# EDGAR Filing Document

**Accession Number:** 0000901832
**File Stem:** 0001104659-23-023828
**Filing Date:** 2023-2
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**Document Hash:** 0d81f591b145a2549650350e1a0b0511
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## Filing Content

## Filing Summary
**0001104659-23-023828.hdr.sgml**: 20230221

**ACCESSION NUMBER**: 0001104659-23-023828

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 2

**CONFORMED PERIOD OF REPORT**: 20230221

**FILED AS OF DATE**: 20230221

**DATE AS OF CHANGE**: 20230221

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ASTRAZENECA PLC
- **CENTRAL INDEX KEY:** 0000901832
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** X0
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-11960
- **FILM NUMBER:** 23649188

**BUSINESS ADDRESS:**
- **STREET 1:** 1 FRANCIS CRICK AVENUE
- **STREET 2:** CAMBRIDGE BIOMEDICAL CAMPUS
- **CITY:** CAMBRIDGE
- **STATE:** X0
- **ZIP:** CB2 0AA
- **BUSINESS PHONE:** 011 44 20 7304 5000

**MAIL ADDRESS:**
- **STREET 1:** 1 FRANCIS CRICK AVENUE
- **STREET 2:** CAMBRIDGE BIOMEDICAL CAMPUS
- **CITY:** CAMBRIDGE
- **STATE:** X0
- **ZIP:** CB2 0AA

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ZENECA GROUP PLC
- **DATE OF NAME CHANGE:** 19930422

**FORM 6-K**

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

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

the Securities Exchange Act of 1934

For the month of February 2023

Commission File Number: 001-11960

**AstraZeneca PLC**

1 Francis Crick Avenue

Cambridge Biomedical Campus

Cambridge CB2 0AA

United Kingdom

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

Form 20-F ⌧ Form 40-F ◻

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

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

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

Yes ◻ No ⌧

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

Exhibit Index

[ANNUAL FINANCIAL REPORT](tm2230344d3_ex99-1.pdf)

<u>SIGNATURES</u>

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AstraZeneca PLC

Date: 21 February 2023

---

| | |
|:---|:---|
| By: | /s/ Adrian Kemp |
| Name: Adrian Kemp | Name: Adrian Kemp |
| Title: Company Secretary | Title: Company Secretary |

---

### Attached PDF Documents

**Attachment 1:** `tm2230344d3_ex99-1.pdf`

AstraZeneca

# What science can do

AstraZeneca Annual Report and Form 20-F Information 2022

![img-0.jpeg](img-0.jpeg)

Welcome

# Science can...

We are a global, science-led, patient-focused pharmaceutical company. We are dedicated to transforming the future of healthcare by unlocking the power of what science can do for people, society and the planet.

☐ See what science can do on page 2

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

## Our Supplements

Detailed information on our Development Pipeline, Patent Expiries and Key Marketed Products and Risk.

☐ See our website,

www.astrazeneca.com/annualreport2022.

![img-4.jpeg](img-4.jpeg)

![img-5.jpeg](img-5.jpeg)

### Key

For more information within this Annual Report.
For more information, see www.astrazeneca.com.
BY Denotes sustainability information independently assured by Bureau Veritas.

### Front cover image:

Next-generation therapeutics.

Advancements in biotechnology have expanded our toolkit of drug modalities. This provides an opportunity to design therapeutics for disease mechanisms previously considered difficult, if not impossible, to target and enables our scientists to pioneer new approaches to drug discovery.

### Use of terms:

In this Annual Report, unless the context otherwise requires, 'AstraZeneca', 'the Group', 'we', 'us' and 'our' refer to AstraZeneca PLC and its consolidated entities.

Strategic Report Corporate Governance Financial Statements Additional Information

## Financial highlights

### Total Revenue1

Up 19% at actual rate of exchange to $44,351 million (up 25% at CER), comprising Product Sales of $42,998 million (up 18%; 24% at CER) and Collaboration Revenue of $1,353 million (up 54%; 56% at CER)

| 2022 | $44,351m |
| --- | --- |
| 2021 | $37,417m |
| 2020 | $26,617m |

**$44.4bn**

### Net cash flow from operating activities

Up 64% at actual rate of exchange to $9,808 million

| 2022 | $9,808m |
| --- | --- |
| 2021 | $5,963m |
| 2020 | $4,799m |

**$9.8bn**

### Reported operating profit

Up 256% at actual rate of exchange to $3,757 million (up 298% at CER)

| 2022 | $3,757m |
| --- | --- |
| 2021 | $1,056m |
| 2020 | $5,162m |

**$3.8bn**

### Core operating profit

Up 34% at actual rate of exchange to $13,350m (up 42% at CER)

| 2022 | $13,350m |
| --- | --- |
| 2021 | $9,928m |
| 2020 | $7,340m |

**$13.4bn**

### Reported EPS2

Increase in Reported EPS to $2.12 (2021: $0.083)

| 2022 | $2.12 |
| --- | --- |
| 2021 | $0.08 |
| 2020 | $2.44 |

**$2.12**

### Core EPS

Up 26% at actual rate of exchange to $6.66 (up 33% at CER)

| 2022 | $6.66 |
| --- | --- |
| 2021 | $5.29 |
| 2020 | $4.02 |

**$6.66**

|| Denotes a scale break. Throughout this Annual Report, all bar chart scales start from zero. We use a scale break where charts of a different magnitude, but the same unit of measurement, are presented alongside each other.

☐ For more information in relation to the inclusion of Reported performance, Core financial measures and constant exchange rate (CER) growth rates as used in this Annual Report, see the Financial Review from page 60 and for more information on the reconciliation between Reported and Core performance, see the Reconciliation of Reported results to Core results in the Financial Review on page 64.

1 As detailed from page 142, Total Revenue consists of Product Sales and Collaboration Revenue.

2 Reported EPS is up 2,581% at actual rate of exchange to $2.12 (up 4,903% at CER).

## Contents

### Strategic Report

- Science can... 2
- AstraZeneca at a Glance 4
- Chair's Statement 6
- Chief Executive Officer's Review 7
- Healthcare in a Changing World 9
- Our Purpose, Values and Business Model 12
- Our Strategy and Key Performance Indicators 14
- Therapy Area Review 18
- > Oncology 18
- > BioPharmaceuticals 22
  - Cardiovascular, Renal & Metabolism 24
  - Respiratory & Immunology 26
  - Vaccines & Immune Therapies 28
- > Rare Disease 30
- Business Review 34
- EU Taxonomy Disclosure 52
- Task Force on Climate-related Financial Disclosures Summary Statement 53
- Risk Overview 56
- Financial Review 60

### Corporate Governance

- Chair's Introduction 78
- Corporate Governance Overview 79
- Board of Directors 80
- Senior Executive Team (SET) 82
- Corporate Governance Report 83
- Nomination and Governance Committee Report 92
- Science Committee Report 94
- Sustainability Committee Report 95
- Audit Committee Report 96
- Directors' Remuneration Report 104

### Financial Statements

- Preparation of the Financial Statements and Directors' Responsibilities 130
- Directors' Annual Report on Internal Controls over Financial Reporting 130
- Auditors' Report 131
- Consolidated Statements 138
- Group Accounting Policies 142
- Notes to the Group Financial Statements 149
- Group Subsidiaries and Holdings 199
- Company Statements 204
- Company Accounting Policies 206
- Notes to the Company Financial Statements 208
- Group Financial Record 211

### Additional Information

- Shareholder information 213
- Directors' Report 215
- Sustainability supplementary information 218
- Trade Marks 219
- Glossary 220
- Cautionary statement regarding forward-looking statements 224

Contents

AstraZeneca Annual Report & Form 20-F Information 2022

1

What science can do

# Science can...

From the beginning, science has been at the front and centre of everything we do, taking us to places we never thought possible.

This is the limitless adventure of what science can do. It can...

![img-6.jpeg](img-6.jpeg)

Bring people together to achieve the impossible

Impel us to take risks, share and collaborate.

Harness data, technology and AI to accelerate change.

☐ See the full story at www.astrazeneca.com/partnering.

![img-7.jpeg](img-7.jpeg)

Change the way we see the world
Change how we live our lives.
Make us pioneers.

☐ See the full story at www.astrazeneca.com/what-science-can-do.

![img-8.jpeg](img-8.jpeg)

2 AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report

Corporate Governance

Financial Statements

Additional Information

![img-9.jpeg](img-9.jpeg)

### Create novel therapies and vaccines

Help people with chronic diseases
live better, healthier lives.

Redefine cancer care.

Pioneer treatments for rare diseases.

Make patients partners in their
own treatment.

☐ See the full story at www.astrazeneca.com/
our-therapy-areas.html.

### Transform the lives of
billions of people

Give more and more of us access
to healthcare.

Inspire us to do incredible things.

☐ See the full story at www.astrazeneca.com/
sustainability

![img-10.jpeg](img-10.jpeg)

![img-11.jpeg](img-11.jpeg)

### Make people, societies and
the planet healthier

Make healthcare systems more
sustainable and resilient.

Lead the way to a low-carbon world.

☐ See the full story at www.astrazeneca.com/
sustainability

![img-12.jpeg](img-12.jpeg)

![img-13.jpeg](img-13.jpeg)

Scan the QR code
to see our film,
'Science can...'

Science can...

AstraZeneca Annual Report & Form 20-F Information 2022

3

# AstraZeneca at a Glance

We are transforming the future of healthcare by unlocking the power of what science can do for people, society and the planet.

## Our strategic priorities

Our priorities reflect how we are working to deliver our growth through innovation strategy and achieve our Purpose of pushing the boundaries of science to deliver life-changing medicines.

1. Science and Innovation

2. Growth and Therapy Area Leadership

3. People and Sustainability

## Science and innovation-led

We use our distinctive scientific capabilities to deliver a pipeline of life-changing medicines.

## Distinctive R&D capabilities

**179**  
projects in  
our development  
pipeline$^{1}$

**15**  
NMEs in our  
late-stage pipeline

**121**  
NME or major LCM  
projects in Phase II  
and Phase III

![img-14.jpeg](img-14.jpeg)

■ Phase I ■ Phase II ■ Late-stage development ■ Life-cycle management projects

$^{1}$ Includes NME and major LCM projects up to launch in all applicable major markets.

## Leading in our Therapy Areas

Focused on areas where we can make the most meaningful difference to patients.

## Therapy Areas

**Oncology  
BioPharmaceuticals  
Rare Disease**

## Total Revenue$^{2}$

**$44.4bn**

![img-15.jpeg](img-15.jpeg)

$^{2}$ Total Revenue includes revenues from Other Medicines. See page 33.

## Broad-based, diverse source of business

Diversified portfolio across primary, specialty care and rare disease with a global reach.

## Total Revenue by Therapy Area

![img-16.jpeg](img-16.jpeg)

## Total Revenue by reporting region$^{3}$

![img-17.jpeg](img-17.jpeg)

$^{3}$ Due to rounding, the sum of percentages above does not equal 100%.

4 AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report Corporate Governance Financial Statements Additional Information

![img-18.jpeg](img-18.jpeg)

Oncology. See from page 18.

![img-19.jpeg](img-19.jpeg)

BioPharmaceuticals. See from page 22.

![img-20.jpeg](img-20.jpeg)

Rare Disease. See from page 30.

# Commitment to our people

We are empowering our people to reach their full potential in a dynamic, inclusive and high-performing working environment.

☐ For more information, see from page 44.

83,500

employees
2021: 83,100
2020: 76,100

49.5%

of our senior roles are filled by women

# Employees by reporting region

![img-21.jpeg](img-21.jpeg)

- Europe 38%
- Emerging Markets 35%
- US 20%
- Established Rest of World 7%

# Commitment to society

We are harnessing the power of Science and Innovation to deliver a positive impact to society, healthcare systems and the environment.

☐ For more information, see from page 48.

# Priority

1

Access to healthcare
Increasing access to life-saving treatments, promoting prevention, and strengthening global health system resilience and sustainability.

# Priority

2

Environmental protection
Accelerating the delivery of net-zero healthcare, managing our environmental impact, and investing in nature and biodiversity.

# Priority

3

Ethics and transparency
Ensuring ethical, open, and inclusive behaviour across our organisation and value chain.

3rd overall and #1 for Product Delivery

Double A List for Climate Change and Water Security

World and Europe constituent

Bloomberg Gender-Equality Index listing

# Global reach and presence

Our R&D organisation has more than 13,000 employees across our global sites. We have four strategic R&D centres: Cambridge, UK; Boston, MA, US; Gaithersburg, MD, US; and Gothenburg, Sweden, as well as seven other R&D centres and offices.

# Global R&D centres

1. Cambridge, UK (HQ)
2. Boston, MA, US
3. Gaithersburg, MD, US
4. Gothenburg, Sweden

■ 29 manufacturing sites in 16 countries

# Other R&D centres and offices

5. San Francisco, CA, US
6. New York, NY, US
7. New Haven, CT, US
8. Alderley Park, UK
9. Macclesfield, UK
10. Shanghai, China
11. Osaka, Japan

![img-22.jpeg](img-22.jpeg)

AstraZeneca at a Glance

AstraZeneca Annual Report & Form 20-F Information 2022

5

## Chair's Statement

![img-23.jpeg](img-23.jpeg)

“Underpinning confidence in the future is our scientific leadership that continues to deliver life-changing and innovative medicines to patients.”

$2.90

Full-year dividend of
$2.90 per share (2021: $2.87)

### A remarkable decade in which to have chaired AstraZeneca, working with excellent Board colleagues and a great management team.

April 2022 marked my tenth anniversary as a Director of AstraZeneca and I have served as Chair since June 2012. In April this year, I will be standing down from the Board at the conclusion of our AGM and handing over the role of Chair to Michel Demaré.

It has been a privilege to chair AstraZeneca in what has been a remarkable decade for the Group under the inspiring leadership of our Chief Executive Officer, Pascal Soriot, in which we have more than delivered our strategic goals of achieving scientific leadership and returning AstraZeneca to growth, all the while being a great place to work.

#### A growing business

Since AstraZeneca returned to growth in the years after 2018, Total Revenue has doubled to more than $44 billion in 2022. Reflecting this financial performance, the Board intends to declare a second interim dividend of $1.97 per share, making a total dividend declared for the full year of $2.90.

As we look ahead, confidence in the years to come builds on our track record of success that is demonstrated most clearly in shareholder returns. In the last decade, AstraZeneca has delivered a Total Shareholder Return of 467%, compared with 85% for the FTSE100 and 366% for our pharma peers.

#### Scientific leadership

Underpinning confidence in the future is our scientific leadership that continues to deliver life-changing and innovative medicines to patients. In the last 10 years, we have launched a remarkable total of 20 new medicines, including three in 2022 alone. In 2022, we also had 14 blockbuster medicines (with annual revenues in excess of $1 billion) and a record 34 approvals of our medicines in major markets.

Over and above this, I am incredibly proud of AstraZeneca’s leading role in fighting the COVID-19 pandemic where we have made, and continue to make, a real difference.

#### A great place to work

Central to AstraZeneca’s success has been its talented, collaborative team and its efforts to ensure we remain a great place to work - an inclusive and diverse workplace where everyone has the potential to develop and grow. I am grateful for everything they have achieved and the inspiring relationships I have established over the years.

I am also grateful for the contribution made by my fellow Directors, past and present, in their important role of overseeing the governance of the Company and delivery of its strategy.

AstraZeneca has also contributed more broadly to the wellbeing of society. Earlier this year, I was proud to lead AstraZeneca’s delegation to the World Economic Forum at Davos, making the case for health as the foundation of strong and resilient societies. Our ground-breaking Ambition Zero Carbon strategy provides an example of how we are also contributing to the health of the planet.

#### Our Chief Executive Officer

Finally, I would like to take this opportunity to pay tribute to Pascal Soriot, our exceptional Chief Executive Officer. His leadership of our science, entrepreneurial skills, ability to identify and recruit great people and sheer hard work have underpinned our return to growth and achievements of the past decade. It has been a privilege to work with him and it was only fitting that his contribution to UK life sciences and leadership in the global response to the COVID-19 pandemic was recognised with the award of a knighthood. I look forward to seeing AstraZeneca continue to thrive and grow under his leadership.

Leif Johansson
Chair

6

AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report Corporate Governance Financial Statements Additional Information

## Chief Executive Officer's Review

![img-24.jpeg](img-24.jpeg)

“Our R&D success and revenue increase in 2022 demonstrate that we are on track to deliver industry-leading revenue growth through 2025 and beyond, and have set AstraZeneca on a path to deliver at least 15 new medicines before the end of the decade.”

$44.4bn

Total Revenue (2021: $37.4bn)

72

Regulatory events - submissions or approvals in major markets

The success of AstraZeneca is built on being true to our Purpose and living our Values to deliver for people, society and the planet.

2022 was a year of continued strong performance and execution of our long-term growth strategy. Total Revenue increased by 19% (25% at CER) to $44.4 billion, with $7.1 billion coming from our Rare Disease portfolio that was incorporated into the Group’s results from 21 July 2021.

In our therapy areas, Total Revenue for Oncology increased by 15% (20% at CER); Cardiovascular, Renal & Metabolism by 13% (19% at CER); Respiratory & Immunology fell by 1% but rose 3% at CER; and Rare Disease rose by 4% (10% at CER).

In the US, Total Revenue was up 47% in 2022 and in Europe it grew by 9% (21% at CER). While Total Revenue in Emerging Markets fell by 4% (growth of 1% at CER), largely the result of the anticipated decline in growth in China, it grew in Established Rest of World during the year by 22% (40% at CER).

### Pioneers in science

Our success is built on relentlessly pushing the boundaries of science to deliver life-changing medicines. In that regard, we made excellent progress in 2022 with a remarkable 72 regulatory events, either submissions or approvals for our medicines in major markets, and 29 pipeline progression events.

During the year, our pioneering science was evident across all therapy areas. For example, in BioPharmaceuticals, the DELIVER Phase III trial established *Forxiga* as the first heart failure (HF) medicine to demonstrate mortality benefit across the full ejection fraction range. This represents a population of patients, many of whom had previously had no treatment options.

Building on Alexion’s 30-year history in Rare Disease, in 2022 we announced the positive high-level results of the ALPHA Phase III trial of danicopan, an investigational oral Factor D inhibitor, as an add-on to *Ultomiris* or *Soliris*

for the treatment of PNH (a rare and life-threatening blood disorder) in patients who experience clinically significant extravascular haemolysis.

In a year of many achievements, no one in the room at the American Society of Clinical Oncology annual meeting last June will forget the standing ovation that greeted the positive Phase III results for *Enhertu* in advanced HER2-low breast cancer. This was followed by its swift approval in the US as the first ever HER2-directed therapy in this indication and represents a major advance for patients with HER2-low metastatic breast cancer.

Our commitment to science was further demonstrated during the year by our announcement in April of plans for a new strategic R&D centre and Alexion headquarters in Kendall Square, Cambridge, MA, US. This move will bring together colleagues from across AstraZeneca and Alexion in a world-leading life sciences hub.

Of course, pushing boundaries sometimes means setbacks and we had some life-cycle management trials during the year that did not meet their primary objectives. However, 2022 was predominantly a year of scientific success, including the approval of three new medicines: *Imjudo* for liver cancer and non-small cell lung cancer (NSCLC); *Beyfortus* for the prevention of RSV, respiratory syncytial virus in infants; and *Airsupra* for asthma. We are also initiating new late-stage trials for high-potential medicines such as camizestrant, datopotamab deruxtecan and volrustomig.

Our R&D success and revenue increase in 2022 demonstrate that we are on track to deliver industry-leading revenue growth through 2025 and beyond, and have set AstraZeneca on a path to deliver at least 15 new medicines before the end of the decade.

Chief Executive Officer's Review

AstraZeneca Annual Report & Form 20-F Information 2022

7

## Patients

As well as requiring us to follow the science, AstraZeneca's Values put patients first. In this regard, our industry-leading growth means more patients around the world are benefiting from our medicines and our continued commitment to innovate for patients and improve health outcomes - including the use of data, digital technologies and AI.

I am particularly proud of what we were able to achieve for patients in Japan in 2022, with a record-breaking five approvals for our cancer treatments in one day, and a remarkable total of 12 medicine approvals for the year. Also in 2022, cancer patients around the world benefited, not only from *Enhertu* and *Imjudo*, but also from *Imfinzi* and *Lynparza* which, taken together, saw eight new indication launches and 21 major market approvals.

Following last year's acquisition of Alexion, by combining resources, we have been able to bring treatments for rare diseases to patients in 10 more countries around the world, including the availability of Alexion's first medicine in China, *Soliris*.

We have also remained at the frontline in the fight against COVID-19, with independent analysis showing that our vaccine, *Vaxzevria*, saved more than six million lives in its first year. Our long-acting antibody combination, *Evusheld*, continues to play an important role helping to protect those most vulnerable to COVID-19. However, as the COVID-19 virus continues to evolve, so too must our response, and we have commenced a late-stage trial for our next-generation COVID-19 long-acting antibody.

We were honoured when *TIME* magazine announced that *Evusheld* had been named on its annual list of the Best Inventions, which features 200 extraordinary innovations changing our lives. Additionally, our top-three ranking in the 2022 Access to Medicine Index is external recognition of our focus on increasing equitable and affordable access to our life-changing treatments.

## AstraZeneca's role in society

In addition to helping patients and in line with our value of doing the right thing, we work to create healthier societies, collaborating with partners to tackle major health challenges.

We are working to identify barriers and give more people equitable access to healthcare. For example, our Healthy Heart Africa programme is committed to reducing hypertension and the burden of cardiovascular disease. We work with partners to raise awareness and offer training, screening and reduced cost treatment, where applicable. By the end of 2022, the programme had launched in nine countries and conducted more than 32 million screenings for high blood pressure since launch, with plans for further expansion.

Our Young Health Programme, which helps young people make informed choices about their health, provides a further example. So far, we have reached more than nine million young people with health information in 39 countries.

Given the multiple challenges facing the world today, we continue to do all we can to ensure healthcare systems are more resilient, effective and sustainable. We used the opportunities provided by a pandemic-delayed EXPO 2020 in Dubai to collaborate across the health, private and academic sectors to launch multiple initiatives in support of our science, therapy areas and a sustainable healthcare network across the Middle East and Africa.

Our Partnership for Health System Sustainability and Resilience is a collaboration with the London School of Economics and the World Economic Forum (WEF) and continues its work to strengthen global health systems. It is now active in more than 30 countries.

At the WEF annual meeting in January 2023, our Chair, Leif Johansson, led AstraZeneca's advocacy for the continued prioritisation of health as the foundation for strong societies and economies, as well as the need to encourage a fundamental re-evaluation of health as a long-term investment for the future.

## Looking after the planet

We continue to make important progress with our own science-led Ambition Zero Carbon strategy. By the end of December 2022, we had achieved a 59% reduction in our Scope 1 and 2 greenhouse gas emissions compared to our 2015 baseline. Our efforts include a partnership with Honeywell to develop a next-generation respiratory inhaler which will have a near-zero global warming potential.

We are also playing a leading role in accelerating change across the health sector, including through the Sustainable Markets Initiative (SMI) which was launched by HM King Charles III in 2021. Ahead of COP27 in 2022, the SMI Health Systems Task Force, which I am honoured to champion, announced shared commitments and actions to reduce emissions in line with the pathway to limit global warming to 1.5°C and deliver the transition to net-zero health systems.

## My thanks to all AstraZeneca colleagues

In January 2023, after almost 25 years with AstraZeneca, Katarina Ageborg, our Executive Vice-President Global Sustainability, Chief Compliance Officer and President, AstraZeneca AB in Sweden, retired. I am grateful to her for the integral role she played in AstraZeneca becoming a global leader in sustainability and in our re-emergence as one of the world's most innovative biopharmaceutical companies.

I would like to extend my thanks to all our 84,000 employees for the part they played in achieving our strong results in 2022. I would especially like to recognise the efforts of those who ensured that our medicines reached patients across the world and contributed to our support for humanitarian relief.

## Our Chair

My particular thanks must go, of course, to Leif Johansson who has chaired our Board for the decade in which I have been leading AstraZeneca. I am grateful to him, not only for his skilled leadership of the Board but also for all he has done for AstraZeneca as Chair. More than that, he has been a great colleague and friend.

I will miss Leif when he steps down after this year's AGM. The last 10 years has shown what AstraZeneca and its people can achieve. I am energised at the prospect of working more closely with Michel Demaré, our new Chair, and by what more we can do for people, society and the planet, thereby earning further returns for shareholders who have entrusted their funds to us.

**Pascal Soriot**
Chief Executive Officer

![img-25.jpeg](img-25.jpeg)

The Terra Carta Seal recognises global corporations that are demonstrating their commitment to, and momentum towards, the creation of genuinely sustainable markets.

For more information on our strategy, see Our Strategy and Key Performance Indicators from page 14.

8 AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report Corporate Governance Financial Statements Additional Information

# Healthcare in a Changing World

The external environment presents us with both challenges and opportunities that require us to adapt, innovate and build trust.

