h levels o f engagement and commitment of the workforce, particularly as employees r eturn to wor king i n ofﬁ ce loc atio ns fol lowing t he pan dem ic. In ad ditio n, we nee d to ef fec tivel y inte gra te Alex ion em ploye es to en sure t hey are e ngag ed an d com mit ted to the AstraZene ca business priorities. Fail ure to en gage e ffe cti vely wi th our e mploye es co uld le ad to bu sine ss disruption in our day -to-day operations, reduce lev els of productivity an d/or inc rea se level s of volu ntar y tu rnove r , all o f whic h coul d ult imately mat eria lly ad vers ely af fe ct our b usin ess o r res ults of o per atio ns. Legal, regulatory and com plia n c e r isks I mpac t Fai lure to meet reg ul ator y or et hic al ex pec tat ions on envi ronme nta l i mpact , includ ing cl imate ch ange Envi ronm enta l iss ues wi ll be come m ore ma teri al in the m arke tplac e as th e wide r healthcare syst em embraces net -zero climate targets. The environmental t argets and per formance of our business will come unde r increa sed scrutiny b y investors, governments and non-gov ernmental organisations. Environmental considerations are star t ing t o become embedded in the publ ic procurement of goods and services, including medicin al products and devices. Sp eciﬁ c inte rmed iate s use d to manu fact ure me dici nes, o r thos e use d as excip ient s or p rope llan ts, ar e comi ng und er inc rea sed re gul ation a nd so me may be s ubje ct to time-limited exemptions or p ot e ntial phase- out. The physical impacts of climat e change could impact the re sil ience of our bu siness operations and supply chain. Inv estors will increa sin gly target companies with strong En vironmental, So cial a nd Gove rna nce (ES G) per fo rman ce. We co ntinu e to see a n inc rea sed re qui reme nt to dis clos e our ESG s trat egy, targ ets an d pe rfo rma nce. T his in clud es a re quire men t to quan tif y the im pact o f speciﬁc ESG is sues on our business and associated m itigation plans (e.g. th e impac t of cli mate ch ange t hrou gh TCFD a nd CDP).  Fail ure to ma xim ise th e sust ain abili ty cr ede ntia ls of our b usi ness , pr oduc ts and t he pro ces ses u sed to m ake our m edi cine s coul d exp ose us to i ncre ase d reg ulato ry r isk, a nd pu t us at a co mme rcia l disadvantage relativ e to our peers. This could adversely impact our ﬁnancial results. Fail ure to pr oact ively m anag e the phy sic al ris ks as soci ated wi th cli mate change could impact t he resilience o f our operations and supply chain. Th is cou ld res ult in s uppl y inter rup tions , los s of stoc k and ad vers ely impact our ﬁnancial results. 5 Risk R isk c ont inue d Le ga l, re gu lato ry a nd com pli anc e ris ks c ontinue d I mpact Sa fet y an d e cac y of ma rketed med ici nes is que stione d Ou r abili ty to a ccur ately a sse ss, p rio r to laun ch, the eve ntua l safe ty or e fﬁ cacy of a n ew pr oduc t onc e in broa der c linic al us e can on ly be b ased o n dat a availa ble at t hat tim e, whi ch is in here ntly l imite d due to re lati vely sh or t per iods o f prod uct te stin g and relativ ely small clin ical study patient samples. Any u nfor ese en saf ety c once rns o r adve rse eve nts re lati ng to our p rodu cts, o r fail ure to comply with la ws, rules and regulations relating to provision o f appropriate w a rnings co ncer ning t he dan ger s and r isks of o ur pr oduc ts tha t resu lt in in juri es, co uld exp ose us to l arge p rodu ct lia bili ty da mage s cla ims, s ett leme nts a nd award s, pa rti cula rly in t he US. A dver se pub lici ty re lati ng to the s afet y of a pro duc t, or of oth er co mpet ing pr oduc ts, may i ncre ase t he ris k of pro duct l iabi lit y clai ms. D eta il s of mate ri al pro duct l iab il ity li tiga tion ma tte rs ca n b e fou nd in Note 30 to th e F in anc ia l St ate ment s fro m page 18 9. Se riou s safe ty co nce rns o r adver se