## A growing pharmaceutical sector

The pharmaceutical sector continues to grow against a backdrop of increasing demand for healthcare. Global pharmaceutical sales grew by 8.4% in 2022. Global healthcare spending is projected to increase at an annual rate of 5.7% from 2021 to 2026.

### Global pharmaceutical sales

In 2022, Established Markets saw an average revenue increase of 8.4% and Emerging Markets revenue also grew at 8.4%. The US, Japan, China, Germany and France are the world's top five pharmaceutical markets by 2021 sales. In 2022, the US had 49.8% of global sales (2021: 49.7%).

$1,214bn (+8.4%)

![img-0.jpeg](img-0.jpeg)

| US ($bn) | Europe ($bn) | Established RoW ($bn) | Emerging Markets ($bn) |
| --- | --- | --- | --- |
| 2022 605 | 2022 213 | 2022 106 | 2022 290 |
| 2021 556 | 2021 196 | 2021 100 | 2021 267 |
| 2020 516 | 2020 185 | 2020 98 | 2020 238 |
| $605bn (+8.8%) | $213bn (+8.6%) | $106bn (+5.7%) | $290bn (+8.4%) |

Data based on world market sales using AstraZeneca Market definitions on page 220. Changes in data subscriptions, exchange rates and subscription coverage, as well as restated IQVIA data, have led to the restatement of total market values for prior years. Source: IQVIA, IQVIA Midas Quantum Q3 2022 (including US data). Reported values and growth are based on CER. Value figures are rounded to the nearest billion and growth percentages are rounded to the nearest tenth.

### Estimated pharmaceutical sales and market growth to 2026

We expect developing markets, including Africa, the Commonwealth of Independent States (CIS)1, the Indian subcontinent and Latin America, to fuel pharmaceutical growth. Market growth in China is expected to remain below historical levels at a compound annual growth rate of 2.6%. This is due to the continued slowdown of the major hospital sector.

1 Includes Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and excludes Ukraine.
2 Non-EU countries, including the UK.

■ Estimated pharmaceutical sales 2026.
Data is based on ex-manufacturer prices at CER. Source: IQVIA.
■ Estimated pharmaceutical market growth. Data is based on the compound annual growth rate from 2021 to 2026. Source: IQVIA Market Prognosis Global 2022-2026.

![img-1.jpeg](img-1.jpeg)

Healthcare in a Changing World

AstraZeneca Annual Report & Form 20-F Information 2022

9

# Healthcare in a Changing World continued

## Impact of global trends

Global trends are influencing and shaping the pharmaceutical sector. Changes can be observed at many levels, for example, in industry regulations and policies, pricing reforms in the US and China, the use of digital and artificial intelligence, and changes in the workplace.

### Political

Greater geopolitical conflict

Over the next two decades, the geopolitical environment is expected to become more contested, potentially reaching levels of intensity not seen since the Cold War.

66%

Two thirds of respondents said geopolitical changes are pushing their organisation to re-evaluate strategy.

(Source: Control Risks Global Risk Survey 2022)

It is expected that, over the next two decades, the geopolitical environment will become more contested, potentially reaching levels of intensity not seen since the Cold War. Additionally, global geopolitical volatility has fundamentally altered the relationships and norms that have governed international economic partnerships and frameworks since the Second World War. For example, when Russia invaded Ukraine in early 2022, it did not take long for the geopolitical consequences to be felt around the globe.

Responses to other global issues, such as climate change or the COVID-19 pandemic, are at risk of being derailed or undermined as a result. Geopolitical tensions also place increased pressure on supply chains and distribution networks.

(Source: Global Trends 2040, March 2021)

### Economic

Global economic downturn

The slowdown of the global economy will continue to affect businesses across the globe.

2.9%

Global GDP growth is forecast to slow from 6.2% in 2021 to 3.4% in 2022 and 2.9% in 2023.

(Source: IMF)

Since 2021, the global economy has experienced a slower recovery than expected, particularly in major economies such as the US, Europe, China and Russia. High governmental debt loads, a slowdown in global trade, increasing energy prices and labour shortages have all contributed to suppressing growth - a trend that can be observed across the globe. In January 2023, the International Monetary Fund (IMF) upgraded its growth forecast for 2023 to 2.9%. This is an increase from its previous forecast of 2.7% but still below the historical annual average of 3.8% between 2000 and 2019.

In addition, inflationary pressures from the rise in energy prices, consequences of the pandemic and conflict in Ukraine have led to higher inflation and, with that, higher nominal interest rates that are expected to continue.

(Source: IMF)

### Societal

Growing burden of chronic diseases

Together with national and regional healthcare services, pharmaceutical companies play a key role in prevention, diagnosis and treatment for patients with chronic diseases.

80%

By 2040, non-communicable diseases (NCDs) could account for 80% of deaths in low-income countries, up from 25% in 1990.

(Source: Global Trends 2040, March 2021)

NCDs, also known as chronic diseases, are the result of a combination of genetic, physiological, environmental and behavioural factors. Cardiovascular diseases account for most NCD deaths annually (17.9 million people), followed by cancers (9.3 million), respiratory diseases (4.1 million), and diabetes (1.5 million).

(Source: WHO)

Increasing demand for healthcare is putting pressure on healthcare budgets which, exacerbated by the impact of the COVID-19 pandemic, is leading to downward pressure on pricing.

10 AstraZeneca Annual Report & Form 20-F Information 2022

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Strategic Report - Economic Governance - Financial Economics - Additional Information

![img-2.jpeg](img-2.jpeg)

Technological

Artificial intelligence becoming mainstream

Artificial intelligence is transformational and its broad use has significant potential to reshape societies, economies and industries.

$5.2bn

Investment in AI-enabled drug discovery more than doubled in the past five years, exceeding $5.2 billion at the end of 2021.

(Source: BCG)

AI will improve productivity in the workplace and challenge existing business models. At the same time, it will disrupt the labour force by creating new job fields while eliminating others. To harness the advantages of AI, countries and companies will need to focus on educating and upskilling their workforce.

(Sources: Global Trends 2040, March 2021 and United Nations)

☐ These risks are explored further in the Risk Overview from page 56 and Pricing and value of our medicines from page 39.

☐ AstraZeneca's response to the trends we face is explored further in Our Strategy and Key Performance Indicators from page 14.

Environmental

Climate change accelerating

Climate change, caused by growing human-produced concentrations of greenhouse gases in the atmosphere, is intensifying.

14%

Human-produced emissions are projected to increase 14% by 2030 from 2010 levels, short of the 45% target reduction.

(Source: Global Trends 2040, March 2021 and Net-zero Coalition, October 2022)

The impact of climate change - via rising temperatures and other extreme weather conditions, rising sea levels and declining biodiversity - will be felt across the globe, with the cost and related challenges disproportionately affecting developing economies. When converging with environmental degradation, the risks to food security, access to water, public health, and energy supply will intensify. To avoid the worst impacts, the global temperature needs to be kept to no more than 1.5°C above pre-industrial levels. This means GHG emissions need to be reduced by 45% by 2030, compared to 2010, and to net-zero by 2050.

(Source: Intergovernmental Panel on Climate Change (IPCC) Summary for Policymakers of Special Report on Global Warming of 1.5°C)

Outlook

Opportunities and challenges for the sector

While demand for healthcare is increasing and science is driving improvements in healthcare, risks remain for the sector.

31%

During the pandemic, public trust in pharma rose to 31% in 2022, from 25% in 2018. But there is still room to improve.

(Source: Ipsos Global Trustworthiness Monitor: Is Trust in Crisis?)

At the same time as demographic and other changes are driving an increased demand for healthcare, continued advances in science and digital technologies are driving innovation and improvements in healthcare. However, risks remain. In addition to the downward pressure on pricing, the sector also faces regulatory challenges and the loss of exclusivity and genericisation.

More generally, to be successful, pharmaceutical companies will need to be able to respond to the pressures and demands made on them by patients and caregivers, health authorities, payers, policymakers and others, while earning their trust. They will also need to develop strategies for protecting themselves against harmful misinformation, which will require collaboration between businesses, policymakers and other stakeholders to tackle at scale.

Healthcare in a Changing World

AstraZeneca Annual Report & Form 20-F Information 2022

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# Our Purpose, Values and Business Model

Inspired by our Values and what science can do, we are focused on accelerating the delivery of life-changing medicines that create enduring value for patients, society and our shareholders.

## Our Purpose

We push the boundaries of science to deliver life-changing medicines.

## Our Values

Our Values determine how we work together and the behaviours that drive our success. They guide our decision making and define our beliefs.

- > We follow the science.
- > We put patients first.
- > We play to win.
- > We do the right thing.
- > We are entrepreneurial.

Business Review, see from page 34.

## Our business model

We are a global pharmaceutical business with a science-led and patient-focused value proposition committed to excellence in the research, development, manufacturing and commercialisation of prescription medicines. We are committed to operating sustainably, in a way that recognises the interconnection between business growth, the needs of society and the limitations of our planet. We invest resources to create financial and non-financial value that benefit patients, society and our business.

## What our business model requires to be successful

Ability to acquire, retain and develop a talented and diverse workforce.

**49.5%**

of our senior middle management roles and above are filled by women

A leadership position in science that enables us to deliver life-changing medicines.

**$9.8bn**

invested in our science in 2022

Understanding the issues that are most important to our many and varied stakeholders.

**>199,000**

healthcare practitioner enquiries responded to

Effective collaborations that supplement and strengthen our pipeline and our efforts to achieve scientific leadership.

**>1,000**

collaborations worldwide

Global commercial presence and skills that ensure our medicines are available to patients when needed.

**>130**

countries where we sell our products

Patent protection for our intellectual property for a reasonable period of time to prevent our new medicines being copied.

**>90**

countries where we obtained patent protection

A supply of high-quality medicines, whether from our own operations or from suppliers.

**$25.1bn**

spent with suppliers

Financial strength, including access to financing and ability to bear the financial risk of investing in the life-cycle of a medicine.

**$9.8bn**

net cash flow from operating activities

## How we add value

### Improved health

Continuous scientific innovation is vital to achieving sustainable healthcare, which creates value by:

- > Improving health outcomes and transforming the lives of patients who use our medicines.
- > Enabling healthcare systems to reduce costs and increase efficiency.
- > Improving access to healthcare and healthcare infrastructure.
- > Helping develop the communities in which we operate through local employment and partnering.

### Financial value

Revenue from our Product Sales and collaboration activities generates cash flow, which helps us:

- > Fund our investment in science and the business to drive long-term value.
- > Follow our progressive dividend policy.
- > Meet our debt service obligations.

**>105m**

Our main therapy area medicines impact more than 105 million patient lives annually. In addition, AstraZeneca and our global partners have released for supply more than three billion *Vaxzeuria/Covishield* COVID-19 vaccine doses to more than 180 countries.

12 AstraZeneca Annual Report & Form 20-F Information 2022

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# Life-cycle of a medicine

We create financial value throughout the life-cycle of a medicine.

# Investment

We invest in the discovery, development, manufacturing and commercialisation of our pipeline of innovative prescription medicines.

# Revenue generation

We generate revenue from Product Sales of our existing medicines and new medicine launches, as well as from our collaboration activities. Our focus is on creating medicines that facilitate profitable future revenue generation, while bringing benefits to patients.

# Reinvestment

We reinvest in developing the next generation of innovative medicines and in our business to provide the platform for future sources of revenue in the face of losses of key patents.

We also assess opportunities to invest in value-enhancing additions to our portfolio.

![img-3.jpeg](img-3.jpeg)

# Research and development phases - duration: 5-15 years

1. Undertake scientific research to identify potential new medicines.
2. Pre-clinical studies in laboratory and animals to understand if the potential medicine is safe to introduce into humans.
3. Phase I trials with small groups of healthy human volunteers (small molecules) or patients (biologics) to understand how the potential medicine is absorbed into the body, distributed and excreted.
4. Phase II trials on small- to medium-sized groups of patients to test effectiveness and tolerability of the medicine and determine optimal dose.
5. Phase III trials in a larger group of patients to gather information about effectiveness and safety of the medicine and evaluate the overall benefit/risk profile.
6. Seek regulatory approvals for manufacturing, marketing and selling the medicine.

# Launch phase - duration: 5-15 years

7. Launch new medicine while continuously monitoring, recording and analysing reported side effects.
8. Post-launch research and development to further understand the benefit/risk profile of the medicine and life-cycle management activities to understand its full potential.

# Post-exclusivity - duration: 20+ years

This is a high-level overview of a medicine's life-cycle and is illustrative only. It is neither intended to, nor does it, represent the life-cycle of any particular medicine or of every medicine discovered and/or developed by AstraZeneca, or the probability of success or approval of any AstraZeneca medicine.

Our Purpose, Values and Business Model

AstraZeneca Annual Report & Form 20-F Information 2022

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# Our Strategy and Key Performance Indicators

## Our ambition is to launch 15 new medicines by 2030.

Our strategy is straightforward. We:

- > are science and innovation led
- > are focused on our chosen therapy areas: Oncology; BioPharmaceuticals (comprising Cardiovascular, Renal & Metabolism (CVRM), Respiratory & Immunology (R&I) and Vaccines & Immune Therapies (V&I)); and Rare Disease
- > have a diversified portfolio with broad coverage across primary care, specialty care and rare disease
- > have global strength with balanced presence across regions
- > have a commitment to people, society and the planet.

We have three priorities designed to deliver our strategy and achieve our financial targets:

1. Science and Innovation

2. Growth and Therapy Area Leadership

3. People and Sustainability

Achieve Group Financial Targets

Effective delivery of our strategic priorities will help us achieve our financial targets. Our capital allocation priorities include investing in the business and pipeline, including potentially value-enhancing

business development opportunities; maintaining a strong, investment-grade credit rating; and supporting a progressive dividend policy, balancing opportunities for growth and maintaining a strong balance sheet.

### Our Key Performance Indicators and remuneration

Our KPIs are aligned to our strategic priorities and are the indicators against which we measure our productivity and success.

Several KPIs used in this section are used to measure the remuneration of Executive Directors and allow us to disclose

aggregated targets without disclosing sensitive commercial information at the individual KPI level. Any variances between the KPI and values used in determining remuneration are explained in the Directors' Remuneration Report from page 104. Other indicators used are now included in the Business Review from page 34.

Since 2021, a metric focusing on the delivery of our Ambition Zero Carbon commitments has been included in our executive incentive arrangements. This underlines the importance we place on reducing GHG emissions from our global operations and fleet (Scope 1 and 2) by 98% by 2026 (from a 2015 baseline).

### Achieve Group Financial Targets

#### Key Performance Indicators

Cash generation is a key driver of long-term shareholder returns and facilitates reinvestment in our pipeline, which is critical for delivering new medicines and future value.

Earnings per share (EPS) is an important profitability metric and a key driver of shareholder value.

☐ For more information on our Core measures, see the Financial Review from page 60.

☐ For details of how Achieve Group Financial Targets are considered when calculating the annual bonus, see page 114.

#### Net cash flow from operating activities

$9,808m

| 2022 | $9,808m |
| --- | --- |
| 2021 | $5,963m |
| 2020 | $4,799m |

Actual growth
2022 +64%
2021 +24%
2020 +62%

#### Reported EPS

$2.12

| 2022 | $2.12 |
| --- | --- |
| 2021 | $0.08 |
| 2020 | $2.44 |

Actual growth
2022 n/m
2021 -97%
2020 +137%
CER growth
2022 n/m
2021 -84%
2020 +142%

#### Core EPS

$6.66

| 2022 | $6.66 |
| --- | --- |
| 2021 | $5.29 |
| 2020 | $4.02 |

Actual growth
2022 +26%
2021 +32%
2020 +15%
CER growth
2022 +33%
2021 +37%
2020 +18%

#### KPI key

● Used for remuneration of Executive Directors

14 AstraZeneca Annual Report & Form 20-F Information 2022

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# 40 Science & Innovation

# Our focus areas

- Creating the next generation of therapeutics using an array of drug modalities, for example, advanced biologics, nucleotide-based and cell therapies.
- Leading in convergence of science, data and technology.
- Advancing our pipeline.

# How our strategy responds to global trends

To ensure we are able to respond to the increasing burden of disease and incorporate advances in science and digital technologies, we are:

- Advancing our understanding of disease biology to help uncover novel drivers of disease, through genomics, functional genomics and knowledge graphs.
- Progressing an early pipeline consisting of numerous new drug modalities, including ADCs, cell therapy, epigenetics, gene therapy, oligonucleotides, radio-immuno conjugates (RICs) and self-amplifying RNA (saRNA).
- Creating humanised models to better predict the success of our molecules in the clinic.
- Pioneering new approaches to engagement in the clinic and beyond, incorporating patient insights to improve experiences and outcomes.
- Embedding AI across our R&D activities, from target identification to clinical trials, to understand where we can harness new technologies and further automate processes.

# How we progressed in 2022

- Achieved 72 regulatory events: 38 NME and major LCM submissions and 34 approvals in major markets (US, EU, China and Japan).
- Secured 29 pipeline progression events: six NME Phase II starts/progressions and 23 NME and major LCM Phase III investment decisions.
- Our pipeline includes 179 projects, of which 155 are in the clinical phase of development.
- At the end of the year, we had 15 NME projects in pivotal trials or under regulatory review covering 28 indications (2021: 16).
- 27 projects were discontinued.

# Focus for 2023

- Drive innovation opportunities across our global R&D sites.
- Continue transforming the way we discover and develop new medicines using AI and machine learning.
- Continue attracting the brightest minds to create an environment in which science thrives.

For more information, see Therapy Area Review from page 18 and Business Review from page 34.

“Our approach to R&D and innovation aims to deliver the quickest and greatest impact possible on disease prevention and treatment.”

# Key Performance Indicators

Our science measures incentivise the development of NMEs and the maximisation of the potential of existing medicines. Pipeline progression events (Phase II NME starts/progressions and Phase III investment decisions) measure innovation and sustainability. Regulatory events (regulatory submissions and approvals) demonstrate the advancement of this innovation to patients and the value to the Group.

For more information on performance against the Group scorecard, see page 114.

# Pipeline progression events

![img-4.jpeg](img-4.jpeg)

1 25 against our Group scorecard for determining annual bonus.
2 26 against our Group scorecard for determining annual bonus.
3 25 against our Group scorecard for determining annual bonus.

# Regulatory events

![img-5.jpeg](img-5.jpeg)

1 50 against our Group scorecard for determining annual bonus.
2 37 against our Group scorecard for determining annual bonus.
3 43 against our Group scorecard for determining annual bonus.

Our Strategy and Key Performance Indicators

AstraZeneca Annual Report & Form 20-F Information 2022

15

# Our Strategy and Key Performance Indicators
*continued*

## Growth and Therapy Area Leadership

### Our focus areas

- > Leveraging our innovative science to create a more personalised, precise and accessible healthcare experience.
- > Engaging with the entire healthcare ecosystem and unlocking visionary partnerships that drive positive change and outcomes.
- > Creating industry-leading growth across our therapy areas and regions.
- > Continuing to implement our Operations 2025 programme.

### How our strategy responds to global trends

To ensure we can respond to the increasing demand for healthcare, downward pressure on prices and increasing control that people have over their own healthcare, we are:

- > Fostering a patient-focused approach and embedding patient insights across our organisation, building integrated therapy area ecosystem models.
- > Engaging with policymakers to support improvements in sustainable access, coverage, care delivery and patient care outcomes.
- > Leveraging technology across prevention and awareness, diagnosis, treatment, post-treatment and wellness to deliver better patient outcomes.
- > Partnering with industry, governments, and others to adopt value-based pricing solutions and bring new medicines to market more quickly.

- > Pursuing a strong patent strategy that builds robust patent estates to protect our pipeline and products while defending and enforcing patent rights.
- > Leveraging the power of digital throughout our end-to-end supply chain through digital drug development to accelerate development lead times.

### How we progressed in 2022

- > Total Revenue, comprising Product Sales and Collaboration Revenue, increased by 19% (25% at CER) to $44,351 million.
- > Collaboration Revenue increased by 54% (56% at CER) to $1,353 million.
- > Grew Total Revenue across our Therapy Areas: Oncology 15% (20% at CER) to $15,539 million; CVRM1 13% (19% at CER) to $9,211 million; and R&I declined 1% (+3% at CER) to $5,963 million. Our new V&I unit grew by 1% (8% at CER) to $4,836 million and Rare Disease1 grew by 4% (10% at CER) to $7,053 million.
- > Total Revenue in Emerging Markets declined by 4% (+1% at CER) to $11,745 million. In the US, it grew by 47% to $17,920 million and in Europe grew by 9% (21% at CER) to $8,738 million.

### Focus for 2023

- > Deliver sustainable growth by seizing opportunities open to us in regions, markets and through targeted business development opportunities.
- > Continue transforming how we work.
- > Advance digital approaches to transform the patient experience.

“Our belief in the power of science is growing the success of our Company and helping us contribute to transforming the future of healthcare.”

1 Growth rates on medicines acquired with Alexion have been calculated on a pro forma basis compared with the corresponding period in the prior year.

For more information, see Therapy Area Review from page 18 and Business Review from page 34.

### Key Performance Indicators

Our Total Revenue measure reflects the importance of incentivising sustainable growth in both the short and longer term.

For details of how Total Revenue is considered when calculating the annual bonus, see from page 114.

### Total Revenue

![img-6.jpeg](img-6.jpeg)

| Actual growth | CER growth |
| --- | --- |
| 2022 +19% | 2022 +25% |
| 2021 +41% | 2021 +38% |
| 2020 +9% | 2020 +10% |

16 AstraZeneca Annual Report & Form 20-F Information 2022

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# People and Sustainability

# Our focus areas

- Continuing to make AstraZeneca a great place to work.
- Making it easier to work across our Group to deliver sustainable growth.
- Ensuring we operate in the smartest way, increasing the speed of delivery of medicines to patients through our Future of Work initiative.
- Harnessing the power of Science and Innovation in ways that positively impact patients, healthcare systems, and the environment.
- Progressing our Sustainability strategy across three integrated priority pillars: access to healthcare, environmental protection, and ethics and transparency.

# How our strategy responds to global trends

To ensure we are able to deliver our strategy, build trust in AstraZeneca and contribute to the health of society and the planet, we are:

- Creating an inclusive and equitable environment where people belong, using our diversity as a competitive advantage.
- Fostering a culture of lifelong learning, strengthening and evolving our capabilities, and instilling confidence to challenge convention and explore possibilities.
- Simplifying the way we work, driving productivity, and optimising digital and technology to deliver a better experience for our people and better outcomes for patients.
- Working towards a future where all people have access to affordable, sustainable and innovative healthcare.

- Playing our part in protecting the planet by reducing GHG emissions from our global operations and fleet by 98% by 2026 and halving our entire value chain footprint by 2030.
- Empowering employees through our Code of Ethics to make decisions in the best interests of the Group and society.

# How we progressed in 2022

- We continued to invest in our people to ensure we recruit, retain and develop a talented workforce.
- In 2022, we delivered a strong performance across the key priorities of our People and Sustainability strategy pillar.
- We continued to score highly in our Pulse surveys for questions relating to our Purpose, direction, patient centricity and employee commitment to our success.
- We demonstrated our continued commitment to working in partnership to strengthen health systems worldwide.
- We maintained a leading role in efforts to address the effects of climate change on our planet and increasingly on public health inequalities and disease prevalence.
- Our Ambition Zero Carbon strategy delivered further reductions in our GHG emissions, and we are on track with our environmental commitments.

# Focus for 2023

- Maintain positive employee engagement.
- Accelerate digital transformation and activities to drive productivity.
- Advance our sustainability priorities, particularly health equity and health system resilience, as well as addressing the effects of the climate crisis on health and conserving biodiversity.

☐ For more information, see People from page 45 and Sustainability from page 48.

“We continue to make AstraZeneca a great place to work while ensuring we have a positive impact on people, society and the environment.”

# Key Performance Indicators

Our People and Sustainability strategy is built around two priorities: Contribution to the enterprise and Contribution to society.

Our Contribution to the enterprise KPI is based on our Pulse survey measure of those employees who believe that AstraZeneca is a great place to work.

Our Contribution to society KPI is based on our sustainability scorecard. Ratings for this KPI reflect our success in achieving our sustainability goals. In 2020, we used 14 priorities and 12 in 2021. Following a materiality assessment, we updated our strategy around nine focus areas as the basis for our 2022 scorecard. These reflect the focus areas, outlined in our Sustainability Report on our website, www.astrazeneca.com/sustainability, that guide our sustainability strategy and where we can have the most positive impact.

# Employee belief that AstraZeneca is a great place to work1

86%

| 2022 | 86% |
| --- | --- |
| 2021 | 85% |
| 2020 | 89% |

1 Source: November Pulse survey for each year.

☐ For more information on our Key Performance Indicators, including definitions, methodology and restatements, see our Sustainability Data Summary at www.astrazeneca.com/sustainability.

# Sustainability scorecard performance2

7/9

| 2022 7/9 | ● |
| --- | --- |
| 2021 10/12 | ● |
| 2020 13/14 | ● |

2 In 2022, we assessed our performance against nine focus areas, each made up of a number of indicators. For a focus area to be 'green', at least 70% of the indicators within it need to have achieved its target in 2022. An overall KPI 'green' rating requires at least seven individual indicators rated green; an 'amber' rating shows five or six rated 'green'; a 'red' rating shows four or fewer rated 'green'.

Our Strategy and Key Performance Indicators

AstraZeneca Annual Report & Form 20-F Information 2022

17

## Therapy Area Review

We are leading a revolution in oncology to redefine cancer care. Our ambition is to follow the science to discover, develop and deliver life-changing treatments that transform outcomes and increase the potential for cure.

# Oncology

Epigenetics: DNA undergoing epigenetic modulation

18 AstraZeneca Annual Report & Form 20-F Information 2022

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# Total Revenue

$15,539m

up 15% (20% at CER)

2021: $13,555m1

2020: $11,417m1

# 2022 overview

- > Performance driven by rapid and broad market penetration of our oncology medicines, with 8 new indication launches and 21 major market approvals across four medicines, including *Imfinzi*, *Enhertu*, *Lynparza* and a new medicine approved for the first time, *Imjudo*2.
- > Impressive business performance underpinned by exceptional Total Revenue growth for *Calquence* and *Enhertu* and strong double-digit growth for *Tagrissso*, *Lynparza* and *Imfinzi*.

1 Total Revenue from *Koselugo* is included within Rare Disease for 2022 reporting, previously reported within Oncology. The comparatives and growth rates shown for each therapy area have been calculated as though these changes had been implemented in 2020.
2 *Imfinzi* Total Revenue includes revenue of *Imjudo* which commenced in 2022.

# Therapy area world market (MAT Q3-22)

$165.8bn

Annual worldwide market value

![img-0.jpeg](img-0.jpeg)

- ■ Small molecule targeted agents $50.9bn
- ■ Immune checkpoint inhibitors $36.6bn
- ■ Monoclonal antibodies (mAbs) $34.3bn
- ■ Chemotherapy $24.5bn
- ■ Hormonal therapies $16.0bn
- ■ PARP inhibitors $3.1bn
- ■ Other oncology therapies $0.5bn

Source: IQVIA.

AstraZeneca focuses on specific segments within this overall therapy area market. Oncology Therapy Area submarket totals ($165.9bn) do not sum up exactly to the Therapy Area total ($165.8bn) due to rounding.

# Unmet medical need and world market

20m

Nearly 20 million people were diagnosed with cancer in 2020 and it remains the second leading cause of death across the globe.

27.5m

The global burden of cancer is expected to grow, with an estimated 27.5 million newly diagnosed patients and 16.3 million deaths annually by 2040.

# Key marketed products

See full product information in the Patent Expiries Supplement on our website, www.astrazeneca.com/annualreport2022.

| Product | Disease | Total Revenue | Commentary |
| --- | --- | --- | --- |
| Tagrissso (osimertinib) | Lung cancer | ↑ $5,444m, up 9% (15% at CER) | Approved in 94 countries for the adjuvant treatment of patients with early-stage EGFR mutated (EGFRm) NSCLC and in 99 countries for both the 1st- and 2nd-line treatment of advanced EGFRm NSCLC. |
| Lynparza (olaparib) | Ovarian cancer Breast cancer Pancreatic cancer Prostate cancer | ↑ $2,993m, up 9% (14% at CER) | Approved in 93 countries as maintenance therapy for platinum-sensitive relapsed ovarian cancer and 1st-line BRCA-mutated (BRCAm) ovarian cancer, and in 89 countries with bevacizumab for homologous recombination repair deficient (HRD)-positive advanced ovarian cancer. Approved in 56 countries for germline BRCAm (gBRCAm), HER2-negative early breast cancer (approved in the metastatic setting in 92 countries). Approved in 89 countries for gBRCAm metastatic pancreatic cancer. Approved in 92 countries for homologous recombination repair (HRR) gene-mutated metastatic castration-resistant prostate cancer (mCRPC) (BRCAm only in certain countries) and in 31 countries in combination with abiraterone for the 1st-line treatment of adult patients with mCRPC. |
| Imfinzi a (durvalumab) | Lung cancer Bladder cancer Liver cancer | ↑ $2,784m, up 15% (21% at CER) | Approved in the curative-intent setting of unresectable, Stage III NSCLC after chemoradiotherapy in 85 countries and in extensive-stage small cell lung cancer in 81 countries. Also approved in combination with gemcitabine and cisplatin as treatment for adult patients with locally advanced or metastatic biliary tract cancer in three countries, and in unresectable hepatocellular carcinoma in the US in combination with Imjudo . Also approved in the US in combination with Imjudo and platinum-based chemotherapy for NSCLC, and for previously treated advanced bladder cancer in 10 countries. |
| Calquence (acalabrutinib) | Mantle cell lymphoma (MCL) Chronic lymphocytic leukaemia (CLL) | ↑ $2,057m, up 66% (69% at CER) | Approved in 85 countries for the treatment of CLL and in 43 countries for the treatment of adult patients with MCL who have received at least one prior therapy. |
| Enhertu (trastuzumab deruxtecan) | Breast cancer Gastric cancer Lung cancer | ↑ $602m, up 182% (184% at CER) | Approved in more than 40 countries for HER2-positive metastatic breast cancer following a (one or more) prior anti-HER2-based regimen. Also approved in more than 30 countries for HER2-low metastatic breast cancer following chemotherapy and previously treated HER2-positive advanced gastric cancer. Approved in the US for previously treated HER2-mutant metastatic NSCLC. |
| Orpathys (savolitinib) | Lung cancer | ↑ $33m, up 109% (106% at CER) | Approved in China for treatment of NSCLC with MET gene alterations. |
| Other products |  |  |  |
| Zoladex (goserelin acetate implant) | Prostate cancer Breast cancer | ↓ $957m, down 1% (up 7% at CER) | Arimidex (anastrozole) Breast cancer ↓ $99m, down 29% (24% at CER) |
| Faslodex (fulvestrant) | Breast cancer | ↓ $334m, down 22% (14% at CER) | Cisxodex/Cisxodex (bicalutamide) Prostate cancer ↓ $78m, down 45% (40% at CER) |
| Irvasa (gefitinib) | Lung cancer | ↓ $114m, down 38% (34% at CER) |  |

Therapy Area Review / Oncology

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19

# Therapy Area Review
## Oncology
*continued*

### Our strategy in Oncology

We strive to push the boundaries of science to change the practice of medicine and transform the lives of patients living with cancer through:

1. Scientific platforms to attack cancer from multiple angles, including targeting cancer cells directly and activating the immune system. We use monotherapy and combination approaches to drive deeper, more durable, responses:
   a. Tumour drivers and resistance - targeting genetic mutations and resistance mechanisms that enable cancer cells to survive and proliferate.
   b. DNA damage response - targeting the DNA repair process to block cancer cells reproducing.
   c. Antibody drug conjugates (ADCs) - highly potent cancer-killing agents delivered directly to cancer cells via a linker attached to a targeted antibody.
   d. Epigenetics - targeting changes to genome expression caused by cancer.
   e. Immuno-oncology - activating the body's own immune system to help fight cancer.
   f. Cell therapies - harnessing living cells to target cancer.
2. Treating cancer earlier where the greatest opportunity for cure exists and building expertise and leadership in key tumour types.
3. Collaborating to harness transformational technologies, including computational pathology, circulating tumour DNA (ctDNA) testing, digital health and data science/AI.
4. Leveraging our global footprint - to make cancer therapies available to every eligible and appropriate patient.

### Lung cancer

Scientific advances are strengthening the potential of our medicines to offer cure and long-term survival in lung cancer with a focus on early detection and precision medicine. Our comprehensive portfolio includes leading medicines *Tagrisso*, *Imfinzi*, *Imjudo*, *Enhertu* and *Orpathys*, with a pipeline of potential new medicines and combinations across diverse mechanisms of action.

> Positive Phase III results from the AEGEAN trial showed *Imfinzi* plus chemotherapy significantly improved pathologic complete response in resectable NSCLC. The trial continues to assess the additional primary endpoint of event-free survival.
> *Tagrisso* approved in Japan for the adjuvant treatment of patients with early-stage EGFRm NSCLC based on the ADAURA Phase III trial. Updated results from ADAURA showed *Tagrisso* continued to prolong the time these patients can live cancer-free after surgery.
> Together with Daiichi Sankyo, we are accelerating Phase III trials in lung and breast cancers for our TROP2-directed ADC, datopotamab deruxtecan - as monotherapy and in combinations - following promising clinical data and strong tolerability profile. We are also driving Phase III trials in breast, endometrial, gastric, prostate, ovarian and colorectal cancers.
> Our novel bispecific antibody, volrustomig (MEDI5752), simultaneously targets PD-1 and CTLA-4, which has potential to improve therapeutic benefit and reduce the risk of toxicity typically associated with CTLA-4 inhibitors. Initial data in late-stage non-squamous NSCLC shows durable responses.

### Breast cancer

We are aiming to shape clinical practice and transform outcomes across all subtypes and stages of breast cancer and ultimately, to eliminate breast cancer as a cause of death. Our comprehensive portfolio of medicines including *Enhertu*, *Lynparza*, *Faslodex* and *Zoladex* and promising compounds in development leverage different mechanisms of action to address the biologically diverse breast cancer tumour environment.

> For *Enhertu*, positive Phase III results in advanced HER2-low metastatic breast cancer led to a rare standing ovation at the American Society of Clinical Oncology Annual meeting and swift approval in the US as the first HER2-directed therapy for patients with HER2-low metastatic breast cancer.
> *Lynparza* became the first and only approved medicine targeting BRCAm in early breast cancer following US approval as adjuvant treatment for gBRCAm HER2-negative high-risk patients based on the OlympiA Phase III trial.
> Positive Phase III results for capivasertib plus *Faslodex* in advanced HR-positive breast cancer reinforced the opportunity with this AKT inhibitor for patients who experience tumour progression on, or resistance to, available endocrine therapies.
> Promising Phase II data for our next-generation, selective estrogen receptor degrader (SERD), camizestrant, in advanced ER-positive breast cancer, demonstrated the potential for camizestrant to improve on currently available endocrine therapies for patients with early and metastatic disease.

### Gynaecological/Genitourinary cancers

Our ambition is to establish *Lynparza* plus abiraterone as the standard of care in 1st-line mCRPC based on its transformational efficacy and best-in-class safety profile. In gynaecological cancers, we aim to maximise progression-free survival and provide hope of cure for women with advanced ovarian cancer.

> Positive results from PROpel Phase III trial showed *Lynparza* in combination with abiraterone significantly delayed disease progression in 1st-line mCRPC, now approved in the EU based on these results. US regulatory submission remains under review following an extension by the FDA in December 2022.
> Our next-generation PARP1 selective inhibitor, AZD5305, is progressing towards potential registrational trials for prostate cancer in combination with new hormonal agents, with data showing good tolerability at higher doses. AZD5305 is designed to selectively target PARP1, thereby killing cancer cells by targeting tumour cell DNA damage response mechanisms.

## 2nd

Cancer is the second leading cause of death worldwide.

## 16.3m

By 2040, cancer is expected to account for 16.3 million deaths annually across the globe.

20 AstraZeneca Annual Report & Form 20-F Information 2022

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Strategic Report Corporate Governance Financial Statements Additional Information

![img-1.jpeg](img-1.jpeg)

We're thinking differently about the underlying genetic causes of cancer, defining new biomarkers and therapeutic targets that span multiple tumour types.

### Gastrointestinal cancers

With positive results across multiple medicines and a robust development programme in many stages and disease types, gastrointestinal cancers are a critical new growth area.

> *Imfinzi* in combination with chemotherapy is the first immunotherapy-based regimen approved in the US, EU and Japan and a new standard of care in advanced biliary tract cancer, a treatment setting with no major global treatment advance in over a decade.
> *Imjudo* in combination with *Imfinzi* is now approved in the US and Japan for patients with unresectable liver cancer and recommended for approval in the EU based on the HIMALAYA Phase III trial.

### Blood cancers

In haematology, we are using our six scientific platforms to develop and test novel investigational agents designed to target underlying drivers, resulting in 25,000 patients treated globally and approvals in 84 countries.

> A new tablet formulation of *Calquence*, our next-generation Bruton's tyrosine kinase (BTK) inhibitor, is now approved in the US for all current indications which allows for co-administration with gastric acid-reducing agents.
> *Calquence* was approved in Japan as a 1st-line treatment for patients with CLL (including small lymphocytic lymphoma) based on findings from the ELEVATE-TN trial.
> Building on the success of *Calquence*, our acquisition of TeneoTwo and its T-cell engager AZD0486 (TNB-486) aims to accelerate and diversify our Oncology pipeline for haematologic malignancies.

For full details, see the Development Pipeline Supplement on our website, www.astrazeneca.com/annualreport2022.

First clinical data for AZD0486 shared at the 2022 American Society of Hematology annual meeting showed early signs of activity in patients with relapsed/refractory B-cell non-Hodgkin lymphoma.

Therapy Area Review / Oncology

AstraZeneca Annual Report & Form 20-F Information 2022

21

Therapy Area Review

# BioPharmaceuticals

We are transforming care for billions of people living with chronic diseases and delivering long-lasting immunity. Our ambition is to intervene earlier to protect vital organs, slow or reverse disease progression, and achieve remission for these often degenerative, debilitating, and life-threatening conditions, so many more people can live better, healthier lives.

Severe asthma disease pathways: the role of epithelial cytokines and eosinophils.

22 AstraZeneca Annual Report & Form 20-F Information 2022

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Strategic Report Corporate Governance Financial Statements Additional Information

# Cardiovascular, Renal & Metabolism

Total Revenue

$9,211m

up 13% (19% at CER)

2021: $8,103m1

2020: $7,139m

We have a relentless focus on developing and delivering innovative, life-changing medicines and solutions for the millions of people affected by the complex spectrum of cardiovascular, renal and metabolic diseases.

# Respiratory & Immunology

Total Revenue

$5,963m

down 1% (up 3% at CER)

2021: $6,049m

2020: $5,375m

Our ambition is to intervene earlier to protect vital organs, slow or reverse disease progression, and achieve remission for these often degenerative, debilitating, and life-threatening conditions.

# Vaccines & Immune Therapies

Total Revenue

$4,836m

up 1% (8% at CER)

2021: $4,779m

2020: $669m

Our ambition is to develop and deliver transformative vaccines and antibodies, providing long-lasting immunity to millions of people, where the burden of disease is greatest.

# 2022 overview

- DELIVER Phase III trial showed *Forxiga* significantly reduced the risk of cardiovascular death or worsening of heart failure in patients with mildly reduced or preserved ejection fraction.
- *Lokelma* launched in 23 markets and achieved global branded market leadership.
- *Andexxa* received the first approved reversal agent specifically for Factor Xa inhibitors in Japan.
- *Eplontersen* met co-primary and secondary endpoints in interim analysis of the NEURO-TTRansform Phase III for ATTRv-PN.
- Human progenitor cells promote the formation of new heart tissue following a heart attack, in new study.

1 Total Revenue from *Andexxa* is included within BioPharmaceuticals Cardiovascular, Renal & Metabolism for 2022 reporting, previously reported within Rare Disease. The comparatives and growth rates shown for each therapy area have been calculated as though these changes had been implemented in 2020.

# 2022 overview

- *Tezapire* approved in the EU and Japan as an add-on maintenance treatment for severe asthma with no phenotype or biomarker limitations.
- *Saphnelo* approved in the EU as an add-on therapy for the treatment of adult patients with moderate to severe systemic lupus erythematosus (SLE).
- Continued strong growth, across the portfolio, including from *Breztri* (up 103% at CER) and *Fasenra* (up 15% at CER).
- *Airsupra* (PT027) approved in the US for the as-needed treatment or prevention of bronchoconstriction and to reduce the risk of exacerbations in people with asthma aged 18 years and older.

# 2022 overview

- *Vaxzeoria* approved in the EU as a third dose booster against COVID-19 received full marketing authorisation in the EU.
- *Eousheld* long-acting antibody (LAAB) combination approved in the EU and Japan for both pre-exposure prophylaxis and treatment of COVID-19.
- *Beyfortus* approved in the EU for the prevention of respiratory syncytial virus (RSV) lower respiratory tract disease in infants.
- First patient dosed in the SUPERNOVA Phase I/III trial of AZD3152 for pre-exposure prophylaxis of COVID-19.

Unmet medical need and world market

64m

people living with heart failure (HF) worldwide.

850m

people living with chronic kidney disease (CKD).

230m

will be affected by non-alcoholic steatohepatitis by 2030.

Unmet medical need and world market

Up to 26m

people globally have severe asthma, with up to 50% of those treated remaining uncontrolled.

3rd

Chronic obstructive pulmonary disease (COPD) is the world's third leading cause of death.

>5m

people worldwide have a form of lupus.

Unmet medical need and world market

>630m

confirmed cases of COVID-19 and more than 6.5 million deaths globally.

>40%

of those hospitalised with breakthrough infections after COVID-19 vaccination are immunocompromised, with an increased risk of inpatient mortality compared with the general population.

Therapy Area Review / BioPharmaceuticals

AstraZeneca Annual Report & Form 20-F Information 2022

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# Therapy Area Review
## BioPharmaceuticals
*continued*

### Cardiovascular, Renal & Metabolism

Therapy area world market
(MAT Q3-22)

**$244.3bn**
Annual worldwide market value

![img-2.jpeg](img-2.jpeg)

- Diabetes **$125.2bn**
- High blood pressure **$35.5bn**
- Abnormal levels of blood cholesterol **$17.2bn**
- Thrombosis **$6.8bn**
- CKD **$9.9bn**
- CKD-associated anaemia **$6.0bn**
- Hyperkalaemia **$0.7bn**
- Other CV **$50.2bn**

Source: IQVIA.
AstraZeneca focuses on specific segments within this overall therapy area market. Some sales for CKD ($9.9bn) and CKD-associated anaemia ($6.0bn) fall outside the CVRM total market. All sales for CKD-associated anaemia ($6.0bn) fall within the CKD market and should not be double-counted.

### Key marketed products

☐ See full product information in the Patent Expires Supplement on our website, www.astrazeneca.com/annualreport2022

| Product | Disease | Total Revenue | Commentary |
| --- | --- | --- | --- |
| Forxiga / Forxiga (dapagliflozin) | Type-2 diabetes (T2D) Heart failure with reduced ejection fraction (HF/EF) Chronic kidney disease (CKD) | ↑ $4,386m, up 46% (56% at CER) | CKD label and HF/EF label approved in over 100 markets each. SGLT2i recognised as foundational HF/EF treatment by major societies (new AHA/ACC/HFSA 2022 & ESC/HFA Guidelines). |
| Brilinta / Brilique (ticagrelor) | Acute coronary syndromes (ACS) | ↓ $1,358m, down 8% (4% at CER) | Approved in 123 countries for ACS and in 82 countries for high-risk patients with history of heart attack. Expansion to new patients in Emerging Markets. |
| Lokelma (sodium zirconium cyclosilicate) | Hyperkalaemia | ↑ $289m, up 65% (75% at CER) | Launched in 23 markets, with global branded market leadership, US total K+ binder market leadership and EU maintaining branded market leadership. |
| Roxadustat | Anaemia of CKD | ↑ $202m, up 12% (17% at CER) | Value and volume market share leadership within China HIF-PHI + ESA market, helping more than 500,000 patients. |
| Andexxa / Ondexxya (andexxnet alfa) 1 | Factor Xa inhibitor reversal agent | ↑ $160m, up 12% (21% at CER) | The first approved reversal agent specifically for Factor Xa inhibitors. Approved in Japan in 2022. |
| Other products |  |  |  |
| Crestor (rosuvastatin calcium) | Dyslipidaemia Hyper-cholesterolaemia | ↓ $1,050m, down 4% (up 2% at CER) |  |
| Seloken / Toprol -XL (metoprolol succinate) | Hypertension Heart failure Angina | ↓ $863m, down 9% (4% at CER) |  |
| Bydunon (exenatide XR injectable suspension) | T2D | ↓ $280m, down 27% (26% at CER) |  |
| Onglyza family, (exenatide, Qtern , Symlin , Atacand and other established brands) | n/a | ↓ $257m, down 28% (25% at CER) |  |

$^{1}$ Growth rates for *Andexxa/Ondexxya* acquired with Alexion have been calculated on a pro forma basis compared with the corresponding period in the prior year.

### Our strategy in CVRM

Our bold ambition is to stop, reverse and cure CVRM diseases by maximising our medicines, delivering innovative solutions and advancing our pipeline. We do this by:

- > unravelling the underlying causes of these diseases by identifying novel targets linked to disease biology to create the next generation of medicines
- > advancing our precision medicine strategy to develop diagnostic strategies and deliver the right therapy for the right patient

- > driving our *CVRM Clinical Development of the Future* programme to help bring medicines to market quicker by shortening enrolment times, promoting diversity in clinical trials, and automating and detecting events earlier through home monitoring devices
- > investing strongly in research to drive data that can be incorporated into clinical practice guidelines to advance patient outcomes
- > supporting our team of over 5,000 people across more than 23 functions including early and late R&D, medical and commercial.

☐ Full details are given in the Development Pipeline Supplement on our website, www.astrazeneca.com/annualreport2022.

### 2022 review - strategy in action

Our CVRM strategy is focused on four key disease areas: heart failure (HF), chronic kidney disease (CKD), cardiovascular disease (CV) and metabolic liver disease. Our focus also extends to several rare disease areas, including transthyretin amyloidosis and factor Xa inhibitor-related bleeds.

### Chronic kidney disease

In CVRM, we remain committed to working towards halting the progression of CKD and eliminating progression to kidney failure. In 2022, real world evidence data studies REVEAL-CKD and INSIDE-CKD were released, showing alarming prevalence of undiagnosed Stage III CKD and demonstrating that *Forxiga* can cut 33% of healthcare costs by delaying disease progression and reducing incidence of cardiorenal events, respectively. These findings reinforce an urgent need for early screening of CKD and the benefits of starting treatment earlier.

24 AstraZeneca Annual Report & Form 20-F Information 2022

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AstraZeneca CaReMe CKD, one of the largest real-world studies on the prevalence, outcomes and cost of CKD in over 2.4 million CKD patients, was published in June. Findings highlighted the high disease burden on patients and healthcare systems and the urgent need to improve early screening, diagnosis and treatment.

Hyperkalaemia (HK) remains a key risk for people living with CKD. As the K+ binder market grows globally, CVRM is well positioned with *Lokelma* as the leading global branded novel K+ binder with quarter-over-quarter growth.

In September, NLRP3 advanced into Phase I for the treatment of acute kidney injury (AKI), which each year affects approximately 13 million people, resulting in two million deaths.

#### Heart failure

Our aim is to eliminate HF as first cause of hospitalisation and to cure HF with reduced ejection fraction. DELIVER Phase III trial results, published in August 2022, showed that *Forxiga* significantly reduced the risk of CV death or worsening of HF in patients regardless of ejection fraction. Importantly, in the pooled analysis of the DAPA-HF and DELIVER Phase III clinical trials, *Forxiga* demonstrated a reduction in CV death, making *Forxiga* the first HF treatment to demonstrate mortality benefit across the full ejection fraction range. These findings were simultaneously published in 11 top-tier articles in peer-reviewed journals including

New England Journal of Medicine, *Nature Medicine* and *The Lancet*. In November, an additional data analysis of DELIVER showed *Forxiga* improved symptom burden and health-related quality of life in patients with mildly reduced or preserved ejection fraction.

In an encouraging example of our early CVRM R&D pipeline, a preclinical study published in May 2022 in *Nature Cell Biology* showed human ventricular progenitor cells promote the formation of new heart tissue following a heart attack with improved cardiac function and reduced scar tissue in a laboratory setting. Research continues in this area and elsewhere in the HF treatment pipeline.

#### Cardiovascular disease

With an ambition to stop progression of atherosclerosis caused by dyslipidaemia, we are making a difference for patients with *Brilinta* expanding to new patient populations in Emerging Markets (excluding China).

In September, we decided to discontinue the development of AZD8233 as results from the Phase IIb SOLANO trial did not meet pre-specified criteria to demonstrate benefit significantly above current standard of care for patients with high-risk hypercholesterolaemia.

In June, our small molecule PCSK9 inhibitor AZD0780 entered Phase I with a focus on high-risk primary prevention and secondary prevention in patients with dyslipidaemia.

#### Metabolism

Non-alcoholic steatohepatitis (NASH) prevalence is growing and is a major public health burden. In July, the first patient was dosed in the Phase IIb/III PROXYMO-ADVANCE for cotadutide in non-cirrhotic NASH. Our precision medicine portfolio in NASH also advanced with the start of the Phase I trial for our investigational antisense oligonucleotide (ASO) AZD7503 17bHSD.

In the fourth quarter of 2022, a Phase I MAD study on ASO precision medicine AZD2693, completed in NASH patients homozygous for the PNPLA3 I148M risk allele, a gene linked to a significant proportion of NASH cases globally.