eve nts re latin g to our pr odu cts co uld le ad to pro duc t reca lls, s eizu res, l oss of p rodu ct ap proval s, declining sales and interruption of supply , and could mat er ial ly adversely impact patient access, our reputation and ﬁnancial revenues. Si gniﬁc ant p rodu ct lia bili ty cl aims c ould a lso a rise w hich c ould b e co stly, diver t ma nage men t atte ntio n, or da mage o ur rep utat ion an d de mand f or our p rodu cts . Unf avoura ble re sol utio n of suc h curr ent an d simi lar fu ture p rodu ct liability claims could subject us to enhanced damages, consumer fraud and/or other claims, including civil and criminal gov e rnmental actions. This could require u s to make sign iﬁcant provisions i n our accounts rel atin g to lega l pro cee ding s, and c ould m ater iall y adver sel y af fect o ur ﬁnancial condition o r results of operations, p ar t icularly where such circumstances a r e no t co vered by insurance. Fo r mo re in for mat ion, se e t he Une xpe ct ed dete rio rati on in t he Gr oup’s  nan cia l po sit ion on page 7 of t he Ri sk Supp leme nt. Adve rse outcome of litig ation and /or g overn ment al inve stigat ions We may b e subje ct to va riou s leg al pro cee ding s and gov ernm ent al inves tiga tion s.Our ma ny busi nes s ope ratio ns ar e subje ct to a wi de ra nge of law s, rul es an d regu lati ons fro m aro und the w orld . Any fai lure to c ompl y with t hese a ppli cab le laws, r ule s and re gulat ions m ay res ult in A stra Zen eca b eing i nvesti gate d by relev ant gove rnm enta l age nci es an d autho riti es an d/or su bjec t to leg al pro cee ding s brou ght by p rivate citizens. Rele vant authorities hav e wide-ranging administrativ e pow e rs t o deal with any fai lure to c ompl y with c onti nuing r egul ator y over sig ht and th is co uld af fec t us, wh ethe r su ch fail ure is o ur own o r that of o ur con trac tors o r exte rna l par tne rs. In p ar ticu lar, the manufacturing, marketing , exportation, promotional, clinical, pharmacovigilance, and pr icin g prac tice s of ph arma ceu tica l manu fac ture rs, a s well as t he man ner in w hich manufacturers interact with r egulatory agencies, purchaser s, pre scribers and patients, are subject t o extensive regulat ion, l itigation and gov er nmental inv e stiga tion. Mor eover , su ch laws , rule s and re gul ation s are su bje ct to cha nge. Ma ny comp anie s, inc ludi ng Ast ra Zene ca, h ave bee n subj ect to l egal cla ims a sse rte d by fed eral a nd st ate gove rnme nta l autho riti es an d private payers and consumers, which ha ve resulted in substantial expense and other signiﬁcant c onsequences. Go vernmental inve stig ation s or pr oce edin gs cou ld res ult in u s bec omin g subje ct to civ il or cr imin al sa ncti ons an d/or be ing fo rced t o pay ﬁne s or dam age s. Civil lit igation, particularly in the US, is inherently unpredictable and une xpec tedl y high awa rds fo r dam ages c an re sult f rom an a dver se re sult. I n many c ase s, liti gati on adve rsa rie s may cl aim en hanc ed damages in extremely high am ounts .Go vernment in vestigations, litigations, and other legal proceedings, regardless of t heir outcome, co uld be c ostl y , dive r t mana geme nt at tent ion, or d amag e our re puta tion a nd dem and fo r our p rodu cts.N ote 30 to th e Fina ncia l St ateme nts f rom pag e 1 8 9 des crib es the m ater ial le gal p roc eedi ngs in whi ch we ar e curr entl y involve d. Unfa voura ble re solu tion o f curr ent an d sim ilar f utur e proc eed ings a gain st us c ould s ubje ct us to c rimi nal liability , ﬁnes, penalties or other monetar y o r non- monetary remedies, including enhanced damages, require us to ma k e signiﬁcant provisions in our accounts relating to legal proceedings and could materially adve rs ely af fec t our b usin ess o r resu lts of o pera tion s. I P-rel ated ri sks t o our pro ducts IP prot ection provides the