#### Transthyretin amyloidosis (ATTR)

ATTR cardiomyopathy (ATTR-CM) and polyneuropathy are progressive, systemic diseases caused by aging or genetic mutations that result in tissue damage leading to poor quality of life, which can be fatal without treatment. In June, eplontersen met co-primary and secondary endpoints in the interim analysis of the NEURO-TTRansform Phase III trial for hereditary transthyretin-mediated amyloid polyneuropathy (ATTRv-PN).

See Rare Disease on page 30.

#### Factor Xa-related bleeds

*Andexxa* is the first approved reversal agent for Factor Xa inhibitors, rivaroxaban or apixaban, providing a major advance in the treatment of patients hospitalised with life-threatening bleeding. In March, *Ondexxya* (*Andexxa*) was approved in Japan for reversal of acute major bleeds in patients on Factor Xa inhibitors.

**17.9m**

people die from cardiovascular diseases every year - more than any other chronic disease.

![img-3.jpeg](img-3.jpeg)

Therapy Area Review / BioPharmaceuticals / Cardiovascular Risk & Metabolism

AstraZeneca Annual Report & Form 20-F Information 2022

25

# Therapy Area Review
## BioPharmaceuticals
*continued*

### Respiratory & Immunology

Therapy area world market
(MAT Q3-22)

**$82.4bn**

Annual worldwide market value

![img-4.jpeg](img-4.jpeg)

- ■ Asthma $24.8bn
- ■ COPD $19.8bn
- ■ Other $37.8bn

Source: IQVIA.
AstraZeneca focuses on specific segments within this overall therapy area market.

### Key marketed products

☐ See full product information in the Patent Expiries Supplement on our website, www.astrazeneca.com/annualreport2022.

| Product | Disease | Total Revenue | Commentary |
| --- | --- | --- | --- |
| Symbicort (budesonide/formoterol) | Asthma COPD | L $2,538m, down 7% (2% at CER) | Retained global market leadership. Only ICS/LABA approved as mild asthma anti-inflammatory reliever in 46 countries, with regulatory reviews anticipated in additional countries. |
| Faserra (benzalizumab) | Severe asthma | M $1,396m, up 11% (15% at CER) | Consolidated leadership in severe eosinophilic asthma. Currently approved as an add-on maintenance treatment for severe eosinophilic asthma in over 75 countries including the US, EU and Japan. |
| Breztri/Triseo (budesonide/glycopyrrolate/formoterol) | COPD | M $398m, up 96% (103% at CER) | Approved in more than 45 countries, including the US, Japan and China. More prominent role of fixed-dose triple therapies, including mortality reduction benefits included in 2023 GOLD report. |
| Sophrnlo (anifrolumab) | Systemic lupus erythematosus (SLE) | M $116m (2021: $8m) | Approved in the US, EU, Japan and several other countries. Regulatory reviews are ongoing in additional countries. |
| Tezspire (tezaprilumab) | Severe asthma | $82m | Approved in the US, EU, Japan and several other countries for severe asthma. Regulatory reviews are ongoing in additional countries. Included in the 2022 QINA guidelines. |
| Other products |  |  |  |
| Pulmicort (budesonide) | Asthma | L $645m, down 33% (31% at CER) | Approved in more than 115 countries. 2022 was first full year of volume-based procurement in China. |
| Daliresp/Daxas (roflumilast) | COPD | L $189m, down 17% (16% at CER) | Approved in more than 50 countries, including the US and EU. Loss of exclusivity in the US in October 2022. |
| Bevespi (glycopyrrolate/formoterol) | COPD | M $58m, up 7% (9% at CER) | Approved in 44 countries, including the US, EU, Japan and China. |

### Our strategy in Respiratory & Immunology

Our ambition is to transform care in respiratory and immune-mediated diseases by moving beyond symptom control to achieve disease modification, remission and, one day, cures for millions of patients worldwide.

#### COPD

We are working to eliminate COPD as a leading cause of death by modifying the course of the disease.

Our strategy is to:

- > drive broad, early diagnosis and 1st-line use of the most effective therapies to improve patient outcomes by preventing exacerbations before damage is accrued in the lung
- > invest in therapies and trials that will enable us to demonstrate true disease modification, including stopping lung function decline over time and reversing the structural damage caused by the disease.

#### Asthma

Our ambition in asthma is to eliminate exacerbations and achieve clinical remission, even in people with the most severe asthma.

Our strategy is to:

- > establish our anti-inflammatory reliever

inhaled portfolio as the backbone of care across all asthma severities

- > drive towards disease remission through an industry-leading biologics portfolio in patients with more severe disease
- > bring forward the next generation of medicines by combining precision medicines with new delivery modalities to achieve clinical remission in patients who remain uncontrolled in spite of current therapeutics.

#### Immunology

Our ambition is to disrupt immunology by focusing on areas of high unmet medical need to drive clinical remission and eventually cure.

Our strategy is to:

- > build momentum in rheumatology, winning in lupus and further expanding into other indications where type 1 interferon is a disease driver
- > establish a presence in gastroenterology and dermatology through a combination of our mid-stage internal pipeline and external collaborations, targeting diseases such as inflammatory bowel disease, atopic dermatitis and chronic spontaneous urticaria
- > invest in future transformative technologies with curative potential such as ADCs and cell therapy.

☐ Full details are given in the Development Pipeline Supplement on our website, www.astrazeneca.com/annualreport2022.

### 2022 review - strategy in action

#### Asthma

*Symbicort* maintained its position as the leading ICS/LABA globally by volume and value. Performance has been driven by steady growth in Emerging Markets and some key Established RoW markets, offset by generic erosion in the EU and Japan and continued price erosion in the US.

In January 2023, *Airsupra* (PT027) was approved in the US for the as-needed treatment or prevention of bronchoconstriction and to reduce the risk of exacerbations in people with asthma aged 18 years and older, offering the first and only anti-inflammatory reliever treatment approach in the US.

Approval was based on results from the MANDALA and DENALI trials and followed a positive vote in November 2022 from the FDA's Pulmonary-Allergy Drugs Advisory Committee on the benefit risk assessment of PT027 in adults.

*Breztri*, our triple therapy, is being studied in asthma in two Phase III pivotal trials, KALOS and LOGOS, in addition to our current indication in COPD.

26 AstraZeneca Annual Report & Form 20-F Information 2022

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Fasenra, our first respiratory biologic is now approved in more than 75 countries and reached more than 100,000 patients with severe eosinophilic asthma.

In September 2022, Tezspire was approved in the EU as an add-on maintenance treatment in patients 12 years and older with severe asthma who are inadequately controlled with high-dose ICS plus another medicinal product. It was also approved in Japan for the treatment of bronchial asthma in patients with severe or refractory disease in whom asthma symptoms cannot be controlled with mid- or high-dose ICS and other long-term maintenance therapies. Tezspire is the first and only biologic for severe asthma to be approved without phenotype or biomarker limitations. Approval was based on results from the PATHFINDER clinical trial programme, including positive results from the Phase III NAVIGATOR trial.

Compounds in early-stage clinical development include:

> elarekibep (AZD1402): an inhaled Anticalin® protein being developed in collaboration with Pieris Pharmaceuticals that inhibits the interleukin-4 receptor subunit alpha (IL-4Ra), a clinically validated target in severe asthma

> AZD8630: an inhaled fragment antibody (inhaled biologic) in co-development with Amgen, that targets thymic stromal lymphopoietin
> atuliflapon (AZD5718): a precision medicine approach in asthma with an oral FLAP inhibitor that blocks the 5-lipoxygenase pathway, a clinically validated target which could offer an alternative for uncontrolled patients before becoming eligible for systemic biologics.

COPD

In the first quarter of 2022, the first patients were enrolled in two Phase III trials (OBERON and TITANIA) of tozorakimab (MEDI3506).

Other Respiratory

In the fourth quarter of 2022, the first patients were dosed in the TILIA Phase III trial of tozorakimab in virally-induced acute respiratory failure.

Immunology

In February 2022, Saphnelo was approved in the EU as an add-on therapy for the treatment of adult patients with moderate to severe, active autoantibody-positive SLE, despite receiving standard therapy. Saphnelo is the first biologic for SLE approved in Europe with an indication not restricted to patients with a high degree of disease activity. In May 2022, the first patients were enrolled in a Phase III trial (IRIS) of Saphnelo in lupus nephritis.

Fasenra's life-cycle management programme includes multiple clinical trials in eosinophilic diseases beyond the current severe asthma indication. High-level results from the MESSINA Phase III trial showed Fasenra did not meet one of two dual-primary endpoints. Fasenra demonstrated a statistically significant improvement in histological disease remission but not a change in dysphagia symptoms, compared with placebo in patients with eosinophilic esophagitis aged 12 years or older. In March 2022, the FDA issued a Complete Response Letter regarding the supplemental Biologics License Application for Fasenra for patients with inadequately controlled chronic rhinosinusitis with nasal polyps.

Other compounds in early-stage clinical development include AZD7798, a CCR9-depleting mAb. CCR9 is the main chemokine receptor for trafficking lymphocytes to the small intestine and considered central to the generation of small bowel inflammation in Crohn's Disease.

Over 600m
people worldwide live with
chronic respiratory and
immune-mediated diseases.

![img-5.jpeg](img-5.jpeg)

Therapy And Review / BioPharmaceuticals / Respiratory & Immunology

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27

# Therapy Area Review
## BioPharmaceuticals
*continued*

### Vaccines & Immune Therapies

Therapy area world market
(MAT Q3-22)

**$9.8bn**

Annual worldwide market value

Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.

### Key marketed products

See full product information in the Patent Expiries Supplement on our website,
www.astrazenec.com/annualreport2022.

| Product | Disease | Total Revenue | Commentary |
| --- | --- | --- | --- |
| Evusheld (tixagevimab and cilgavimab) | COVID-19 | ↑ $2,184m, (2021: $135m) | Authorised for pre-exposure prophylaxis (prevention) of COVID-19 in the US (emergency use), EU, Japan and many other countries. Approved for the treatment of COVID-19 in the EU and Japan. US emergency use authorisation for Evusheld revised in January 2023 to limit its use to when the combined frequency of non-susceptible variants in the US is <90%. |
| Vaxzevria (ChAdOx1-S [Recombinant]) | COVID-19 | ↓ $1,875m, down 53% (51% at CER) | More than three billion vaccine doses have been released for supply to over 180 countries. |
| Synagis (palivizumab) | RSV | ↑ $578m, up 41% (59% at CER) | Available in more than 100 countries outside the US. Sobi holds the US rights. |
| Fluent Tetra/FluMist Quadrivalent (live attenuated influenza vaccine) | Influenza | ↓ $175m, down 31% (20% at CER) | Approved in the US, EU and other countries. Daiichi Sankyo holds rights to FluMist Quadrivalent in Japan. |
| Beyfortus (nirsevimab) | RSV | $25m | Approved in the EU. In collaboration with Sanofi. Sobi has the right to participate in AstraZeneca's share of the US profits and losses related to Beyfortus . |

### Our strategy in Vaccines & Immune Therapies

With an initial focus on some of the most common and debilitating respiratory diseases, we have a portfolio of medicines that includes vaccines for COVID-19 and influenza, long-acting antibodies for COVID-19 and respiratory syncytial virus (RSV), and a pipeline of next-generation therapeutics and scientific platforms. We are optimising the potential of both vaccines and antibodies, with a focus on developing medicines that provide effective and long-lasting immunity.

#### Vaccines

We are engineering novel, next-generation vaccines that have the potential to generate potent and long-lasting immune responses.

#### Antibodies

We are pioneering novel approaches to developing highly-targeted, long-acting antibodies, using our half-life extension technology. We have significantly accelerated the speed at which we are able to identify potent antibody candidates, screening billions of antibody candidates in a matter of months.

This complementary approach, with vaccines providing protection for those able to mount their own immune response, and antibody therapies for those who cannot, aims to ensure that no one is left behind.

Full details are given in the Development Pipeline Supplement on our website, www.astrazenec.com/annualreport2022.

### 2022 review - strategy in action
**Vaxzevria**

*Vaxzevria* was co-invented by the University of Oxford. Through a landmark agreement in 2020, *Vaxzevria* was developed and distributed by AstraZeneca at cost during the pandemic. Under a sub-licence agreement with AstraZeneca, the vaccine is manufactured and supplied by the Serum Institute of India under the name *Covishield*.

*Vaxzevria* has been granted marketing or emergency-use authorisation as both a primary vaccine schedule and as a booster in multiple countries worldwide. In May 2022, the EU granted conditional marketing approval for the use of *Vaxzevria* as a third-dose booster in adults in both homologous (same vaccine) or heterologous (mixed vaccine) settings. In November 2022, *Vaxzevria* was granted full marketing approval in the EU as both a primary vaccination series and a third-dose booster.

To date, AstraZeneca and our global partners have released over 3.1 billion doses for supply to over 180 countries. Approximately two thirds of these doses went to low- and middle-income countries, and more than 580 million doses have been delivered to 130 countries through the COVAX Facility. In July 2022, Airfinity reported that *Vaxzevria* is estimated to have helped save more than six million lives in its first year of use.

The majority of vaccine product sales and doses delivered related to pandemic contracts. AstraZeneca will continue to supply the vaccine around the world as needed, in line with our agreement with the University of Oxford.

#### *Evusheld*

*Evusheld* is a long-acting antibody (LAAB) combination for the pre-exposure prophylaxis (prevention) and treatment of COVID-19. *Evusheld* is approved and being supplied in about 50 countries around the world. *Evusheld* is intended to protect those most vulnerable to COVID-19, including those who may not be well protected against the virus from vaccination, such as the immunocompromised, and those at high risk for severe COVID-19 hospitalisation and death if they get infected.

In February 2022, AstraZeneca finalised an agreement with the US Department of Health and Human Services for them to purchase an additional one million units of *Evusheld*.

In March 2022, *Evusheld* was approved for pre-exposure prophylaxis (prevention) of COVID-19 in the EU in a broad population of adults and adolescents aged 12 years and older weighing at least 40kg. The approval was based on a review of *Evusheld* data, including results from the PROVENT Phase III pre-exposure prophylaxis (prevention) trial published in the New England Journal of Medicine in April.

In August 2022, *Evusheld* was granted Special Approval for Emergency use in Japan for both pre-exposure prophylaxis (prevention) and treatment of symptomatic disease caused by SARS-CoV-2 infection in adults and adolescents aged 12 years and older weighing at least 40kg. The approvals were based on a review of *Evusheld* data, including results from PROVENT and the TACKLE Phase III COVID-19 treatment trial published in *The Lancet Respiratory Medicine* in June.

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The Japan government also agreed to purchase 300,000 units of *Evusheld*.

In September 2022, *Evusheld* was approved in the EU for the treatment of adults and adolescents aged 12 years and older weighing at least 40kg with COVID-19 who do not require supplemental oxygen and who are at increased risk of progressing to severe COVID-19.

In January 2023, the FDA stated that *Evusheld* is not currently authorised for Emergency Use for pre-exposure prophylaxis (prevention) of COVID-19 in the US until further notice, due to the sustained high frequency of circulating SARS-CoV-2 variants that *Evusheld* does not retain in vitro neutralisation against. The FDA will make a determination about reinstating authorisation of *Evusheld* if the national prevalence of resistant variants decreases to 90% or less on a sustained basis.

#### AZD3152

AZD3152 is an investigational next-generation long-acting antibody being developed to have broad neutralising activity across SARS-CoV-2 strains. In December 2022, the first participant was dosed in the SUPERNOVA Phase I/III trial evaluating AZD3152 for pre-exposure prophylaxis (prevention) of

symptomatic COVID-19. AZD3152 neutralises all tested SARS-CoV-2 variants in in vitro studies to date.

#### Synagis

Since its initial approval in 1998, *Synagis* has become the global standard of care for RSV prevention and helps protect at-risk babies against RSV. *Synagis* is available for the prevention of RSV in more than 100 countries outside the US. Our agreement with Sobi for the rights to *Synagis* in the US remains ongoing.

#### Beyfortus

Following an accelerated assessment procedure, *Beyfortus* (nirsevimab) was approved in November 2022 in the EU for the prevention of RSV lower respiratory tract disease in newborns and infants during their first RSV season. Following EU approval, *Beyfortus* became the first and only single-dose RSV preventative option approved for the broad newborn and infant population. Approval was based on positive results from the MELODY Phase III and MEDLEY Phase II/III trials published in *The New England Journal of Medicine* in March 2022.

The Biologics License Application for nirsevimab has been accepted for review by the FDA for the prevention of RSV lower respiratory tract disease in newborns and infants entering or during their first RSV season and for children up to 24 months of age who remain vulnerable to severe RSV disease through their second RSV season. The FDA has indicated that it will work to expedite its review.

*Beyfortus* is being jointly developed and commercialised by AstraZeneca and Sanofi.

#### Fluenz Tetra/FluMist Quadrivalent

*Fluenz Tetra/FluMist Quadrivalent* is the first and only commercial intranasal influenza vaccine offering a needle-free alternative to traditional vaccines. It is licensed in multiple countries and remains a central part of the UK, Irish, Italian and Finnish paediatric national influenza vaccination programmes, demonstrating positive and cost-effective protection of the health of both children and the wider population. In addition, we are a global partner to governments in supplying doses for influenza pandemics.

## Nearly one billion

seasonal influenza cases may result in 290,000 to 650,000 deaths annually due to influenza-related respiratory diseases.

Source: WHO.

![img-0.jpeg](img-0.jpeg)

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## Therapy Area Review

2022 marked the first full year of Alexion, AstraZeneca Rare Disease, following AstraZeneca's acquisition of Alexion Pharmaceuticals, Inc. on 21 July 2021.

Our mission is to transform the lives of people affected by rare diseases through the development and delivery of innovative medicines as well as supportive technologies and healthcare services.

![info icon]() For more information, see Science and Innovation from page 35 and Growth and Therapy Area Leadership from page 39.

# Rare Disease

Unlocking the potential of the complement system

The dysregulation of the complement system, an essential part of the immune system, is a key driver of many devastating diseases. Targeting and inhibiting the complement system before it can trigger tissue damage or destruction can help restore balance.

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# Total Revenue

# $7,053m

up 4% (10% at CER)1

2021: $3,110m2

2020: $38m2

1 Growth rates for medicines acquired with Alexion have been calculated on a pro forma basis compared with the corresponding period in the prior year.
2 Total Revenue from Koselugo is included within Rare Disease for 2022 reporting, previously reported within Oncology, and Total Revenue from Amlexus is included within BioPharmaceuticals: Cardiovascular, Renal & Metabolism for 2022 reporting, previously reported within Rare Disease. The comparatives and growth rates shown for each therapy area have been calculated as though these changes had been implemented in 2020.

# 2022 overview

> Sustained growth in C5 franchise (Soliris and Ultomiris), including:
> Continued conversion to Ultomiris in paroxysmal nocturnal haemoglobinuria (PNH) and atypical haemolytic uremic syndrome (aHUS).
> Launch of Ultomiris in generalised myasthenia gravis (gMG) in the US, Japan and EU as the first and only long-acting C5 complement inhibitor.
> Koselugo approved in Japan for paediatric patients with plexiform neurofibromas in neurofibromatosis type 1.
> Ultomiris met the primary endpoint in CHAMPION-NMOSD Phase III trial in adults with neuromyelitis optica spectrum disorder (NMOSD).
> Acquired LogicBio Therapeutics, Inc., a pioneering genomic medicine company.

# Unmet medical need and world market

# 400 million

people around the world are affected by a rare disease, half of whom are children.

# >7,000

rare diseases are known to exist today but only 5% have approved treatment options.

# 3 in 10

children with a rare disease don't live to see their fifth birthday.

Therapy area world market

(MAT Q3-22)

# $152.3bn

Annual worldwide market value

Source: IQVIA.

AstraZeneca focuses on specific segments

within this overall therapy area market.

# Key marketed products

☐ See full product information in the Patent Expiries Supplement on our website, www.astrazeneca.com/annualreport2022.

| Product | Disease | Total Revenue | Commentary |
| --- | --- | --- | --- |
| Soliris (eculizumab) | PNH aHUS gMG NMOSD | $3,762m, down 11% (5% at CER) | Approved in 50+ countries for treatment of patients with PNH, including the US, EU and Japan. Approved in 50+ countries for treatment of aHUS, including the US, EU and Japan. Approved in the US as treatment for gMG in adults who are anti-acetylcholine receptor antibody-positive. Approved in the EU and Japan as treatment for refractory gMG in adults who are anti-acetylcholine receptor antibody-positive. Approved in the US, EU, Canada and Japan as treatment for NMOSD in adults who are anti-aquaporin-4 antibody-positive. |
| Ultomiris (ravulizumab) | PNH aHUS gMG | $1,965m, up 34% (42% at CER) | Approved in 50+ countries for treatment of adults with PNH, including the US, EU, Canada and Japan. Approved in the US and EU for treatment of children and adolescents with PNH. Approved in 40+ countries for the treatment of aHUS, including the US, EU and Japan for treatment of aHUS. Approved in the US and Japan as a treatment for gMG in adults who are anti-acetylcholine receptor antibody-positive. Approved in the EU as an add-on to standard therapy for treatment of gMG in adults who are anti-acetylcholine receptor antibody-positive. |
| Streneq (asfotase alfa) | Hypophosphatasia (HPP) | $958m, up 16% (18% at CER) | Approved in 40+ countries, including the US, EU, Japan and Canada. |
| Koselugo (selumetinib) | Neurofibromatosis type 1 (NF1) plexiform neurofibroma (PN) | $208m, up 93% (96% at CER) | Approved in 40+ countries, including the US, EU and Japan. |
| Kanuma (sebelipase alfa) | Lysosomal acid lipase deficiency (LAL-D) | $160m, up 16% (19% at CER) | Approved in 40+ countries, including the US, EU, Japan and Canada. |

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# Therapy Area Review
## Rare Disease
*continued*

### Our strategy in Rare Disease

We are dedicated to improving the lives of those living with rare diseases, and the people who support them, through:

- > continuing our leadership in complement therapies, by building on our pioneering legacy of innovation
- > serving more people through diversifying our portfolio and expanding our geographic footprint
- > creating smart and efficient strategies to speed access to our medicines for patients
- > innovating by investing in science and platforms as well as continuing to leverage AstraZeneca technologies and research capabilities.

### 2022 review - strategy in action

#### Sustained leadership in complement

Alexion was the first company to translate the complement system into transformative medicines. We are continuing that legacy of leadership across multiple geographies and disease areas.

*Ultomiris* is now the established standard of care in the US, Germany and Japan for both PNH and aHUS, two chronic and potentially life-threatening diseases that can lead to serious health complications, including organ damage. We are working with healthcare systems around the world to enable access in additional countries.

Approval of subcutaneous administration of *Ultomiris* in the US for the treatment of adults with PNH or aHUS will give patients a choice for how they receive their treatment (submission under review in the EU).

The US, EU and Japan have approved *Ultomiris* for the treatment of adults with gMG, a progressive autoimmune neuromuscular disease. We have also seen increased use of *Soliris* by patients with gMG and NMOSD, an autoimmune disorder of the central nervous system that affects the optic nerve and spinal cord.

Full results from the Phase III CHAMPION-NMOSD trial demonstrated that *Ultomiris* achieved a statistically significant and clinically meaningful reduction in the risk of relapse in adults with anti-aquaporin-4 antibody-positive (AQP4 Ab+) NMOSD compared with the external placebo arm. *Ultomiris* met the primary endpoint of time to first on-trial relapse as confirmed by an independent adjudication committee (zero adjudicated relapses were observed over a median treatment duration of 73 weeks). Results demonstrated *Ultomiris* reduced the risk of relapse in AQP4 Ab+ NMOSD by 98.6% compared with placebo.

Additional clinical trials of *Ultomiris* are ongoing in a number of disease areas where the complement pathway is thought to play a role, including a Phase III trial in haematopoietic stem cell transplant-associated thrombotic microangiopathy and Phase II clinical trial in dermatomyositis.

We discontinued the Phase III trial of *Soliris* in Japanese adults with Guillain-Barré syndrome (GBS) due to lack of efficacy in that disease. We discontinued our Phase III trial of *Ultomiris* in complement-mediated thrombotic microangiopathy as a result of a strategic portfolio prioritisation exercise.

Consistent with our efforts to expand the availability and use of our existing medicines into new geographies and diseases, we have filed for approval of *Ultomiris* in nearly 60 countries globally.

### Beyond *Ultomiris*

We are advancing a broad development portfolio across research platforms to inhibit certain complement system targets, including C5, Factor D, and Factor P, which enables us to pursue a range of indications.

#### C5 inhibition

We are exploring the ability to treat earlier-line gMG patients with gefurulimab (ALXN1720), an internally discovered potential third-generation C5 inhibitor that is being evaluated in a Phase III trial.

#### Factor D

Factor D is a component of the complement alternative pathway and plays a critical role in multiple complement-mediated rare diseases. Targeting Factor D can potentially address a wide range of therapeutic areas of interest, including haematology, nephrology and ophthalmology.