foundation for continued investment in dev eloping innovativ e me dici nes to im prove pa tien t heal th. Howeve r ,th e pha rmac euti cal i ndus tr y is experiencing pressure from governments and other he alt hcare pay e rs t o impose limits on IP p rote ctio ns in an e ffo rt to m anag e hea lthc are co sts. A ddit iona lly , p olic ymake rs ar e prog res sivel y lever aging r egu latio ns to exp edite t he app roval of g ene ric dr ugs a nd encourage generic drug utilisation. These policies may drive accelerated uti lisation of ge neri c alte rnat ives to o ur pro duct s foll owing ex pir y or lo ss of ou r IP rig hts. We al so re cogn ise in crea sin g use of c ompu lsor y li cens ing in s ome co untr ies i n whic h we oper ate. We are s ubje ct to nu mero us pate nt cha llen ges r elati ng to var ious p rodu cts o r pr oces ses a nd as ser ti ons of no n-i nfri ngem ent of o ur pate nts. A l oss in a ny of the se ch alle nges c ould r esul t in los s of pate nt pr otect ion on t he cove red pr oduc t, an d a risk to the r evenu e gene rate d by the pr oduc t. We als o face t he ris k that o ur pro duc ts may be fo und to in frin ge pate nts ow ned or l ice nsed by t hird p ar ties a nd be s ubje ct to mo neta ry d amag es, o r comp elle d to cea se sa les of t he inf ring ing pro duc t, res ulti ng in a pote ntia l ris k to revenu e. These challenges threaten the value of our inv estment in pharmaceutical dev elopment. D eta il s of mate ri al pate nt lit igat ion mat ter s c an be fou nd in Note 30 to t he F in an cia l S ta teme nts f rom pa ge 189 . Foll owing ex pir y of ou r IP rig hts, o r if we are u nabl e to obta in, de fend an d enfo rce IP th at pro tect s our pr oduc ts, we m ay expe rie nce accelerated and intensiﬁed competition from third parties. Also, if our pr oduc ts are f ound to i nfri nge a thi rd- par ty p atent , we may be s ubje ct to mo neta ry d amag es or c ompe lle d to cea se sal es of th e infr ingi ng pr oduc t. The se ne gati ve outc omes c ould h ave an ad vers e, mate rial impact on our ﬁna ncial re sults. 6 Risk R isk c ont inue d Ec onom ic an d n anc ial r is ks Impac t Fai lure to achie ve st rateg ic pla ns or mee t t arg ets or exp ect ation s From t ime to tim e, we com muni cate ou r busi nes s stra tegy, our t arge ts or pe r form ance exp ect atio ns (for ex ampl e, the ex pec tatio ns de scr ibed i n Future p rosp ect s in the Fin anci al Rev iew on pa ge 66). A ll suc h sta temen ts are o f a for ward -loo king n atur e and ba sed on a ssu mpti ons an d judg eme nts, a ll of whi ch are s ubje ct to si gniﬁ cant i nher ent risks and uncertainties. Foll owing t he acq uisi tion of A lexi on in Jul y 2021 , we m ay expe rie nce di fﬁ culti es in integrating ge ographically separated organisations, systems a nd facilities, and personnel with different organisational cultures. Th ere ca n be no g uara ntee t hat ou r ﬁnan cial t arge ts or ex pec tati ons wil l mater iali se. Ac tual r esul ts may d eviate m ater ially a nd ad vers ely fro m any ta rget o r expe cta tion. Any f ailu re to suc ces sful ly imp leme nt ou r busi nes s stra tegy m ay fr ustr ate the a chieve men t of our t arge ts, wh ich may t here fore m ateri ally damage our brand , business, ﬁnancial position or re sults of operations. Fail ure to ef fec tivel y inte grate A lexi on into th e Gro up may de lay the realisation of anticipated beneﬁts from the acquisit ion, incur highe r tha n anti cipa ted co sts of in tegr atio n, or re sult in o ngo ing ope rat iona l inefﬁciencie s which may adversely impact the results of operations. Fur the rmo re, our r epor te d resu lts of o pera tion s may be n egat ively impacted from acquisit ion-related charges, amortisation of expenses related t o intangibles, charges f or the implementation of long-term assets, or previously unknown or unidentiﬁed contingent l iabilities. Fai lure in  na ncia l c ontrol or the oc