In September 2022, we announced positive high-level results from our Phase III trial evaluating danicopan (ALXN2040), an investigational, oral, Factor D inhibitor, as add-on therapy to *Ultomiris* or *Soliris*. The ALPHA Phase III trial for patients with PNH who experience clinically significant extravascular haemolysis met the primary endpoint, demonstrating a statistically significant improvement compared with placebo in haemoglobin levels from baseline to week 12.

A Phase II trial of danicopan in geographic atrophy, a chronic and progressive eye disease, is ongoing.

We advanced two Phase II trials of vemircopan (ALXN2050) as a monotherapy in PNH, gMG and two rare renal diseases: proliferative lupus nephritis and immunoglobulin A nephropathy.

We initiated a Phase I trial of ALXN2080, potentially our third-generation Factor D inhibitor.

#### Factor P

Properdin, or Factor P, is an important regulator of complement alternative pathway activation and amplification. A Phase I clinical trial for ALXN1820, an internally discovered bispecific anti-properdin VHH antibody, is ongoing. We are also advancing multiple clinical development assets as potential treatments for certain rare nephrology diseases, including ALXN2030, an investigational siRNA targeting the complement C3 protein.

☐ Full details are given in the Development Pipeline Supplement on our website, www.astrazeneca.com/annualreport2022.

**5%**

Only 5% of known rare diseases have approved treatment options today.

**50%**

of the 400 million people affected by a rare disease worldwide are children.

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![img-1.jpeg](img-1.jpeg)

## 62 countries

Our Rare Disease medicines are now approved in 62 countries, including 10 new countries since July 2021.

### Expanding beyond complement

We have continued to expand our rare disease focus beyond complement with novel assets.

#### AL amyloidosis

AL amyloidosis is a rare disease in which misfolded amyloid proteins build up in organs throughout the body, including the heart and kidneys, causing significant organ damage and failure that may ultimately be fatal.

CAEL-101, a potentially first-in-class fibril-reactive mAb for the treatment of AL amyloidosis, is currently being evaluated in the Cardiac Amyloid Reaching for Extended Survival Phase III clinical programme in combination with standard of care (SoC) therapy in AL amyloidosis. Two parallel Phase III trials in patients with Mayo Stage IIIa and Stage IIIb disease, respectively, are ongoing.

#### Transthyretin amyloidosis (ATTR)

ATTR cardiomyopathy (ATTR-CM) is a systemic, progressive and fatal condition that leads to progressive HF and a high rate of fatality within four years from diagnosis.

In March 2022, we closed an exclusive global collaboration and licence agreement with Neurimmune AG to develop and commercialise NI006, an investigational human mAb currently in Phase Ib development for the treatment of ATTR-CM. NI006 specifically targets misfolded transthyretin and is designed to directly address the pathology of ATTR-CM by enabling removal of amyloid fibril deposits in the heart, with the potential to treat patients with advanced ATTR-CM.

Additionally, Alexion holds an exclusive licence from Eidos Therapeutics, Inc. to develop and commercialise acoramidis (ALXN2060) in Japan, and we are conducting a Phase III bridging trial of acoramidis for patients with ATTR-CM in Japan.

#### Wilson disease

Wilson disease is a rare and progressive genetic condition in which the body's pathway for removing excess copper is compromised. Damage from excess copper build up in organs and tissues can lead to liver disease, neurological and psychiatric symptoms.

In June 2022, we announced detailed results from the positive FoCus Phase III trial of ALXN1840, an investigational once daily, oral medicine. The trial met its primary endpoint, demonstrating approximately three times greater copper mobilisation from tissues than standard of care treatments, including in patients who had been treated previously for an average of 10 years. In the trial, patients taking ALXN1840 experienced rapid copper mobilisation, with a response at four weeks, sustained through 48 weeks.

#### Hypophosphatasia (HPP)

HPP is a rare, genetic metabolic disease characterised by impaired bone mineralisation, muscle weakness and other systemic manifestations of the disease, which can lead to death in infants and significant disability at any age.

We are progressing a Phase I trial for ALXN1850, our next-generation alkaline phosphatase enzyme replacement therapy, in adult patients with HPP.

#### Neurofibromatosis Type 1 (NF1) Plexiform Neurofibromas (PN)

NF1 PN is a rare, progressive, genetic condition impacting multiple body systems characterised by benign tumours called plexiform neurofibromas, which develop along nerve sheaths throughout the body.

In September 2022, *Koselugo* was approved in Japan for paediatric patients with NF1 PN, adding to earlier approvals, including in the US and EU.

### Other Medicines

We no longer report Other Medicines separately. COVID-19-related vaccine information is now incorporated under Vaccines & Immune Therapies in the BioPharmaceuticals Therapy Area.

The majority of the Total Revenue within Other Medicines relates to *Nexium* sales of $1,367 million.

In neuroscience, we continue to progress a number of Phase I and Phase II trials.

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# Business Review

A talented team delivering our strategic priorities sustainably, supporting scientific innovation and commercial success.

Our business is organised to deliver our growth through innovation strategy and achieve our purpose of pushing the boundaries of science to deliver life-changing medicines. Our R&D and Commercial functions promote accelerated decision making and the launches of new medicines across our therapy areas.

![img-2.jpeg](img-2.jpeg)

## Science and Innovation

We are reinforcing our continued focus on science and on innovation, from discovery through development and life-cycle management, to further our productivity and outcomes. We have three therapy area-focused R&D organisations - Oncology, BioPharmaceuticals (CVRM, R&I and V&I) and Rare Disease.

Key topics covered

Summary and performance indicators
Research & Development
Development pipeline overview
Bioethics

## Growth and Therapy Area Leadership

We are building on what we are doing to realise the potential of our pipeline and medicines to deliver sustainable growth in each of our therapy areas. We have Commercial regions that align product strategy and commercial delivery, while our Operations function develops, manufactures and delivers our medicines.

Key topics covered

Summary and performance indicators
Sales and marketing
Our commercial regions
Operations
IT and IS resources
Business development

## People and Sustainability

We are strengthening our commitment to our people, ensuring that AstraZeneca remains a great place to work, as well as elevating our pledge to the planet and society.

Key topics covered

Summary and performance indicators
People
Sustainability
> Access to healthcare
> Environmental protection
> Ethics and transparency

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# Science and Innovation

# Summary and performance indicators

We are using our distinctive scientific capabilities to deliver a pipeline of life-changing medicines.

# Our performance in 2022

- Invested $9.8 billion in our R&D.
- First approvals for 2 NMEs, Imjudo and Beyfortus.
- 179 pipeline projects, of which 155 are in the clinical phase of development.
- R&D productivity was 19% versus the industry average of 14%.
- Published 156 manuscripts in 'high-impact' journals.
- Shared pre-clinical data for the first molecule to incorporate our antibody drug conjugate linker technology.

- Generated the world's first bioengineered HFpEF miniature human heart models.
- Announced plans for a new strategic R&D centre and Alexion corporate headquarters in Kendall Square, Cambridge, MA, US.
- Continued the installation of primary laboratory equipment and commissioning of our new Discovery Centre (DISC) in Cambridge, UK.

# Performance indicators

By measuring both Phase II and Phase III pipeline progressions, we focus on both near-term and longer-term delivery. Phase II NME starts ensure the ongoing robustness and future stability of the pipeline (and reflect the outcome of nearer-term strategic investment decisions). Phase III investments measure assets that will deliver nearer-term value (and reflect the outcome of longer-term strategic investment decisions). Submissions and approvals metrics demonstrate the advancement of this innovation through filing and approval in four major markets (US, EU, China and Japan).

# NME Phase II starts/progressions

![img-3.jpeg](img-3.jpeg)

# NME and major LCM submissions

![img-4.jpeg](img-4.jpeg)

# NME and major LCM Phase III investment decisions

![img-5.jpeg](img-5.jpeg)

# NME and major LCM approvals

![img-6.jpeg](img-6.jpeg)

# Research & Development

In 2022, we continued to progress our science and our pipeline in a way that reflected our ongoing commitment to maintaining an ethical business culture.

# Our R&D resources

Our R&D organisation has more than 13,000 employees across our global sites. We have four strategic R&D centres: Cambridge, UK; Gaithersburg, MD, US; Gothenburg, Sweden; and Boston, MA, US, as well as seven other R&D centres and offices.

# Our R&D centres

Work continued on The Discovery Centre (DISC) in Cambridge, UK during 2022 to complete the installation of primary laboratory equipment and commissioning of the building to accommodate our 2,220 research scientists. The total projected cost remains at circa $1.4 billion (£1.1 billion).

In April, we announced plans to open a new site in Kendall Square, Cambridge, MA, US at the heart of the life sciences and innovation hub of the greater Boston area. The site will be a fourth strategic R&D centre for AstraZeneca, as well as a new US corporate headquarters for Alexion, our Rare Disease business. The site will bring together approximately 1,500 R&D, commercial and corporate colleagues and is scheduled for completion in 2026.

# Investing in R&D

In 2022, R&D expenditure was $9,762 million (2021: $9,736 million; 2020: $5,991 million), including Core R&D costs of $9,500 million (2021: $7,987 million; 2020: $5,872 million). In addition, we spent $2,051 million on acquiring product rights (such as in-licensing) (2021: $27,042 million; 2020: $1,454 million). We also invested $111 million on the implementation of our R&D restructuring strategy (2021: $223 million; 2020: $35 million). Allocations of spend by early- and late-stage development are shown in the chart to the left.

Investment in 2022 increased to support our late-stage assets across Oncology and BioPharmaceuticals, including eplontersen (in-licensed from Ionis in 2021) and Andexxa in CVRM, and Enhertu, camizestrant and ceralasertib in Oncology. Discovery investment increased to take advantage of new technologies, including cell therapy, and we also acquired Neogene with its expertise in this area. The Alexion portfolio continues to evolve with 2022 representing our first full year of investment. COVID-19 investments continue as we switch to new treatments to meet the challenges of new variants.

# Research & Development

![img-7.jpeg](img-7.jpeg)

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# Business Review
*continued*

● Science and Innovation

Research & Development *continued*

Our ambition is to transform the lives of patients with improved outcomes and a better quality of life by working towards more effective treatment and prevention, and ultimately, cures for some of the world's most complex diseases.

In 2022, we continued to progress our science, guided by our 5R framework (right target, right patient, right tissue, right safety, right commercial potential) and focusing on four key areas of transformative science.

Our R&D in 2022

Our R&D productivity, defined as progressing from candidate drug nomination to Phase III completion, was 19% in 2022 versus an industry average of 14%.

Our scientists published 783 manuscripts with 156 in 'high-impact' peer-reviewed journals, each with an impact factor exceeding 15 (Thomson Reuters five-year impact factor score). The ongoing high impact compared with 169 in 2021 continues to reflect the quality of, and drive to share, our science.

Enhancing our understanding of disease biology

Advancing our understanding of disease biology is helping uncover novel drivers for the diseases we aim to treat, prevent and in the future, cure. Selecting the right target remains the most important decision in drug discovery.

2022 developments included:

- The Functional Genomics Centre completed its first radiation/CRISPR screen, which aimed to identify potential sensitising genes or pathways, and was one of the largest functional genomics screens ever run using radiation.
- With BenevolentAI, adding four novel AI-generated targets for CKD and idiopathic pulmonary fibrosis to our drug discovery

portfolio. We also expanded the collaboration to look at systemic lupus erythematosus and heart failure.

- Collaborating with Rady Children's Institute for Genomic Medicine (RCIGM) to help accelerate BeginNGS, a tool designed to screen newborns for genetic diseases using rapid Whole Genome Sequencing.

Creating the next generation of therapeutics

We continue to design new ways of targeting the drivers of disease. The diversity of technologies applied in our early pipeline is exemplified by the increased number of new modalities entering clinical development, including ADCs, bispecific VHH antibodies, cell and gene therapies, oligonucleotides and T-cell engagers.

2022 developments included:

- An agreement with Cellular Biomedicine Group to evaluate an armoured GPC3 targeted CAR-T product in the clinic in solid tumours, and complementing our own cell therapy capabilities with Neogene's expertise in T-cell receptor therapies.

☐ For more information on Neogene, see Business Development on page 43.

- Published pre-clinical research in *Nature Cell Biology* showing human ventricular progenitor cells promote the formation of new heart tissue following a heart attack.

We aim to start clinical studies within the next two years.

- Collaborating with the Australian Regenerative Medicine Institute (ARMI) at Monash University to better understand how macrophages mediate regeneration and investigate whether macrophage-derived signals can be applied as new therapeutic modalities.
- Sharing pre-clinical data for AZD8205, a novel ADC targeting B7-H4, a protein overexpressed in a range of solid tumours. This is the first molecule incorporating AstraZeneca's proprietary ADC linker technology.

Better predicting clinical success of our candidate drug molecules

We are adopting a range of cutting-edge technologies that provide an environment in which human cells behave more like they would in the body, generating data that is more relevant to patients than previous methods.

2022 developments included:

- Developing 'miniature organs' in collaboration with NovoHeart to recreate the mechanical and electrical properties in a beating mini-heart. This year, we successfully generated the world's first bioengineered HFpEF miniature human heart models.
- New advances in mass spectrometry imaging, published this year in *Angewandte Chemie*, enable the imaging of biologics

and drug complexes that were previously too large to detect.

- Exploring the potential of computational pathology in oncology to enhance patient selection and enable more personalised treatments. For example, our novel Quantitative Continuous Scoring approach helped identify up to 30% more breast cancer patients suitable for treatment versus using conventional pathology, opening up a potential treatment option to more patients.

Pioneering new approaches to engagement in the clinic

In a typical year, we conduct more than 270 global clinical trials, involving more than 46,000 patients. Through greater use of digital solutions, digital health technologies and pioneering approaches, we aim to deliver the next wave of life-changing medicines.

2022 developments included:

- Collaborating with GRAIL on companion diagnostic tests to identify patients with high-risk, early-stage cancer who could benefit most from treatment.
- Developing a remote digital health solution that monitors patients for stomatitis, which is now live in six clinical trials.
- Using COMPex to inform exacerbation outcomes in clinical trials to better the patient experience and enable faster decision making. This is being used as

a primary endpoint for the first time in the Phase IIa Crescendo study in COPD.

- Accelerating identification and recruitment of patients into clinical trials through our collaboration with Tempus. We recruited 25% of US SERENA-6 clinical trial participants via this route.
- Leveraging the Patient Friction Coefficient to assess the burden of clinical trials on rare disease patients and their families, incorporating insights to improve our trial designs.

36 AstraZeneca Annual Report & Form 20-F Information 2022

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## Development pipeline overview

2022 was another exceptional year for our science, with our pipeline producing overwhelmingly positive news for patients. This included 72 regulatory events, either submissions or approvals for our medicines in major markets, including two NME first approvals.

![img-8.jpeg](img-8.jpeg)

In 2022, we continued to progress our science, guided by our 5R framework: right target, right patient, right tissue, right safety, right commercial potential.

This performance is backed by a healthy pipeline of high-potential medicines, with a total of 29 pipeline progression events, either NME Phase II starts or Phase III investment decisions, indicating our ability to deliver longer-term sustainable growth.

Our pipeline comprises 179 projects, of which 155 are in the clinical phase of development. We have 15 NME projects in pivotal trials or under regulatory review, compared with 16 at the end of 2021. Also in 2022, 20 NMEs

progressed to their next phase of development and 27 projects were discontinued: 12 for poorer than anticipated safety and efficacy results and 15 as a result of a strategic shift in the environment or portfolio prioritisation.

### Accelerating our pipeline

We are prioritising our investment in specific programmes, focusing on scientific innovation. As a result, this has led to receiving 12 Regulatory Designations for

Breakthrough Therapy, Priority Review or Fast Track for nine new medicines which offer the potential to address unmet medical need in certain diseases. We also secured Orphan Drug Designation for the development of two medicines to treat rare diseases.

For more information, see Therapy Area Review from page 18.

![img-9.jpeg](img-9.jpeg)

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# Business Review
*continued*

Science and Innovation

Bioethics

‘Bioethics’ means the ethical issues arising from the study and practice of biological and medical science, which we manage in line with our commitment to an ethical business culture. Our Global Standard on Bioethics sets out our key principles, which apply to all our scientific activities, including those conducted by third parties on our behalf.

For more information, see
www.astrazeneca.com/sustainability/resources.html.

![img-10.jpeg](img-10.jpeg)

“Being transparent about our business supports learning and development for our employees, suppliers and partners and is fundamental to meeting the expectations of patients, investors and broader society.”

Clinical trial transparency

We believe that transparency enhances the understanding of how our medicines work and benefits patients. We publish information about our clinical research, as well as the registration and results of all our interventional clinical trials and most non-interventional trials - regardless of whether the results are favourable - for all products. This includes completed trials for marketed medicines, drugs in development and drugs where development has been discontinued.

As of 31 December 2022, AstraZeneca had:

> Shared anonymised individual patient-level data from 228 unique studies.
> Responded to 313 requests from external researchers using our portal www.vivli.org and/or scientific collaborations, to request our clinical data and reports to support their research.
> Published 14 Anonymised Clinical Document Packages.
> Published 312 Trial Result Summaries in accessible language and translated these into 63 languages for all study sites on the industry-wide portal www.trialsummaries.com.

Research use of human biological samples and genomic information

We use human biological samples and genomic information for research into better understanding of diseases, improved diagnosis, and other healthcare improvements, as well as the research and development of new medicines. We are committed to minimising the use of human foetal tissue (hFT) through scientific advancements. Permission is granted only when no other scientifically reasonable alternative is available, or there is a regulatory requirement. There were two new hFT approvals in 2022. As of 31 December 2022, six projects using hFT had progressed and three projects are ongoing.

Animals in research

Animal studies remain a small, but necessary, part of developing new medicines and will continue to be until suitable technological alternatives become available. Animal studies are also required by some international regulators before medicines progress to human trials. Nonetheless we are committed to the 3Rs (Replacement, Reduction and Refinement of animals in research). Animals were used for in-house studies 100,803 times in 2022 (93,511 in 2021), and on our behalf in contract research studies 55,455 times (58,826 in 2021). In total, over 98% were rodents or fish.

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## Growth and Therapy Area Leadership

### Summary and performance indicators

We plan to meet our growth and profitability goals through innovation, commercial excellence and the creation of sustainable profitability.

### Our performance in 2022

- > Total Revenue, comprising Product Sales and Collaboration Revenue, increased by 19% (25% at CER) to $44,351 million.
- > In the US, Total Revenue increased by 47% to $17,920 million and in Europe by 9% (21% at CER) to $8,738 million.
- > Total Revenue in Emerging Markets decreased by 4% (increased by 1% at CER) to $11,745 million, with a decline in China of 4% (stable at CER) to $5,792 million.
- > Continued collaboration with payers to conclude outcomes- and value-based reimbursement models that improve patient outcomes and enable access to medicines.

- > Committed to high ethical standards: 147 employees and third parties were removed from their roles for breaches of sales and marketing regulations or codes.
- > Delivered 198 successful market launches.
- > Signed 23 major or strategically important business development transactions.

### Key Performance Indicators

Global Total Revenue by geography

|  | 2022 |  |  |  | 2021 |  |  |  | 2020 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Total Revenue $m | Actual growth % | CER growth % | Total Revenue $m | Actual growth % | CER growth % | Total Revenue $m | Actual growth % | CER growth % |
| Emerging Markets | 11,745 | (4) | 1 | 12,281 | 41 | 36 | 8,711 | 7 | 10 |
| US | 17,920 | 47 | 47 | 12,228 | 38 | 38 | 8,833 | 13 | 13 |
| Europe | 8,738 | 9 | 21 | 8,050 | 45 | 40 | 5,540 | 10 | 9 |
| Established Rest of World | 5,948 | 22 | 40 | 4,858 | 37 | 37 | 3,533 | 6 | 5 |
| Total | 44,351 | 19 | 25 | 37,417 | 41 | 38 | 26,617 | 9 | 10 |

### Sales and marketing

Our growth is delivered by our Commercial teams, which comprised 44,790 employees at the end of 2022. We have an active presence in some 85 countries and sold our products in approximately 130 countries in 2022. In most markets, we sell our medicines through wholly-owned local marketing companies. We also sell through distributors and local representative offices. We market our products largely to primary and specialty care physicians.

In 2022, Total Revenue grew by double-digits in the US and Established Rest of World while we saw high single-digit growth in Europe. Product Sales in Emerging Markets declined 4% (CER: growth of 1%), largely the result of the anticipated decline in growth in China. We delivered 14 blockbuster drugs during the year.

### Pricing and value of our medicines

Increasing demand for healthcare means increasing pressure on health system budgets. This includes downward pressure on pricing and reimbursement in many markets, heightened by a shift from primary to specialty care and rare disease medicines, which comprise a growing share of our portfolio. This pricing pressure, including from governments, means we are unable to pass on the full impact of cost increases brought about by heightened global rates of inflation prevalent in 2022.

The COVID-19 pandemic continues to impact healthcare delivery as providers and hospitals work to return to pre-pandemic conditions.

For more information on our COVID-19 response, see Vaccines & Immune Therapies from page 28.

Pricing for our medicines seeks to reflect the value they bring to patients, payers and society, and the significant investment required for targeted treatment options. In our discussions with national, regional and local stakeholders, we base our pricing policies on four principles: sustainability, value, access and flexibility.

Full details are given in our Sustainability Report on our website, www.astrazeneca.com/sustainability.

We also collaborate with payers to conclude innovative outcomes and value-based reimbursement models that improve patient outcomes and enable access to medicines across key therapeutic areas and geographic regions. We also offer a number of patient assistance programmes that help increase patients' access to medicines and/or healthcare, and reduce their out-of-pocket costs.

For more information, see Access to healthcare on page 49.

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# Business Review
continued

● Growth and Therapy Area Leadership

Our commercial regions

We strive to meet our growth and profitability goals through commercial excellence in each of our global regions.

![img-0.jpeg](img-0.jpeg)

"Pricing for our medicines seeks to reflect the value they bring to patients, payers and society, and the significant investment required for targeted treatment options."

US

As the twelfth-largest prescription-based pharmaceutical company in the US, we have a 3.4% market share of US pharmaceuticals by sales value. Total Revenue increased by 47% in 2022 to $17,920 million, driven by the growth of our brands across Oncology, Rare Disease and BioPharmaceuticals including Tagrisso, Calquence, Lynparza, Imfinzi, Enhertu, Farxiga and Breztri. Evusheld was introduced for immunocompromised patients to help prevent COVID-19.

In Rare Disease, sales of Soliris were impacted by successful conversion to Ultomiris, which was partially offset by Soliris growth in NMOSD. Ultomiris pro forma sales1 grew by 34% (42% at CER) to $1,965 million.

The US healthcare system is complex. Multiple payers and intermediaries exert pressure on patient access to branded medicines through regulatory rebates in government programmes and voluntary rebates paid to managed care organisations and pharmacy benefit managers for commercially insured patients. Significant pricing pressure is driven by payer consolidation, restrictive reimbursement policies and cost control tools, such as exclusionary formularies and price protection clauses. Many formularies employ 'generic first' strategies and/or require physicians to obtain prior approval for the use of a branded medicine where a generic alternative exists.

For prescriptions dispensed in the US in 2022, generics constituted 87.1% of the market by volume (2021: 86.3%). By value they constituted 15.1% ($97.5 billion) of the market ($644.8 billion).

Ongoing scrutiny of the US pharmaceutical industry, focused largely on affordability, continued and has been the basis of multiple policy proposals. A landmark healthcare law, the Inflation Reduction Act (IRA) of 2022 was passed to address affordability concerns.

However, we have a diversified product portfolio in the US providing a broad spectrum of treatments in many different therapy areas, allowing access for patients in need of our innovative medicines.

Europe

The total European pharmaceutical market was worth $213 billion in 2022. We are the tenth-largest prescription-based pharmaceutical company in Europe (see market definitions on page 220) with a 2.9% market share of pharmaceutical sales by value. Total Revenue was $8,738 million, up 9% at actual rate of exchange (21% at CER).

We continued to launch new medicines and saw sustained performance of innovative medicines.

BioPharmaceutical Total Revenue declined by 7% (grew 4% at CER). Forxiga revenue grew 60% (81% at CER) driven by new indications in HF and CKD. Fasenra revenue grew by 7% (20% at CER). Trixeo is now launched in more than 21 markets. Evusheld revenue reached $298 million.

Oncology Total Revenue grew by 9% (21% at CER), driven by strong performance of Tagrisso, Imfinzi and Lynparza. We also launched Calquence and Enhertu with strong results during the year.

Rare Disease Total Revenue declined by 3% (grew 9% at CER) to $1,428 million, driven by a fall in Soliris sales offset by conversion of sales to Ultomiris.

Established Rest of World (RoW)

In 2022, Established Rest of World Product Sales increased by 22% (40% at CER) to $5,846 million, with sales in Japan up 17% (39% at CER) to $4,007 million. More than $1 billion in sales came from Vaxzevria and Evusheld. In Rare Disease, pro forma sales1 of Soliris increased by 11% (24% at CER) to $476 million with a continued expansion of indications in new markets, and sales of Ultomiris grew by 6% (26% at CER) to $310 million with rapid conversion from Soliris in new launch markets.

Japan

The pharmaceutical market in Japan was worth $63 billion in 2022, positioning AstraZeneca as the third-largest prescription-based pharmaceutical manufacturer with a 4.1% value market share of pharmaceutical sales by value. The government conducted a regular price control measurement in April 2022 in order to address continued pressure on healthcare spend.

Total Revenue grew by 17% (39% at CER) to $4,110 million, despite continued COVID-19 impacts, price revisions and ongoing generic erosion for Symbicort. The strong performance was driven by new medicines including Tagrisso, Imfinzi, Lynparza, Fasenra, Breztri, Lokelma and Forxiga. New launches of Tezspire, Ondexxya and Evusheld also contributed to the results. Additionally, we launched new indications of Tagrisso and Lynparza adjuvant treatment, Imfinzi

gastrointestinal cancer treatment, and Calquence 1st-line chronic lymphocytic leukemia treatment.

Canada

Total Revenue in Canada increased by 51% at actual rate of exchange (57% at CER) in 2022. This was primarily driven by strong, sustained growth of Tagrisso, Lynparza, Forxiga, Fasenra and Evusheld. Declines for Onglyza, Crestor and Brilinta (linked to LoE), combined with pricing pressures, partially offset this growth.

Australia and New Zealand

Our Total Revenue in Australia and New Zealand increased by 8% at actual rate of exchange (18% at CER) in 2022. This was primarily due to growth in Oncology, Respiratory & Immunology and Forxiga/Xigduo. In addition, we had sales of Evusheld in both countries to support their governments' response to COVID-19.

1 Growth rates for medicines have been calculated on a pro forma basis compared with the corresponding period in the prior year.

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### Emerging Markets

With Total Revenue of $11,745 million (2021: $12,281 million), AstraZeneca was the largest multinational pharmaceutical company for Innovative Branded Products, as measured by prescription sales, and the sixth fastest-growing top 10 multinational pharmaceutical company in Emerging Markets in 2022. Growth drivers included new medicines across our entire portfolio. We are broadening access through channel expansion and external partnerships.

### Invasion of Ukraine

We were shocked following the Russian invasion of Ukraine in February 2022 and, since then, have provided all practical support possible to ensure the safety, health and wellbeing of our employees. We have also committed over $10 million in humanitarian support. As a healthcare business, we are doing everything possible to ensure medical supply chains continue to operate and that patients in both countries are able to access our medicines, while complying with sanctions imposed on Russia.

### China

In China, AstraZeneca is the largest pharmaceutical company in the hospital sector, as measured by sales value. In 2022, Total Revenue decreased by 4% at actual rate of exchange (stable at CER) to $5,792 million (2021: $6,011 million).

*Tagrisso*, *Lynparza*, *Zoladex*, *Breztri*, *Bevespi* and *Linzess* were renewed and *Orpathys* was listed in the National Reimbursed Drug List (NRDL).

Since the implementation of VBP, several AstraZeneca medicines have been impacted. In the most recent VBP implementation, *Bricanyl neb*, *Losec IV* and *Betaloc ZOK* were included. We expect additional AstraZeneca medicines to be included in the next VBP cycle with an estimated implementation during 2023.

Targeted COVID-19 lockdown restrictions have continued to impact growth rates and patient demand for *Pulmicort*, *Forxiga* and several Oncology medicines.

Following the establishment of a Rare Disease business, *Soliris* became the first Rare Disease product available in China in the final quarter of 2022.

### Healthcare in low- and middle-income countries

AstraZeneca is committed to equitable access to healthcare. By working in collaboration, we remove barriers and support the development and delivery of healthcare, particularly in low- and middle-income countries. We also adapt our access programmes to suit local health systems and communities, contributing to health system capacity and resilience through training, education, prevention and diagnosis.

For more information, see Access to healthcare from page 49.

### Responsible sales and marketing

As outlined in Code of Ethics on page 51, we are committed to high ethical standards. We have dedicated compliance professionals who advise on and monitor adherence to our Code and policies, and work with local staff to ensure we meet our ethical standards.

Nominated signatories review product promotional materials and activities to ensure compliance with applicable regulations and codes of practice, and that information is accurate and balanced. Group Internal Audit conducts audits of selected marketing companies.

In 2022, we identified 10 confirmed external breaches across our commercial business (2021: 13). There were 2,872 instances (instances can involve multiple people) of employee and third-party non-compliance with our policies (2021: 2,477). A total of 147 employees and third parties were removed from their role as a result of a breach (2021: 105) and 3,326 received warnings (2021: 2,084). We brief our Audit Committee quarterly on breach statistics, serious incidents and corresponding remediation.

Breaches primarily consist of low-impact incidents. We continue to foster a speak-up culture, strong first-line oversight (and related reporting) as well as targeted second-line monitoring to identify problems early and use learnings to improve our programme.

### Anti-bribery and anti-corruption

We do not tolerate bribery or any other form of corruption. Preventing bribery and corruption are a focus of our third-party risk management and due diligence processes, as well as our monitoring and audit programmes. We reinforce our commitment to ethical business conduct through our annual Code of Ethics training which is delivered to all employees and relevant third parties.

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41

# Business Review
*continued*

Growth and Therapy Area Leadership

Operations

Our manufacturing and supply function continued to support our growth and pipeline by delivering successful launches, maintaining excellent product supply and advancing digital and new technology capabilities.

Ensuring quality and compliance

As outlined in our Code of Ethics on page 51, we are committed to high ethical standards. As members of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), the European Federation of Pharmaceutical Industries and Associations (EFPIA) and the Pharmaceutical Research and Manufacturers of America (PhRMA), we adhere to their codes.

Managing our supply chain

Throughout 2022, we saw further external supply volatility, driven by the COVID-19 pandemic, the impact of geopolitical tensions, and rising global inflation. We continued to activate our business continuity plans to maintain supply of medicines to patients and mitigate against any risk of disruption along our end-to-end supply chain. We also continued our global efforts to increase the availability of dual and multiple sources of raw materials, maintaining adequate stock levels, reducing end-to-end supply lead times, and mitigating the effect of increasing price fluctuations across raw materials, services and utilities.

Supply chain finance

AstraZeneca has a supply chain finance programme to support the cash flow of our external supply base. The programme is managed by Taulia Inc. (with funding provided by some of the Group's relationship banks) and provides suppliers with visibility of invoices and payment dates via a dedicated platform. Suppliers can access this platform free of charge and have flexibility to select individual invoices for early payment. On election of an early payment, a charge is incurred by the supplier based on the period of acceleration, central bank interest rate and the rate agreed between Taulia Inc. and each supplier. All early payments are processed by the funders and AstraZeneca settles the original invoice amount with the funders at maturity of the original invoice due date.

The programme operates in the US, UK, Sweden and Germany. As at 31 December 2022, the programme had 420 suppliers enrolled and a potential early payment balance of $67 million. We have a separate programme in China with 25 suppliers enrolled and a potential early payment balance of $1.3 million.

In 2022, we continued to deliver against our Operations 2025 plan. The plan focuses on efficiently scaling our capabilities to support the growth of our portfolio, leveraging the benefits of new manufacturing technology and digital innovation, and taking proactive steps to deliver our science-based emissions reduction targets in our global operations.

Responsible supply chain

All employees and contractors who source goods and services on behalf of AstraZeneca are expected to follow our Global Standard for Procuring Goods and Services. Through assessments and improvement programmes, we monitor our suppliers' compliance with our Global Standard on Expectations of Third Parties and Code of Ethics, which are published on our website. In 2022, we conducted 42 audits (2021: 37) on high-risk commercial suppliers (external manufacturing partners) to ensure appropriate practices and controls. Of these, 33% fully met our expectations while 55% had improvement plans for minor instances of non-compliance. There were three audits that indicated a high risk to AstraZeneca and specific actions have been taken to mitigate the supply and/or reputational risks from these engagements.

Through our Positive Sourcing Programme, we promote ethical behaviour among our suppliers, aiming to achieve 100% ethical spend and ensuring sustainability is embedded throughout our procurement processes. Our procurement sustainability approach supports our suppliers' progress on sustainability, enables us to innovate together on challenges and promotes supplier diversity. Our Supplier Diversity Programme supports small and diverse businesses to be more sustainable, with the ambition to expand the programme to 10 countries outside the US by 2025. In 2022, our programme was launched in Sweden and is now also active in Brazil, South Africa, UK, Australia, New Zealand and Poland.

Global manufacturing capability

Our principal tablet and capsule formulation sites are in the UK, Sweden, China, Puerto Rico and the US, with local/regional supply sites in Russia, Japan, Indonesia, Egypt, France, India, Mexico and Brazil. We also have major formulation sites for the global supply of parenteral and/or inhalation products in the US, Sweden, France, Australia and the UK. Most of the manufacture of APIs is delivered through the efficient use of external sourcing that is complemented by internal capability in Sweden. For biologics, our principal commercial manufacturing facilities are in the US, Sweden, UK and the Netherlands.

In 2022, we delivered 198 successful market launches. We continue to progress our new technology investments, and scaled five digital solutions to our eight largest manufacturing sites. We also achieved a 6.2% reduction in our site operations energy consumption compared to 2021.

Our network contains capabilities in process development, drug substance, drug product manufacturing and distribution, including global supply of mAbs and influenza vaccines.

In June 2022, we announced our intention to build an inhalation manufacturing site in Qingdao, China to support the growth of our respiratory portfolio in China. This announcement is based on a Memorandum of Understanding (MOU), and at this stage does not represent a legally binding contract. In September 2022, we announced that we will cease packing and distribution activities at our site in Reims, France by the end of 2024. This is driven by a reduction in demand volumes following the divestment of several products that the site supports.

In November 2022, we announced the sale of our West Chester site in Ohio, US, to National Resilience, Inc. This will enable the continued supply of AstraZeneca medicines produced at the site to patients, as well as continued employment for more than 500 people working at the site. The sale completed in January 2023, with a phased transition of services.

Alexion has internal manufacturing facilities and also works with third-party contract manufacturers to supply clinical and commercial quantities of our products and product candidates. Our internal manufacturing capability includes a fill/finish facility at our Athlone site and a packaging and labelling facility at our Dublin site. Our drug substance manufacturing capabilities are shared between Athlone and Dublin. We have a large-scale drug substance facility in Dublin and, during 2022, we received regulatory approval for our new small-scale drug substance facility located in Athlone.

At the end of 2022, we employed 15,035 people at 28 Operations sites in 16 countries.

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## IT and IS resources

We continue to harness the power of platforms, data and AI to accelerate the pace of change, as well as personalise healthcare and drive better patient outcomes.

Technology is opening up possibilities in R&D and is empowering patients, including the use of augmented and virtual reality, or extended reality (XR), to simulate what patients will experience during a clinical trial or treatment. We are also using XR to train operators on complex manufacturing processes, educate our salesforce and conduct business in a more sustainable way. The QR code on this page shows how we are already using XR to help patients administer their medicines. We have established an internal centre of excellence to ensure we remain at the forefront of these advances.

As outlined in the Audit Committee Report from page 96, cybersecurity continued to be a priority in 2022 and was the subject of a deep dive session with the Chief Digital Officer and Chief Information Officer and her team. Additionally, she has met with the Senior Executive Team, the Board and business

leaders in 2022 to share aspects of 'being digital', with cybersecurity underpinning all aspects of this.

Our cybersecurity programme is focused on the following key areas:

- Ensuring our value streams, critical business processes and IT infrastructure can be accessed any time, any place, by our workforce.
- Protecting against and detecting threats to our global ecosystem.
- Rapidly and decisively responding and recovering from any cyber events.

Scan the QR code to learn more about Lokelma

## Business development

Our business development organisation works globally to partner with academia, governments, pharmaceutical and biotech companies, and others to access the best science and push scientific boundaries.

We assess opportunities to make strategic, value-enhancing additions to our portfolio and pipeline in our key therapy areas through in-licensing, collaborations and acquisitions. We also divest medicines, typically outside our core therapy areas, which enables us to redirect resources to our main areas of focus while ensuring continued or expanded patient access.

We currently have approximately 1,000 ongoing collaborations worldwide and have completed more than 80 major or strategically important business development transactions in the past three years, including 23 in 2022, some of which are summarised below.

### In 2022, new deals included:

- Acquisition of CinCor Pharma, Inc., a clinical-stage company, focused on developing treatments for resistant and uncontrolled hypertension as well as CKD. AstraZeneca will pay $26 per share at closing, plus $10 per share in a contingency payment payable upon specific regulatory events, and, if achieved, represents a total value of approximately $1.8 billion. The acquisition is expected to close in the first quarter of 2023.
- Acquisition of Neogene Therapeutics, Inc. for an initial payment of $200 million and up to $120 million in additional contingent milestone-based and non-contingent consideration. Neogene is a clinical-stage company developing the next-generation T-cell receptor therapies, bringing cell therapies to patients with solid tumours.
- Acquisition of TeneoTwo and its Phase I CD19/CD3 T-cell engager, TNB-486, currently under evaluation in relapsed and refractory B-cell non-Hodgkin lymphoma. AstraZeneca acquired all outstanding equity of TeneoTwo in exchange for an upfront payment of $100 million. Under the terms of the agreement, AstraZeneca will make additional contingent R&D-related

milestone payments of up to $805 million and additional contingent commercial-related milestone payments of up to $360 million to TeneoTwo's equity holders.

- Alexion entered into an exclusive worldwide licensing agreement with Neurimmune AG for NI006, an investigational human mAb currently in Phase Ib development for the treatment of transthyretin amyloid cardiomyopathy (ATTR-CM). Neurimmune received an upfront payment of $30 million and is eligible to receive additional contingency payments of up to $730 million and low-to-mid teen royalties on net sales.
- A worldwide licensing transaction with RQ Biotechnology Limited for a portfolio of pre-clinical mAbs targeted against SARS-CoV2, the virus that causes COVID-19, contributed to bolstering our Vaccines & Immune Therapies pipeline.
- Strategic research collaboration with gene sequencing company Illumina to combine strengths in genomic analysis techniques to improve efficiency in drug target discovery.

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# Business Review
continued

## People and Sustainability

### Summary and performance indicators

Our success depends on recruiting, retaining and developing talented people while operating in a responsible and sustainable way.

### Our performance in 2022

- > Further integrated Alexion employees through the consolidation of 11 sites.
- > Hired 22,500 employees (7,700 internal and 14,800 external). 4,720 of these hires were a direct result of our employee referral scheme.
- > 3,994 attendees across our development experiences (up 44% since 2021).
- > 49.5% of our senior roles are filled by women.
- > Expanded the Partnership for Health System Sustainability and Resilience and progressed in-depth health system research in 13 Phase 2 countries.

- > Over 10.5 million trees planted in Australia, Indonesia, Ghana, the US and the UK since 2020 through AZ Forest.
- > Screened more than 750 material suppliers with a critical role in patient supply to understand climate vulnerability in the upstream value chain for 10 selected medicines.
- > Reached 44.6 million people through our flagship Access to Healthcare programmes.

### Performance indicators

People - Contribution to the enterprise

This priority is built on three pillars: performing as an enterprise team, commitment to lifelong learning and development, and being champions of inclusion and diversity.

For more information, see People from page 45.

### Performing as an enterprise team1

77%

| 2022 | 77% |
| --- | --- |
| 2021 | 78% |
| 2020 | 81% |

1 Source: November Pulse full census survey for each year, based on the percentage of favourable responses to the statement 'Based on my experience, I believe there is effective collaboration between teams across AstraZeneca'.

### Building a culture of lifelong learning and development2

89%

| 2022 | 89% |
| --- | --- |
| 2021 | 88% |
| 2020 | 90% |

2 Source: November Pulse full census survey for each year, based on the percentage of favourable responses to the statement 'In the last 12 months, I have improved my existing skills, or learned new skills, or had a development opportunity'.

### Being champions of inclusion and diversity3

49.5%

| 2022 | 49.5% |
| --- | --- |
| 2021 | 48.1% |
| 2020 | 46.9% |

3 Female representation in Senior Middle Management roles and above (F+, the most senior 13% of the employee population).

### Performance indicators

Sustainability - Contribution to society

We are tackling some of the biggest issues of our time, from climate change to access to healthcare and disease prevention.

For more information, see Sustainability from page 48.

### Ambition Zero Carbon (progress) (Scope 1 and 2)1

-59.3%

| 2022 | -59.3% |
| --- | --- |
| 2021 | -58.6% |
| 2020 | -58.0% |

1 Reduction of Scope 1 and 2 GHG emissions from 2015 baseline year. The data coverage includes all sites owned or controlled by AstraZeneca.

### % Speak up culture2

83%

| 2022 | 83% |
| --- | --- |
| 2021 | 83% |
| 2020 | 84% |

2 Based on internal survey which asked all AstraZeneca employees if they felt comfortable to speak up/speak my mind and express my opinion at work.

### People reached by our Access to Healthcare programmes3

44.6m

| 2022 | 44.6m |
| --- | --- |
| 2021 | 31.7m |
| 2020 | 25.0m |

3 Cumulative data including current and historical programmes: Healthy Heart Africa, Youth Health Programme, and Healthy Lung Programmes.

44 AstraZeneca Annual Report & Form 20-F Information 2022

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# People

We grow and prosper by recruiting, retaining and developing talented people. We do that by being a great place to work that encourages and rewards innovation, entrepreneurship and high performance.

![img-1.jpeg](img-1.jpeg)

"We're empowering our people to reach their full potential in a dynamic, inclusive and high-performing working environment."

# Performing as an enterprise team

# Building diverse talent and critical capabilities

In 2022, we continued to build critical capabilities needed to achieve our ambitions through external and internal hiring. We received over 793,000 job applications and hired 22,500 employees (7,700 internal and 14,800 external). Of these, 4,720 hires were a direct result of our employee referral scheme. Our early talent programmes continued to provide development opportunities to employees starting out in their careers and enabled us to build future leadership capabilities. We hired 300 employees into our apprentice, graduate and MBA programmes. An optimal level of employee turnover ensures we retain talent while continuing to bring in fresh and innovative ideas. Voluntary employee turnover decreased to 11% (2021: 14%). Encouraging internal development is one way we retain key talent, with 9% of employees receiving a promotion during 2022.

In 2022, we successfully integrated over 4,000 Alexion employees into AstraZeneca across the newly formed Rare Disease Therapy Area and AstraZeneca functions such as HR and IT. This included:

- 11 sites consolidated and employees co-located through expansion of the New Haven site, creation of the Barcelona, Spain hub and announcement of the new Boston, MA, US site.
- Over 30 R&D bridges established to consolidate Alexion and AstraZeneca workstreams, including AI & Data Analytics, Gene Therapy, Protein Engineering and Precision Medicine.
- Colleague Connexion Buddy Programme to build relationships between Alexion and AstraZeneca employees: approximately 2,350 employees (1,500 Alexion, 850 AstraZeneca) have joined since the programme launched.

In 2023, we will continue this integration through the consolidation of a further eight sites and wider policy alignment.

# Creating a culture of high performance

Since removing performance ratings in 2021, our focus has shifted to the coaching, development and contribution of our employees. To support managers in developing their teams, we conducted 555 performance development workshops for 16,500 participants, with 8,000 line managers attending at least one workshop. The success of our approach to performance is reflected in the completion rate of end-of-year insights. In our latest performance development round, 95.5% of employees and 96.5% of managers completed year-end insights.

Providing continuous recognition is a crucial aspect of our performance development approach. In 2022, 269,000 rewards were given to 68% of employees through our recognition platform. Of these awards, 20% were cross-functional, demonstrating the cohesive and collaborative nature of our organisation.

# Listening to our workforce

Listening to our workforce is important in ensuring AstraZeneca continues to be a great place to work and we encourage employees to speak their minds. In 2022, employees provided their opinions through various feedback mechanisms, including onboarding surveys, exit interviews and our global employee engagement survey. The results of our engagement survey are shared with the Board of Directors, Senior Executive Team, line managers and the wider workforce to ensure full transparency.

# Key highlights:

- 92% participation in global engagement survey.
- 89% of employees stated they believe strongly in AstraZeneca's future direction and key priorities.
- 89% of employees stated they had at least one development discussion with their manager.
- In exit interviews, more than 90% of employees who left said they would consider working at AstraZeneca again.
- We received an average rating of 4.6 out of five from successful hires in our Candidate Experience survey.

# Building a culture of lifelong learning and development

Evolving the capabilities of our employees remains critical to achieving our ambitions. We are committed to sustaining a culture of lifelong learning and development by encouraging employees to take ownership of their development through innovative experiences.

# Key 2022 highlights demonstrating our progress:

- Invested $37.7 million in the upskilling of our employees, average spend of $482 per employee.
- 2,348,892 total learning hours, average of 20.6 hours per employee.
- 64% of employees accessed our global learning platform.
- 3,994 attendees across our development experiences (up 44% since 2021).
- Building diverse future leaders; 67% of our programme participants are women.
- 89% of employees believe they have improved their existing skills, learned new skills or had a development opportunity.

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# Business Review
*continued*

# People and Sustainability

# People *continued*

The positive impact of our learning culture is evident both internally and externally. Internally, it has contributed to improved retention, increased promotion rates and more accurate succession planning. Of our 2021 development experience attendees, 27% were identified as succession candidates for at least one position. The resignation rate for employees who went through a development programme is 9.2%, compared to 11.6% for AstraZeneca overall1. In addition, attendees of our acceleration-focused programmes have a higher promotion rate at 34%, compared to 14% for an equivalent population who had not participated2. Externally, our Talent and Development function received a number of external awards during 2022, which recognised us as a high-performing learning organisation.

# Champions of inclusion and diversity

Our global commitment to inclusion and diversity (I&D) is woven into everything we do and is reflected in our Values and the behaviours that underpin them.

For more information, see our website, www.astrazeneca.com/sustainability/ethics-and-transparency/inclusion-and-diversity.html.

# Our commitments

Women comprise 52.9% (approximately 43,900) of our global workforce. There are five women on our Board (38% of the total) and, following the resignation of Katerina Ageborg in January 2023, four of 11 SET members are women (36% of the total). The representation of women in senior middle management positions increased to 49.5% in 2022, on track to reach our 2025 target of gender equality. In the 2021 FTSE Women Leader review published in 2022, we were named as the highest-ranking pharmaceutical company in the FTSE100 for representation of women on the combined executive committee and their direct reports. We also retained our position as one of 418 companies on the Bloomberg Gender-Equality Index 2023, which recognises companies committed to transparency in gender reporting and advancing women's equality.

Our employees come from 177 countries. In 2022, 17.7% of SET members or their direct reports are from Emerging Markets and Japan (2021: 18.4%) and we are on track to reach our 20% target by 2025. Our Global Inclusion and Diversity Council is chaired by our CEO and comprises senior and rising leaders who are representative of our global workforce. Our Board of Directors and the SET conduct biannual and quarterly reviews, respectively, of our workforce composition, covering gender, ethnicity and age representation. In the US, where we have more comprehensive

data available, 35.7% of our workforce identify as an ethnic minority (2021: 32.9%). In 2022, we rolled out pay equity training to all line managers of US-based employees to ensure equitable reward and compensation.

We are committed to hiring and promoting talent ethically and in compliance with applicable laws. Our Code of Ethics and its supporting Standards are designed to help protect against unlawful discrimination on any grounds, including disability. The Code covers recruitment and selection, performance management, career development and promotion, transfer, training (including, if needed, for people who have become disabled), and reward. AstraZeneca embraces the cognitive differences of neurodivergent employees and supports employees with both seen and unseen disabilities in line with their country-specific laws and regulations. Where risk assessments can be performed, we will consider accommodating adjustments to the working environment that support an inclusive and safe workplace. Our Global Standard for Inclusion and Diversity sets out how we foster an inclusive and diverse workforce where everyone feels valued and respected because of their individual abilities and perspectives.

For more information on our Standards and Global Policy framework, see our website, www.astrazeneca.com/sustainability.

In 2022, our I&D efforts earned recognition externally. We were featured in:

- Bloomberg Gender Equality Index 2023
- Forbes World's Best Employers 2023
- Financial Times, Diversity Leaders 2023
- HRC Corporate Equality Index, 2022 Best Places to Work for LGBTQ Equality (US)
- Diversity Inc. Top 50 Companies for Diversity (US).

# Human rights

Our Human Rights policy supports the basic rights of our employees, such as the right to health, freedom from slavery and the right to privacy. Our Code of Ethics and Human Rights Statement commit us to respecting and promoting international human rights, not only in our own operations, but also in our wider spheres of influence, such as our third-party providers. To that end, we integrate human rights considerations into our processes and practices. We are also committed to ensuring that there is no modern slavery or human trafficking in our supply chains, or any part of our business. We provide assurance annually to the Audit Committee and our full statement required under section 54 of the UK Modern Slavery Act 2015 and section II (14) of the Australian Modern Slavery Act 2018, which is available on our website, www.astrazeneca.com.

# Employee relations

Our Employee Relations function takes a global approach to employment principles and standards, local laws and good practice. Our ambition is to build a positive and safe working environment for employees through global policies and processes. To achieve this, our Employee Relations function works in partnership with Legal, Compliance, HR and Employee Representative groups, such as the European Consultation Committee, works councils, and unions. According to our internal Human Rights survey carried out in 2022, 45% of our countries have a relationship with trade unions. Of those countries that don't have a relationship with trade unions, 95% of them have established arrangements to engage similarly with their workforce.