cur renc e of f raud Ef fec tive inte rna l cont rols a ssi st in the p rovis ion of r elia ble Fin anc ial St atem ents a nd the d etec tion a nd preve ntio n of fra ud. T e stin g of inte rnal c ontr ols pr ovide o nly li mited as sur ance ove r the ac cur acy of Fin anc ial St atem ents a nd may n ot preve nt or de tect misstatements or fraud. Si gniﬁc ant r esou rce s may be re quir ed to re medi ate any d eﬁci ency i n internal controls. Any such deﬁciency may trigger related in vestigations an d may res ult in ﬁ nes b eing l evied a gain st ind ivid ual di rec tors o r of ﬁce rs. S eri ous fr aud ma y lead to p rose cut ion of se nio r mana geme nt. Unex pec ted dete riorat ion in t he G roup’ s n anc ial pos ition Pro duct s ale s in cou ntri es oth er tha n the US a re pre dom inan tly in cu rre ncie s othe r than the US dollar , including the Chinese renminbi, the euro, Japanese y e n and pound sterling. A num ber of o ur exi sting o r futu re co mmer cial a gree men ts, su ch as b orrow ings , deriv ativ e ﬁnancial instruments and comme rcial contracts, utilise or ma y utilise v arious Lon don In terb ank O ffe red R ates (L IBOR ) , o r othe r simi lar ra tes as b enc hmar k refe renc e ra tes. Th ese r ates a re the su bje ct of on going r egu lator y ref orm, t he res ult of w hich is ex pec ted to se e some o r all of t hem pa rt iall y or full y rep lace d by alte rnat ive reference rates. Th e majo rit y of our c ash in vestm ents a re ma nage d cen trall y and a re inves ted in A A A credit-rat ed institution al money ma rk et funds, collateralised bank deposits, ﬁxed income securities in government, and ﬁnancial and non-ﬁnancial se curities. T his means our c red it expo sure i s a mix of U S, EU and r est of wo rld s overei gn def ault r isk, ﬁ nan cial institution and non-ﬁnancial institution default risk. Currency ﬂuctuations ca n signiﬁcantly affect our results o f operations, whi ch ar e repo rte d in US do llar s. Move ment s in excha nge r ates ag ains t the US dollar may materially adversely affec t our ﬁnancial condition or results of op erations. Th is may re sult i n poten tial a djus tmen ts or re neg otiat ions b eing ne ces sar y to ou r agre eme nts. W hile di ffe rent a lter nati ve refe renc e ra tes are d evelo ping, t here i s a risk t hat we fa il to ren egot iate or a djus t our a gre eme nts. T his co uld have a n adver se ef fe ct on th e cost , cas h ﬂows , value , retur n on an d trad ing ma rket of (a s appr opr iate) ou r borrowings, derivative ﬁnancial instruments and other agreements. In a su sta ined e con omic d owntu rn, ﬁn anci al ins titu tions m ay cea se to tra de an d ther e can be n o gua rante e that we w ill be a ble to ac ces s mo nies owe d to us. Our consolidated balance sheet contains signiﬁcant in vestments in intangible as sets, inc ludi ng goo dwil l. The ph arm ace utic al bus ines s is hi gh ris k, and w e invest i n a larg e num ber of p roje cts i n an ef for t to deve lop a su cce ssfu l por t folio of a ppr oved pro duc ts. Ou r abili ty to re ali se valu e on the se inve stme nts de pen ds on re gula tor y appr ovals , market acceptance, c ompet ition and le gal developments. We expe ct th at som e of our i ntan gibl e ass ets wil l bec ome im pair ed in the f utur e. Impa irm ent lo sse s may mate ria lly ad vers ely af fe ct our ﬁnancial condition o r results of operations. D eta il s of the ca r ry ing va lue s of go odw il l a nd int an gi ble ass ets ar e in clud ed in Not es 9 a nd 10 t o t he Fi na nci al St ateme nts fr om page 15 6. Our deﬁned beneﬁt post - ret irement obligations (the most signiﬁcant of wh ich are f or the U K, Swe den a nd US) c an mate ria lly ch ange i n value, b ut ar e larg ely ba cked by inve sted as set s. Solvency le vels could fall, leading to higher contributions if there are : fal ls in as set s; incr eas es in li abili ty va luati ons (dr iven by fa lls in b ond yie lds , incr ease s in fu ture in ﬂatio n or lowe r than ex pec ted mo rt alit y); or c hang es in re gula tion s. A mate ria l incr ease i n deﬁc it may c ause credit agencies to downgrade our rating, negatively affecting our ab ilit y to bor row . N ote 22 fr om page 168 ha s f ur the r det ai ls . 