# Workforce safety and health

We are committed to providing a safe and healthy working environment for our employees and partners. Our Global Safety, Health and Environment (SHE) Standard describes our commitment to, management of, and accountability for SHE.

For more information on this standard, and our Code of Ethics, see our website, www.astrazeneca.com/sustainability/resources.html.

We set and monitor our safety and health targets to support our workforce and aim to achieve the highest performance standards. In 2022, we reduced the vehicle collision rate by 49% and the work-related injury rate by 72% from the 2015 baseline. Sadly, an AstraZeneca driver was involved in a vehicle accident that resulted in fatal injuries to a member of the public in the US in December 2021 (the investigation finalised in early 2022).

1 Includes employees who have been through a development experience from 2020-2022.

2 Includes employees who have been through a development experience in 2020 and then received a development opportunity (promotion, talent assignment, assignment) during 2021/2022.

46 AstraZeneca Annual Report & Form 20-F Information 2022

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# Our global business1

# Employees by reporting region

![img-2.jpeg](img-2.jpeg)

83,500
employees

# Co-located around four
global R&D centres

1. Cambridge, UK
4,400
2. Boston, MA, US
1,000
3. Gaithersburg, MD, US
4,087
4. Gothenburg, Sweden
2,800

# By geographical area

![img-3.jpeg](img-3.jpeg)

1. US
16,500
20%

4. Canada
1,200
1%

7. Other Europe
11,400
14%

10. China
16,500
20%

2. UK
10,700
13%

5. Central and
South America
4,000
5%

8. Russia
2,000
2%

11. Japan
3,500
4%

3. Sweden
7,100
8%

6. Middle East
and Africa
2,400
3%

9. Other Asia
Pacific
7,200
9%

12. Australia and
New Zealand
1,000
1%

1 All numbers as at 31 December 2022.

![img-4.jpeg](img-4.jpeg)

"Our employees are based in 80 countries and
represent 132 nationalities."

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# Business Review
*continued*

# People and Sustainability

# Sustainability

iv

Sustainability at AstraZeneca means harnessing the power of science and innovation, and our global reach to build a healthy future for people, society, and the planet.

For more information, see our Sustainability Report on www.astrazeneca.com/sustainability/resources.html.

![img-5.jpeg](img-5.jpeg)

"Our future depends on healthy people, a healthy society and a healthy planet. We believe that these elements are interconnected, and that together we must build a sustainable future."

# Overview

We seek to create value beyond the impact of our medicines by embedding sustainability into everything we do - from the lab to the patient - and by supporting health system resilience to make sustainable healthcare available to all.

During 2022, we were recognised for our efforts across all our sustainability priorities, including:

- Access to Medicine Index - third overall out of 20 pharmaceutical companies
- Bloomberg Gender-Equality Index, for the fifth consecutive year
- CDP Double A List for Climate and Water Security, for the seventh consecutive year.
- Dow Jones Sustainability Index - World and Europe constituent
- FTSE4Good Index Series constituent
- Listed in Financial Times European Climate Leaders.

# Our approach to sustainability

Our ambition to push the boundaries of science to deliver life-changing medicines is underpinned by our commitment to contribute sustainably to people, society and the planet. As a global business, we are playing our part by operating ethically and responsibly, and in helping tackle the biggest challenges of our time, including climate change, biodiversity loss and global health equity. We believe these challenges are interdependent and will require collaboration to be successfully addressed, implementing a variety of approaches across a network of relationships. By working together to find science-based solutions, we believe we can drive real change and build a better future.

# Governance

Our sustainability strategy is developed by the SET, which reviews our internal sustainability scorecard quarterly, and is approved by the Board. Our Board Sustainability Committee monitors the execution of the sustainability strategy, overseeing the communication of our activities with stakeholders, and providing input to the Board and other Board Committees on sustainability matters as required.

For more information, see Board Sustainability Committee Report on page 95.

# Benchmarking and assurance

We contribute to key global environmental, social and governance (ESG) performance evaluations, recognising the value of independent third-party assessment and insights. Our performance is also assessed independently based on the information and data we make publicly available. Bureau Veritas has provided limited independent assurance for the sustainability information contained within this Annual Report and Form 20-F. Assurance is in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised) and ISAE 3410 Assurance Engagements on Greenhouse Gas (GHG) Statements.

For more information, see Sustainability supplementary information on page 218 and the letter of assurance available in the Annual Sustainability Report section on www.astrazeneca.com/sustainability/resources.html.

# Sustainability strategy

We assess the relevance of our material focus areas through continuous dialogue with our stakeholders and horizon-scanning for emerging topics. Our existing nine focus areas remained a priority in 2022, grouped under three interconnected strategic priority pillars:

| Access to healthcare | Environmental protection | Ethics and transparency |
| --- | --- | --- |
| Equitable access | Ambition Zero Carbon | Ethical business culture |
| Affordability and pricing | Product sustainability | Inclusion and diversity |
| Health system resilience | Natural resources | Workforce safety and health |

48 AstraZeneca Annual Report & Form 20-F Information 2022

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## Access to healthcare

We want to transform healthcare to secure a future where all people have access to affordable, sustainable, and innovative healthcare. This is critical right across the patient care pathway - from prevention, early detection and diagnosis to the effective treatment of disease. We are working to remove barriers, deliver innovative medicines and strengthen healthcare infrastructure and resilience through global and local partnerships.

### Achievements in 2022

- > More than 10,600 healthcare workers trained via Healthy Heart Africa
- > More than 44.6 million people reached through Access to Healthcare programmes
- > Healthy Heart Africa conducted more than 32 million screenings for elevated blood pressure
- > Young Health Programme reached more than 9 million young people through prevention and education programmes in more than 39 countries
- > More than 12.8 million people reached through our patient access programmes, which enables sustainable access to AstraZeneca medicines.

### Equitable access

Your health should not be determined by who you are, where you live or where you were born. We are working to remove barriers to healthcare and give everyone the chance to be as healthy as possible.

### Diversity in clinical trials

We are committed to designing clinical programmes with equity at the forefront. Our approach includes increasing the diversity of clinical trial participants so that trials better reflect the patients who may use our medicines, which ensures we have a robust and reliable body of evidence.

☐ For more information, see Clinical trial transparency on page 38.

### Rare diseases

There are more than 7,000 known rare diseases in the world yet only 5% of them have an approved treatment option. We believe people with rare diseases deserve the same attention and investment into finding therapies as anyone else. We help people access medicines through our patient support and expanded access programmes, and we are expanding the geographies where our medicines are available.

The Alexion Charitable Foundation (ACF) seeks to cultivate a sense of belonging, particularly for those affected by a rare disease. ACF provides philanthropic funding through two primary channels, its signature RARE BELONGING® suite of funding priorities and through Local Needs Grants.

☐ For more information, see Rare Disease from page 30.

## COVID-19 vaccine

During 2022, together with our global partners, we supplied approximately 0.5 billion vaccine doses to more than 80 countries. Of these, approximately 60% went to low- and middle-income countries (LMICs), and more than 300 million were delivered to 50 countries through the COVAX Facility. In 2022, analysis published by health analytics firm Airfinity showed that the AstraZeneca COVID-19 vaccine helped to save over six million lives during the period 8 December 2020 to 8 December 2021.

☐ For more information, see Vaccines & Immune Therapies from page 28.

### Improving access to digital solutions

In 2022, we joined the World Economic Forum's EDISON Alliance's 1 Billion Lives Challenge to improve access to innovative and scalable digital health solutions by 2025, with a focus on underserved communities. Our ambition is to screen five million patients for lung cancer using AI-based technology, in partnership with Qure.ai.

### Affordability and pricing

We are committed to addressing barriers to access and affordability. Industry, payers and policymakers need to work together to identify solutions. Through collaborations and stakeholder coalitions we are working to ensure essential and innovative medicines become more widely available.

☐ For more information, see Pricing and value of our medicines on page 39.

### Health system resilience

Sustainable healthcare for all requires investment in strengthening health systems, to deliver an infrastructure designed to be responsive to the needs of the population it serves. Each of our Access to healthcare focus areas contributes to health system resilience and we are investing in groundbreaking global and local collaborations, company initiatives and fast-tracked innovation to give access to, and improve the quality of, healthcare for more people.

### Partnership for Health System Sustainability and Resilience (PHSSR)

Our collaboration with the London School of Economics and the World Economic Forum continued its work to strengthen global health systems, now active in over 30 countries worldwide. Joined by other global partners Philips, KPMG, the World Health Organization Foundation and the Center for Asia-Pacific Resilience and Innovation, the PHSSR continues to expand and act as a driver for policy improvements in the countries where it is active. During 2022, the partnership's in-depth health system research progressed in 13 Phase 2 countries with main findings presented at the Global PHSSR Summit in

November. It covered key themes across workforce and health service delivery, finance and governance, and the role of technology in strengthening health systems.

### Healthy Heart Africa programme

Our Healthy Heart Africa programme is committed to reducing hypertension and the burden of cardiovascular disease, aiming to reach 10 million people with elevated blood pressure across Africa by 2025. We work with local and global partners to raise awareness and offer training, screening and reduced cost treatment, where applicable. By the end of 2022, the programme had conducted over 32 million blood pressure screenings and trained over 10,600 healthcare workers since launch in 2014. In 2022, the programme expanded to Nigeria and Zanzibar and was identified as a Best Practice in the 2022 Access to Medicine Index. At the end of 2022, it was agreed to expand to 10 new countries, starting in 2023.

### Young Health Programme

Since 2010, the AstraZeneca Young Health Programme has helped young people aged 10 to 24 to make informed choices about their health, to counter the prevalence of non-communicable diseases, as well as mental health conditions. In collaboration with UNICEF and Plan International, we support research, advocacy, education and development of young people. By the end of 2022, the programme had reached 9.1 million young people with health information and trained 260,191 peer educators in 39 countries since its launch.

### Community investment

We aim to make a positive impact on people in all the communities where we are present. Our Global Standard on External Funding includes community investment and provides guidance to ensure a consistent, transparent, and ethical approach around the world, based on local needs. Our activities are focused on supporting programmes to advance patient health, increase access to care, drive scientific innovation and build resilience, and include financial and non-financial contributions. In 2022, we provided $108 million to more than 1,000 non-profit organisations across 64 countries. We also donated more than $3.1 billion (2021: $2.3 billion) of medicines through patient assistance programmes around the world, the largest of which is our AZ&Me Prescription Savings programme in the US.

### Product donation programmes

In 2022, we gave $12.1 million (2021: $23 million) in product donations for disaster, humanitarian relief and public health need. We remain committed to working with all health system stakeholders towards achieving more systemic solutions.

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# Business Review
continued

# People and Sustainability

# Sustainability continued

# Environmental protection

We recognise the connection between healthy people and a healthy planet. A significant impact of climate change is increasing levels of ill health, including a rise in chronic conditions such as heart disease, stroke, lung cancer and respiratory disease. We are using a science-led approach to lower the economic and environmental burden of healthcare, while improving health outcomes. We are proactively managing our environmental impact across all activities, limiting our use of finite resources, and investing in nature and biodiversity.

Through our Natural Resource Efficiency Fund, we have invested approximately $150 million in environmental efficiency innovations since 2015. This, together with other central capital investments, has seen a further $26.6 million spent in 2022, including 31 new projects.

# Achievements in 2022

- > 59.3% reduction in Scope 1 and 2 GHG emissions since 2015
- > 14.4% reduction in energy consumption since 2015
- > More than 10.5 million trees planted by AZ Forest since 2020
- > 18.7% reduction in water usage and 18.6% reduction in our waste since 2015
- > 100% safe API discharges for AstraZeneca sites and 92% safe API discharges for globally managed first-tier supplier sites
- > 97.5% of paper-based product packaging materials used were supplied from sustainable sources in 2021, achieving the 2022 target.

# Ambition Zero Carbon

Approximately 5% of global GHG emissions come from the healthcare sector, from mineral extraction and processing through to use of medicines and their disposal. We are accelerating the delivery of net-zero healthcare and our progress towards net-zero. We were one of the first companies to have our net-zero targets across Scope 1, 2 and 3 verified under the Science Based Targets initiative Net-Zero Corporate Standard.

# Near-term targets:

- > 98% reduction in Scope 1 and 2 GHG emissions by 2026 from 2015 baseline, maximising our transition to electric vehicles in our road fleet (EV100) by the end of 2025, and using 100% renewable energy (RE100) for electricity and heat by 2025.
- > Reducing energy consumption by 10% and doubling energy productivity (EP100) from 2015 to 2025.
- > Launching first next-generation respiratory inhalers with near-zero climate impact by 2025.

- > Aligning supplier spend (Scope 3) with companies with approved science-based targets by 2025.
- > Planting and stewarding over 50 million trees by end of 2025 as a nature-based solution, through our global AZ Forest initiative.

# Longer-term targets:

- > 50% reduction in total Scope 3 emissions by 2030 and 90% reduction by 2045, from 2019 baseline.
- > Carbon negative for all residual emissions from 2030 and science-based net-zero by 2045.
- > Transition to next-generation respiratory inhalers with near-zero climate impact.

A transition plan with actionable steps to meet the targets is disclosed in our Sustainability Report. Our goal of becoming carbon negative across our entire value chain by 2030 recognises that total emissions from our value chain partners are significantly larger than our own direct operations. We are pledging to engage our suppliers to reduce their direct emissions through to 2030 and identify carbon removal options that will lead to more carbon dioxide (CO2) removed from the atmosphere than added to it.

For more information, see our Sustainability Report on www.astrazeneca.com/sustainability/resources.html.

# Product sustainability

People and the planet benefit from those medicines that have the smallest possible environmental impact, while maintaining medical efficacy and safety. As technologies and healthcare systems evolve, so should solutions to reduce energy, water, material use, waste and pollution generated from designing, manufacturing and delivering medicines to patients. We follow a life-cycle approach that covers all stages of our products and our internal Product Sustainability Index ensures we understand their environmental impacts and prioritise improvement opportunities.

A key product-related element of our Ambition Zero Carbon strategy is our commitment to developing a next-generation pressurised metered-dose inhaler (pMDI) using the propellant HFO-1234ze, which has a near-zero global warming potential, in partnership with Honeywell. This is a significant innovation given the clinical need for pMDIs. In 2022, project milestones achieved included the Phase III investment decision, initiation of pivotal studies, first delivery of commercial-grade propellant from Honeywell and positive regulatory interactions globally.

As part of our commitment to drive thought leadership and innovation to manage Pharmaceuticals in the Environment, we lead the Innovative Medicines Initiative PREMIER project, a public-private partnership between the

European Commission and EFPIA. One aim is to develop tools to identify potential environmental risks of APIs earlier in drug development and make these tools and data more visible and accessible to all stakeholders. We also lead our industry with respect to reporting API emissions from manufacturing and through our EcoPharmacoVigilance (EPV) programme.

# Natural resources

The conservation and sustainable use of natural resources, along with the protection and restoration of ecosystems, is vital to shape a healthy future and tackle the environmental drivers of disease. We are committed to reducing our impact on the planet through the efficient, circular use of natural resources across the value chain. This includes responsible sourcing, consumption, production, and disposal. We also invest in nature and aim to protect biodiversity to improve both environmental and societal health.

# Circular economy

'Circularity' is a key tool for conserving natural resources, designing out waste and pollution, keeping products and materials in use (for example by designing for durability and recycling) and avoiding non-renewable resources. In 2022, we implemented projects to enable circular use of natural resources within our sites in Sweden. At our operations site in Södertälje, recycling condensate and rejected purified water will deliver savings of 150,000m3 of water annually. Our R&D site in Gothenburg is recovering and reusing over 95% of liquid helium, an increasingly scarce natural resource.

# Water stewardship

In 2022, we increased the ambition of our 2025 water efficiency target, now aiming to reduce water use by 20% from 2015 baseline levels, in support of water security and resilience. Moving beyond efficiency, we are working in partnership with our stakeholders, including the World Wide Fund for Nature Sweden, to further adopt water stewardship practices in alignment with the Alliance for Water Stewardship Standard and to set long-term contextual targets at high-risk sites by 2025.

# AZ Forest

We have AZ Forest activities in Australia, Indonesia, and the UK, in addition to two new projects announced in 2022:

- > In Ghana, we committed to planting and maintaining over three million trees to support natural forest restoration and community-led agroforestry.
- > In the US, we committed to planting and maintaining one million trees, contributing to the restoration of water quality and wildlife habitats in the Delaware River Watershed.

Since 2020, AZ Forest has planted more than 10.5 million trees.

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## Ethics and transparency AU

We seek to create positive societal impact and embed ethical behaviour in all our business activities, markets and value chain. We promote ethical, transparent and inclusive policies internally as well as with our partners and suppliers. It is important that we create value beyond the impact of our medicines. Building trust through integrity, transparency and fair treatment is central to everything we do.

### Achievements in 2022

- > 49.5% of our senior roles are filled by women.
- > 83% of employee survey respondents feel they can speak their mind at work.

### Code of Ethics

We are committed to high ethical standards. Our Code of Ethics (the Code) embodies our Values, expected behaviours, principles and policies. It applies to all Executive and Non-Executive Directors, officers, employees and contract staff of our worldwide Group. The Code empowers employees to make decisions in the best interests of the Group, the communities in which we work and the people we serve. It focuses on why our commitments matter and is at the core of our compliance programme. It has been translated into approximately 40 languages and guides employees on how to make the best choices and act in a consistent, responsible way. Our mandatory training reminds employees of our commitments. In 2022, 100% of all active employees completed annual training on the Code.

The Code includes high-level Global Policies covering Science, Interactions, Workplace and Sustainability. These policies are complemented by Global Standards. We also have additional global, local and functional requirements to support employees in their daily work.

☐ For more information, see our Code, Global Policies and Position Statements on our website, www.astrazeneca.com/sustainability/resources.html

The Code asks employees to report possible violations and provides information on how to do so, including via the AZ Ethics helpline or website. AZ Ethics is also available to third parties. Reports can be made anonymously where desired and permitted by local law. Anyone who raises a potential breach in good faith is fully supported by management; retaliation is not tolerated.

The majority of cases come to our attention through self-reporting to line managers or local Human Resources, Legal or Compliance. In 2022, 490 reports of alleged compliance breaches or other ethical concerns were made through AZ Ethics, including anonymous reports that could be considered whistleblowing (2021: 416).

A Finance Code complements the Code and applies to the CFO, the Group's principal accounting officers (including key finance staff in all overseas subsidiaries) and all managers in the finance function. This reinforces the importance of the integrity of the Group's Financial Statements, the reliability of the accounting records on which they are based, and the robustness of the relevant controls and processes.

☐ For more information on our Ethics and transparency focus areas, see Champions of inclusion and diversity, and, Workforce safety and health, on page 46.

Non-Financial Information Statement
Under sections 414CA and 414CB of the Companies Act 2006, as introduced by the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, AstraZeneca is required to include, in its Strategic Report, a non-financial statement containing certain information. As required by the Regulations, the Strategic Report contains information on the following matters, which include references to our relevant policies, due diligence processes and information on how we are performing against various measures in these areas:

- > Anti-bribery and anti-corruption, see page 41.
- > Code of Ethics, see 51.
- > Access to healthcare, see page 49.
- > Environmental protection, see page 50.
- > People, see page 45.
- > Human rights, see page 46.

Information on the Group's Principal Risks is included in Risk Overview (see from page 56) and information on the non-financial key performance indicators relevant to our business is included in Key Performance Indicators (see from page 14). A description of our business model is contained in Business Model and Life-cycle of a Medicine (see from page 12).

"An ethical business culture is an imperative against a background of reputational, legal, regulatory and long-term sustainability risks, and we are committed to increasing public trust in our industry."

![img-0.jpeg](img-0.jpeg)

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EU Taxonomy Disclosure

Assessment

The EU Taxonomy (Regulation (EU) 2020/852) and associated Delegated Acts represent an evolving reporting framework and are part of the EU's measures towards climate goals. The EU Taxonomy (Taxonomy) is a classification system for sustainable economic activities. An economic activity is Taxonomy-eligible if it is described in the Taxonomy Delegated Acts. An economic activity is Taxonomy-aligned if it makes a substantial contribution to one or more of the specified environmental objectives, meets specified Do-No-Significant-Harm (DNSH) criteria, and is carried out in compliance with specified minimum social safeguards.

Information prepared under this disclosure is consistent with our Consolidated Financial Statements for the year ended 31 December 2022, and comparatives, prepared under the basis of preparation detailed in our Group Accounting Policies on page 142.

Capital expenditure was assessed for Taxonomy-eligibility on a project basis. Operating expenditures were assessed for Taxonomy-eligibility based on the nature of expense. Taxonomy-alignment assessments were conducted on an activity level, based on our Global Standards and Policies. No activity was assessed as fully Taxonomy-aligned in 2022. Double-counting was avoided by reconciliation to underlying financial records.

The Taxonomy is still in development by the EU and company specific assumptions are required to fulfil the reporting requirements.

Revenue

The Taxonomy-eligible Revenue KPI is defined as Taxonomy-eligible Revenue divided by Total Revenue, which corresponds to 'Total Revenue' in our Consolidated Statement of Comprehensive Income as detailed on page 138.

The Group's revenues are wholly derived from the business of pharmaceuticals, which is not currently covered by the EU Taxonomy and therefore cannot be considered for Taxonomy-eligibility. Consequently our Revenue KPI for the year ended 31 December 2022 is 0% (2021: 0%).

Capital expenditure

The Taxonomy-eligible capital expenditure (Capex) KPI is defined as Taxonomy-eligible Capex divided by Total Capex.

> Taxonomy-eligible Capex is capex related to assets or processes associated with Taxonomy-eligible activities or the purchase of output from Taxonomy-eligible economic activities.
> Total Capex corresponds to the total of the 'Additions through business combinations' and 'Capital expenditure' movement types as detailed in Note 7 - Property, plant and equipment (page 159), the total of the 'Additions - separately acquired' and 'Additions through business combinations' movement types as detailed in Note 8 - Leases Right-of-use assets (page 160), and the total of the 'Additions - separately acquired' and 'Additions through business combinations' movement types as detailed in Note 10 - Intangible assets (page 161).

The Group's Taxonomy-eligible Capex KPI for the year ended 31 December 2022 is 14% (2021: 2%). The 2021 comparative is low due to the inclusion of $26,955 million relating to intangible assets recognised as part of the acquisition of the Alexion business in the Total Capex comparative for the year. The eligible activities are presented in the table below.

Operating expenditure

The Taxonomy-eligible operating expenditure (Opex) KPI is defined as Taxonomy-eligible Opex divided by Taxonomy-defined Opex.
> The Group's Taxonomy-eligible Opex is expenses related to assets or processes associated with Taxonomy-eligible economic activities or the purchase of output from Taxonomy-eligible economic activities.
> The Group's Taxonomy-defined Opex is the total of R&D expenses, and other direct non-capitalised costs that relate to building renovation measures, short-term leases, maintenance and repair, and any other direct expenditures incurred in the day-to-day servicing of assets of Property, plant and equipment.

The Group's Taxonomy-eligible Opex KPI for the year ended 31 December 2022 is 2% (2021: 2%). The low proportion is primarily due to the majority of the Group's Taxonomy-defined Opex consisting of Pharmaceutical R&D expenses of $9,762 million (2021: $9,736 million), which is not currently covered by the EU Taxonomy. The eligible activities are presented in the table below.

Taxonomy eligibility and alignment1

|  | Capex |  |  |  | Opex |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 |  |  | 2021 |  | 2022 |  |  | 2021 |  |
|  | Total Capex | Taxonomy-eligible Capex | Taxonomy-aligned Capex | Total Capex | Taxonomy-eligible Capex | Total Opex | Taxonomy-eligible Opex | Taxonomy-aligned Opex | Total Opex | Taxonomy-eligible Opex |
| Economic activity2 | $m | % | % | $m | % | $m | % | % | $m | % |
| 6.5 Transport by motorbikes, passenger cars and light commercial vehicles | 3,519 | 2 | 0 | 30,462 | 0 | 10,076 |  |  | 10,028 |  |
| 7.1 Construction of new buildings |  | 8 | 0 |  | 2 |  |  |  |  |  |
| 7.2 Renovation of existing buildings |  | 2 | 0 |  | 0 |  |  |  |  |  |
| 7.7 Acquisition and ownership of buildings |  | 0 | 0 |  | 0 |  | 2 | 0 |  | 2 |
| 8.1 Data processing, hosting and related activities |  | 1 | 0 |  | 0 |  |  |  |  |  |
| 8.2 Computer programming, consultancy and related activities |  | 1 | 0 |  | 0 |  |  |  |  |  |

1 Percentages are subject to rounding.

2 As per EU Taxonomy definition.

52 AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report Corporate Governance Financial Statements Additional Information

# Task Force on Climate-related Financial Disclosures Summary Statement

## Our commitment to climate change

We support the Task Force on Climate-related Financial Disclosures (TCFD) framework, and our disclosures are consistent with the four TCFD recommendations and the 11 recommended disclosures, in line with the compliance requirements of Listing Rule 9.8.6R(8) of the UK Financial Conduct Authority. Page 54 sets out the required disclosures in more details and explains where further information can be found. To enable us to cover all required information, such as methodology and results, we also refer to other documents outside this Annual Report.