7 Risk R isk c ont inue d Ec onom ic an d n anc ial r is ks co ntinued Imp act Unex pec ted dete riorat ion in t he G roup’ s n anc ial pos ition cont inue d We mai ntai n relev ant in sura nce c overag e for ri sks ar isi ng with in the G roup. Financial liabilities arising where w e do not ha ve i nsurance coverage, or where an insurer succes sful ly denies co verage, could mat e rially adversely affect our ﬁnancial c ondit ion. Fo r mo re in for mat ion, se e A dve rse outc ome of lit igat ion an d/or gov er nme nta l in ves tiga tion s on p age 6 of t hi s R isk Sup plem ent. Reve nue au thor itie s can m ake con ﬂict ing cla ims a s to the pr oﬁts to b e ta x ed i n individual countries. The Organisation for E conomic Co-operation and Development (OEC D) has i ntrod uce d a numb er of ch ang es und er the B ase Er osio n and Pr oﬁt Sh ift ing (BE PS) Act ion Pla ns whi ch ar e now bei ng pro gre ssive ly imp leme nted by t ax a utho riti es around the w or ld . In December 202 1 , the OEC D published the G lobal A nti-Base Er osion (GloBE) rules, se ttin g out th e fram ewor k the 1 30 c ountr ies w hich a re mem ber s of the I nclu sive Fram ework a re exp ecte d to intr oduc e fro m 2023, wh ich ta xes p roﬁt s of larg e grou ps at a mi nimu m rate of 15 % i n each c ount ry i n whic h they op era te. It is al so co nsid erin g furthe r potential actions, which w ould potentially include allocating taxing rights o ver a hig her p ropo rt ion of pr oﬁts to e nd ma rket ju risd icti ons, a nd is no w seek ing a consensus amongst t he Inclusiv e Framework members on those changes. Th e reso luti on of ta x dis pute s rega rdin g the pr oﬁts to b e ta x ed i n ind ivid ual te rrito rie s can r esul t in a rea lloc atio n of proﬁ ts or lo sse s be twee n jur isdi ctio ns, or eve n doub le ta xati on, an d an inc rea se or de crea se in re late d ta x cost s, and h as the p oten tial to af fe ct our c ash ﬂows , EPS an d post-t ax e arni ngs. C laim s, reg ardl ess o f thei r meri ts or the ir out come, a re co stly, diver t ma nage men t atte ntio n and may adversely affect our reputation. If ta x tre atie s are w ithdr awn or a men ded, th is cou ld mate ria lly adversely affect our ﬁnancial c ondit ion or results of ope rat ions, as co uld a ne gati ve outco me of a ta x dis pute o r a failu re by ta x aut hori ties to ag ree to el imina te doub le ta xati on. Ch ange s to the ap plic atio n of ta x tre atie s or the ava ilab ilit y of the EU a rbi trat ion co nventi on foll owing Bre xit co uld al so res ult in a dver se co nse quen ces, s uch a s thos e described abo ve. Fo r mo re in for mat ion, se e F in anc ia l R ev iew on page 66 for t ax ri sk ma nag eme nt p oli cies a nd Not e 3 0 to th e F in anc ia l S tat ement s fro m p age 195 for de tai ls of cu rre nt ta x d isp utes . Cha nge s in ta x reg imes c ould r esul t in a mate ria l impa ct on th e Gr oup’s cash t ax li abil itie s and t ax ch arge , resu ltin g in eith er an inc rea se or a re duc tion in ﬁ nan cial r esul ts. Sp eci ﬁc OECD B EPS recommendations that w e expect t o impact t he Group include cha nges to pat ent box r egim es, re str icti ons of in tere st ded ucti bili ty , glo bal min imum t ax r ate and r evise d tra nsfe r pric ing gu idel ines a lloc atin g mo re proﬁ ts to en d use r marke ts. 8 Risk R isk c ont inue d

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AstraZeneca PLC Annual Report 2021

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AstraZeneca PLC — Annual Report 2021

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AstraZeneca PLC Annual Report 2021