We have applied the TCFD framework annually since 2020 and continued to apply it to describe activities conducted in 2022. All our business operations worldwide are in scope, unless otherwise stated. The framework applies a risk-based approach, focusing on material risks and opportunities.

☐ For further information relating to our TCFD disclosures, see our 2022 TCFD Extended report on our website, www.astrazeneca.com/annualreport2022.

☐ Our CDP response, based on 2021 performance, provides further information on our approach to climate change, available at www.cdp.net/en.

Future expansions to medium- and low-risk areas are indicated by section.

To future-proof the supply of medicines to patients, over 2020/21 we conducted a broad physical climate risk screening of our sites, followed by deep dive assessments at 29 locations (including manufacturing sites, R&D hubs and IT centres) to understand exposure risk to extreme weather events, and possible revenue impact from disruption to business-critical activities. From 2021, we widened our approach to screen over 750 suppliers with a critical role in patient supply, to understand climate vulnerability in the upstream value chain for 10 selected medicines. This ensures all required mitigation measures are in place or planned, to manage future climate risks based on a worst-case scenario.

Transition risks and opportunities are screened for medicines by using Life Cycle Assessment (LCA) data and carbon intensity.

☐ For further information see our Sustainability Report, which describes our approach and progress, based on our sustainability focus areas on our website, www.astrazeneca.com/sustainability.

☐ For further information see our Sustainability Data Summary, which provides performance measures and targets with at least three years of data, where available, on our website, www.astrazeneca.com/sustainability.

Highest risks were identified across asthma and COPD products. Transitioning to near-zero Global Warming Potential (GWP) propellants between 2025 and 2030 is part of our $1 billion Ambition Zero Carbon strategy to accelerate the decarbonisation of our business and transform climate risks into opportunities. Our greenhouse gas (GHG) emissions reduction targets and progress are disclosed on pages 50 and 218.

In many cases, mitigation measures are already in place to address both physical and transition risks with no material impact on our business model and climate risk is not currently considered to be a Principal Risk for the Group. However, the risk 'Failure to meet regulatory expectations on environmental impact, including climate change' is a component of the Group's risk landscape within the Annual Report. This TCFD statement has been shared with our Board and Audit Committee.

☐ For more information, see the Risk supplement on our website, www.astrazeneca.com/annualreport2022.

## Key

| ● Low risk | Time horizon for impact |
| --- | --- |
| ● Medium risk | Short-term: 1-3 years |
| ● High risk | Mid-term: 3-7 years |
| ● Opportunity | Long-term: 7-25 years |

## Climate risk summarised

| Risk or opportunity | Time horizon Short/Mid/Long | Potential impact | How it is managed |
| --- | --- | --- | --- |
| Physical risks | ● ● ● | > Increased extreme heat events and cooling needs impacting compliance with Good Manufacturing Practice. > Heavy rainfall causing local flooding and/or landslides. > Water stress affecting access to water used in operations. > High winds damaging structures. | Identified risks are addressed in local business continuity plans or by technical mitigations integrated into site master plans. |
| Transition risks and opportunities | ● ● ● | Healthcare providers increasing demand for products and services with low GHG footprint, to meet net-zero ambitions. | Transition to near-zero GWP propellants across respiratory portfolio from 2025 to 2030. |
|  | ● ● ● | Changes in F-gas regulations and their impact on respiratory medicines. | We advocate a phased transition of the new EU F-gas regulation to earliest 2030, if the medicinal exemption is lifted, to ensure patient safety, and allow time for regulatory approvals and transition to low or near-zero GWP propellants. |
|  | ● ● ● | Carbon pricing and future environmental taxation. | Ambition Zero Carbon mitigates future value chain pricing and taxation exposure. |
|  | ● ● ● | Supply/demand of renewable energy. | Annual investment of approximately $25 million in natural resource reduction programme, and collaborations to scale access to renewable energy in the supply chain. |
|  | ● ● ● | Change in raw material or sourcing costs. | Supply chain engagements include transition to low-carbon economy preparedness. |

Task Force on Climate-related Financial Disclosures Summary Statement

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53

# Task Force on Climate-related Financial Disclosures Summary Statement (B) *continued*

## Key

- ● Sustainability Report

| TCFD Framework and recommended disclosures | AstraZeneca current status | Links to more information on key developments. |
| --- | --- | --- |
| Governance |  |  |
| Describe the Board's oversight of climate-related risks and opportunities. | Our Board Sustainability Committee was established to monitor the execution of our sustainability strategy. | ● page 2 ● pages 48, 95, and 98 ● page 8 |
| Describe management's role in assessing and managing climate-related risks and opportunities. | Our CEO is responsible to the Board for the development and performance of our climate strategy and related risks and opportunities, as part of his overall responsibilities. The TCFD Steering Group coordinates management of physical and transitional climate risks and opportunities. | ● page 2 ● page 48 ● pages 9 and 19 |
| Strategy |  |  |
| Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. | Physical risks from climate change are primarily disruption or delays to manufacturing or distribution, and/or impairment due to failure of cold chain logistics, and increased liability insurance premiums and reputational damage - see table on page 53. Transition risks and opportunities are primarily regulatory and market changes, and/or pressure and ability to reduce product carbon footprints and decarbonise our value chain - see table on page 53. | ● pages 4 to 10 ● pages 19 to 22 |
| Describe the impact of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning. | We are taking enterprise-wide action to reduce our GHG emissions from our global operations and fleet by 98% by 2026 (from a 2015 baseline) with a $1 billion budget. We aim to halve our entire value chain footprint (Scope 3) by 2030, to achieve a 90% reduction by 2045 (from a 2019 baseline) and reach our net-zero Science-based targets (SBTs) to fully prepare for a low-carbon economy. Our transition plan to net-zero is disclosed in our Sustainability Report as a response to FCA requirement 2021/61 9.8.6F. | ● pages 4 to 10 ● pages 19 to 24 |
| Describe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. | We are building resilience against a worst-case scenario (RCP8.5) in our supply chain by investing in mitigation in at-risk sites, supply chain design, and inventory levels, to manage interruption risks. No material business impact from such short-term events is foreseen. Value chain decarbonisation, with net-zero targets aligned to a 1.5°C scenario, will secure low-carbon economy resilience and scale opportunities in progressive markets. | ● pages 1, 3 and 5 |
| Risk management |  |  |
| Describe the organisation's processes for identifying and assessing climate-related risks. | Climate assessments integrated into overall enterprise risk management, inform the enterprise of specific risks and opportunities posed by climate change and/or transition to a low-carbon economy. | ● pages 1 and 2 ● pages 56, 57, and 98 ● pages 19 to 26 |
| Describe the organisation's processes for managing climate-related risks. | Identified risks are addressed in local business continuity plans or by technical mitigations in site master plans. Mid- and long-term financial planning includes required investments. Ambition Zero Carbon is reducing our GHG footprint, mitigating some transition risks, and protecting revenue. | ● pages 1 2 and 4 to 10 ● pages 50, 56, 57, and 98 ● pages 19 to 26 |
| Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation's overall risk management. | Identified risks are managed locally and escalated to functional and/or enterprise level if material. | ● pages 1, 2 and 4 to 6 ● pages 56, 57 and 98 ● pages 19 to 26 |

54 AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report Corporate Governance Financial Statements Additional Information

| TCFD Framework and recommended disclosures | AstraZeneca current status | Links to more information on key developments. |
| --- | --- | --- |
| Metrics and targets |  |  |
| Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. | GHG footprint and progress towards short- and long-term targets are reported in line with World Resources Institute GHG Protocol guidance and disclosed separately in our Sustainability Data Summary www.astrazeneca.com/sustainability/resources.html Data in the TCFD report is assured by Bureau Veritas. | ● page 11 ● pages 50 and 218 ● pages 20 and 21 ● pages 5 to 9 |
| Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions and the related risks. | GHG footprint and progress towards short-and long-term targets are reported in line with World Resources Institute GHG Protocol guidance and disclosed separately in our Sustainability Data Summary www.astrazeneca.com/sustainability/resources.html | ● pages 50 and 218 ● pages 20 and 21 ● pages 5 to 9 |
| Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. | Relevant metrics and KPIs in our Sustainability Data Summary reflect the extent of decarbonisation and thereby reduced exposure to transition risks, as well as showing future opportunities. | ● pages 1 and 2 ● page 50 ● pages 20 and 21 ● pages 5 to 9 |

Task Force on Climate-related Financial Disclosures Summary Statement

AstraZeneca Annual Report & Form 20-F Information 2022

55

# Risk Overview

“We face a diverse range of risks and uncertainties. Those risks that have the potential to have a material impact on our Strategic Priorities are our Principal Risks.”

## Managing risk

Our approach to risk management is designed to encourage clear decision making on which risks we take and how we manage these risks. We strive to embed sound risk management in our strategy, planning, budgeting and performance management processes. The Board defines the Group’s risk appetite. This enables the Group, in both quantitative and qualitative terms, to judge the level of risk it is prepared to take in achieving its overall objectives. The Board expresses the acceptable levels of risk for the Group using three key dimensions. These are: (i) earnings and cash flow, (ii) return on investment and (iii) ethics and reputation. Annually, the Group develops a detailed three-year bottom-up business plan and 10-year long-range projection to support the delivery of its strategy. The Board considers these in the context of the Group’s risk appetite. Adjustments are made to the plan or risk appetite to ensure they remain aligned.

The SET is required by the Board to oversee and monitor the effectiveness of the risk management processes implemented by management. Within each SET function, leadership teams discuss the risks the business faces. Quarterly, each SET function assesses changes to these risks, new and emerging risks and mitigation plans. These are assimilated into a Group Risk Report for the Board, Audit Committee and SET.

Global Compliance, Finance and Global Internal Audit support SET by advising on policy and standard setting, monitoring and auditing, communication and training, as well as reporting on the adequacy of line management processes as they apply to risk management. The Board believes that existing processes provide it with adequate information on the risks and uncertainties we face. The Board has carried out a robust assessment of the Principal and Emerging risks facing the Group. Our Principal Risks are those risks that are most likely to have a material impact on our business and are a subset of the total risk landscape facing the Group. The table on pages 58 and 59 provides insight into these Principal Risks.

## Emerging risks

Emerging risks are ‘new’ risks that have the potential to crystallise in the future but are unlikely to impact the business during the next year. The outcome of such risks is often more uncertain. They may begin to evolve rapidly or simply not materialise.

We monitor our business activities and external and internal environments for new, emerging and changing risks to ensure these are managed appropriately. Annually, we combine input from each SET function and external insight to scan the horizon for emerging risks and a summary is presented to the Audit Committee and Board. Emerging risks continue to be monitored as part of the ongoing risk management processes outlined above.

## Climate risk

The identification and assessment of climate risk form part of our existing risk management processes. ‘Failure to meet regulatory and ethical expectations on environmental impact, including climate change’ is a component of the Group’s risk landscape but is not currently considered to be a Principal Risk for the Group.

We support the TCFD framework and continue to develop our disclosures in line with its recommendations. Our TCFD Statement from page 53 summarises the work undertaken to date to understand the potential impact of climate change on our business and outlines future areas of management focus.

56 AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report Corporate Governance Financial Statements Additional Information

## Viability statement

In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Board has determined that a three-year period to 31 December 2025 constitutes an appropriate period over which to provide its viability statement.

The Board assesses the Company's prospects using a 10-year long-range projection. It notes the rich and varied portfolio of medicines in development across a range of therapy areas and the medicines currently commercialised in more than 100 markets and concludes that the Company's long-term prospects remain strong. The Board also considers annually and on a rolling basis, a three-year bottom-up detailed business plan and, given the inherent uncertainty involved, believes that the three-year statement presents readers of this Annual Report with a reasonable degree of assurance over the ongoing viability of the Company while still providing a longer-term perspective.

The three-year detailed business plan captures risks to the sales and cost forecasts at a market and SET function level. The plan is used to perform central net debt and headroom profile analysis. The following scenarios have been applied to this analysis to create a severe but plausible downside combining a number of the Principal Risks detailed on pages 58 to 59.

> **Principal Risks:** Pricing, affordability, access and competitive pressures; failures or delays in the quality and execution of the Group's commercial strategies.
- **Scenario 1** - Government action on pricing, higher than anticipated competition and other commercial headwinds result in lower than anticipated growth rates for our medicines.
- **Scenario 2** - A significant incident leads to reputational damage in a key market resulting in an ongoing 10% reduction in revenue achieved in this market.

> **Principal Risk:** Failure or delay in the delivery of our pipeline or launch of new medicines.
- **Scenario 3** - Assumes no launches of new products.

> **Principal Risk:** Failure to maintain supply of compliant, quality medicines.
- **Scenario 4** - Major equipment failure or significant regulatory observation at one of our major manufacturing sites results in a 12-month loss of formulation capability for one of our key oncology products leading to supply interruption.

> **Principal Risks:** Failure in information technology or cybersecurity. Adverse outcome of litigation and/or government investigations.
- **Scenario 5** - Legal, regulatory, cyber or other non-compliance results in a payment of $500 million in 2024.

> **Principal Risk:** Geopolitical and/or macroeconomic volatility disrupts the operation of our global business.
- **Scenario 6** - Measures taken to mitigate the impact of inflation do not deliver to the extent anticipated and add an additional $300 million to the 2023 cost base.

In addition, the Board has considered more stressed scenarios including restrictions on debt factoring and no access to capital markets to raise new debt. In each scenario (or combination of scenarios above), the Group is able to rely on its existing cash, cash equivalents and short-term fixed income investments, committed credit facilities, leverage its cost base, reduce capital expenditure and take other cash management measures to mitigate the impacts and still have residual capacity to absorb further shocks.

Based on the results of this analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment.

"Leadership teams within each of our SET functions discuss the risks to our business every quarter, with findings included in our Group Risk Report."

Risk Overview

AstraZeneca Annual Report & Form 20-F Information 2022

57

# Risk Overview
continued

Strategy key

- Science & Innovation
- Growth & Therapy Area Leadership

- People & Sustainability
- Achieve Group Financial Targets

Trend key

- Increasing risk
- Decreasing risk
- Unchanged
- New

Principal Risks

| Risk category and Principal Risks | Context/potential impact | Management actions | Trend versus prior year |
| --- | --- | --- | --- |
| Product pipeline risks |  |  |  |
| Failure or delay in the delivery of our pipeline or launch of new medicines | The development of any pharmaceutical product candidate is a complex, risky and lengthy process involving significant resources. A project may fail at any stage of the process due to a number of factors, which could adversely affect our future business and results of operations. | Priorities and accelerate our pipeline. Strengthen pipeline through acquisitions, licensing and collaborations. Focus on innovative science in our main therapy areas. Improve R&D productivity. |  |
| Failure to meet regulatory or ethical requirements for medicine development or approval | We are subject to laws and regulations that control our ability to market our pharmaceutical products. Delays in regulatory reviews and approvals could delay our ability to market our products and may adversely affect our revenue. | Quality management systems incorporating monitoring, training and assurance activities. Collaborating with regulatory bodies and advocacy groups to monitor and respond to changes in the regulatory environment, including revised processes, timelines and guidance. |  |
| Commercialisation risks |  |  |  |
| Pricing, affordability, access and competitive pressures | Continuing global pressures to reduce healthcare spending may lead to cost containment measures implemented by payers which could have an adverse effect on our business and financial results. | Focus on key products. Demonstrate value of medicines/health economics. Implement innovative value-based agreements focused on patient outcomes. Global footprint. Diversified portfolio. | Global economic and political conditions placing downward pressure on healthcare pricing and spending and therefore on revenue and innovation. |
| Failure or delays in the quality or execution of the Group's commercial strategies | A failure to execute our commercial strategies or achieve the level of sales anticipated for a medicine could materially impact our business results. | Focus on key products. Substantial investment in sales and marketing activities. Accelerate execution of plans and risk share through business development and strategic collaborations and alliances. |  |
| Supply chain and business execution risks |  |  |  |
| Failure to maintain supply of compliant, quality medicines | Supply chain difficulties may result in product shortages which could lead to lost product sales and materially affect our reputation and revenues. | Establishment of new manufacturing facilities, creating capacity and technical capability to support new product launches. Contingency plans, including dual sourcing, multiple suppliers and close monitoring and maintenance of stock levels. Business continuity and resilience initiatives, disaster and data recovery, and emergency response plans. Quality management systems. | Geopolitical tensions and high levels of demand for certain raw materials and components place increased pressure on supply chains and distribution networks. |
| Failure in information technology or cybersecurity | Significant disruption to our IT systems, including breaches of data security or cybersecurity, or legal compliance failure could harm our reputation and materially affect our financial condition or results of operations. | Cybersecurity framework and dashboard. Disaster and data recovery plans. Strategies to secure critical systems and processes. Regular cybersecurity and privacy training for employees. | Growing multi-faceted cyber threat. |
| Failure to attract, develop, engage and retain a diverse, talented and capable workforce | The inability to attract and retain highly-skilled personnel may weaken our succession plans for critical positions, impact the implementation of our strategic objectives, and ultimately result in the failure of our business operations. | Targeted recruitment and retention strategies deployed, including in the Rare Disease therapy area. Development of our employees. Evolve our culture. |  |

58 AstraZeneca Annual Report & Form 20-F Information 2022

Strategic Report

Strategic Report Corporate Governance Financial Statements Additional Information

### Consolidated Statement of Comprehensive Income disclosures

The amounts that have been charged to the Consolidated Statement of Comprehensive Income, in respect of defined benefit schemes for the year ended 31 December 2022, are set out below.

|  | 2022 |  |  |  |  | 2021 |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | UK $m | US $m | Sweden $m | Rest of Group $m | Total $m | UK $m | US $m | Sweden $m | Rest of Group $m | Total $m |
| Operating profit |  |  |  |  |  |  |  |  |  |  |
| Current service cost | (14) | (1) | (35) | (38) | (88) | (18) | (2) | (69) | (35) | (124) |
| Past service (cost)/credit | (5) | - | (4) | 3 | (6) | (4) | - | (1) | - | (5) |
| Expenses | (8) | (2) | - | - | (7) | (7) | - | - | - | (7) |
| Total charge to Operating profit | (24) | (3) | (39) | (35) | (101) | (29) | (2) | (70) | (35) | (136) |
| Finance expense |  |  |  |  |  |  |  |  |  |  |
| Interest income on scheme assets | 123 | 29 | 18 | 5 | 175 | 75 | 27 | 12 | 5 | 119 |
| Interest expense on post-retirement scheme obligations | (132) | (29) | (31) | (12) | (204) | (87) | (28) | (22) | (8) | (145) |
| Net interest on post-employment defined benefit plan liabilities | (9) | - | (13) | (7) | (29) | (12) | (1) | (10) | (3) | (26) |
| Charge before taxation | (33) | (3) | (52) | (42) | (130) | (41) | (3) | (80) | (38) | (162) |
| Other comprehensive income |  |  |  |  |  |  |  |  |  |  |
| Difference between the actual return and the expected return on the post-retirement scheme assets | (1,964) | (295) | (153) | (55) | (2,467) | 372 | (22) | 62 | 3 | 415 |
| Experience gains/(losses) arising on the post-retirement scheme obligations | 55 | (16) | (99) | (6) | (66) | (43) | (9) | - | 74 | 22 |
| Changes in financial assumptions underlying the present value of the post-retirement scheme obligations | 2,272 | 284 | 896 | 275 | 3,727 | 239 | 59 | (43) | (61) | 194 |
| Changes in demographic assumptions | (84) | - | 9 | (1) | (76) | 3 | (4) | - | (4) | (5) |
| Remeasurement of the defined benefit liability | 279 | (27) | 653 | 213 | 1,118 | 571 | 24 | 19 | 12 | 626 |

Past service costs include granting early retirement in UK and Sweden.

Total Group pension costs in respect of defined contribution and defined benefit schemes during the year are set out below (see Note 29).

|  | 2022 $m | 2021 $m |
| --- | --- | --- |
| Defined contribution schemes | 445 | 428 |
| Defined benefit schemes - current service costs and expenses | 95 | 131 |
| Defined benefit schemes - past service cost | 6 | 5 |
| Pension costs | 546 | 564 |

### ● Rate sensitivities

The following table shows the US dollar effect of a change in the significant actuarial assumptions used to determine the retirement benefits obligations in our three main defined benefit pension obligation countries.

|  | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | +0.5% | -0.5% | +0.5% | -0.5% |
| Discount rate |  |  |  |  |
| UK ($m) | 262 | (289) | 565 | (634) |
| US ($m) | 46 | (49) | 79 | (84) |
| Sweden ($m) | 95 | (107) | 197 | (226) |
| Total ($m) | 403 | (445) | 841 | (944) |
|  | 2022 |  | 2021 |  |
|  | +0.5% | -0.5% | +0.5% | -0.5% |
| Inflation rate 1 |  |  |  |  |
| UK ($m) | (173) | 165 | (386) | 375 |
| US ($m) | n/a | n/a | n/a | n/a |
| Sweden ($m) | (104) | 93 | (207) | 196 |
| Total ($m) | (277) | 258 | (593) | 571 |
|  | 2022 |  | 2021 |  |
|  | +0.5% | -0.5% | +0.5% | -0.5% |
| Rate of increase in salaries |  |  |  |  |
| UK ($m) | n/a | n/a | n/a | n/a |
| US ($m) | n/a | n/a | n/a | n/a |
| Sweden ($m) | (47) | 43 | (90) | 82 |
| Total ($m) | (47) | 43 | (90) | 82 |

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 179

# Notes to the Group Financial Statements

## 22 Post-retirement and other defined benefit schemes *continued*

|  | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | +1 year | -1 year | +1 year | -1 year |
| Mortality rate |  |  |  |  |
| UK ($m) | (191) 2 | 193 3 | (390) | 388 |
| US ($m) | (20) | 20 | (29) | 29 |
| Sweden ($m) | (44) | 44 | (94) | 93 |
| Total ($m) | (255) | 257 | (513) | 510 |

$^{1}$ Rate of increase in pensions in payment follows inflation.

$^{2}$ Of the $191m increase, $103m is covered by the longevity swap.

$^{3}$ Of the $193m decrease, $103m is covered by the longevity swap.

The sensitivity to the financial assumptions shown above has been estimated taking into account the approximate duration of the liabilities and the overall profile of the plan membership.

The inflation sensitivity allows for the impact of a change in inflation on salary increases and pension increases (where these assumptions are inflation-linked).

The salary increase sensitivity reflects the impact of an increase of only salary relative to inflation.

The sensitivity to the life expectancy assumption is estimated based on a revised mortality assumption that extends/reduces the current life expectancy by one year for a particular age.

## 23 Reserves

### Retained earnings

The cumulative amount of goodwill written off directly to reserves resulting from acquisitions, net of disposals, amounted to $591m (2021: $615m; 2020: $636m) using year-end rates of exchange.

At 31 December 2022, 1,671,446 shares, at a cost of $112m, have been deducted from Retained earnings (2021: 3,922,122 shares, at a cost of $239m; 2020: 556,108 shares, at a cost of $51m) to satisfy future vesting of employee share plans.

There are no significant statutory or contractual restrictions on the distribution of current profits of subsidiaries; undistributed profits of prior years are, in the main, permanently employed in the businesses of these companies. The undistributed income of AstraZeneca companies overseas might be liable to overseas taxes and/or UK taxation (after allowing for double taxation relief) if they were to be distributed as dividends (see Note 4).

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Cumulative translation differences included within Retained earnings |  |  |  |
| At 1 January | (1,934) | (1,143) | (2,189) |
| Foreign exchange arising on consolidation | (1,446) | (483) | 443 |
| Exchange adjustments on goodwill (recorded against other reserves) | (24) | (21) | 22 |
| Foreign exchange arising on designated liabilities in net investment hedges 1 | (282) | (321) | 573 |
| Fair value movements on derivatives designated in net investment hedges | (8) | 34 | 8 |
| Net exchange movement in Retained earnings | (1,760) | (791) | 1,046 |
| At 31 December | (3,694) | (1,934) | (1,143) |

$^{1}$ Foreign exchange arising on designated liabilities in net investment hedges includes $102m in respect of designated bonds and $(384)m in respect of designated contingent consideration and other liabilities. The change in value of designated contingent consideration liabilities relates to $(369)m in respect of BMS' share of Global Diabetes Alliance, and $(15)m in respect of Almirall.

The cumulative loss with respect to costs of hedging is $3m (2021: gain of $4m; 2020: gain of $9m) and the loss during the year was $7m (2021: loss of $6m; 2020: gain of $9m).

The balance remaining in the foreign currency translation reserve from net investment hedging relationships for which hedge accounting no longer applied is a gain of $527m.

### Other reserves

The other reserves arose from the cancellation of £1,255m of share premium account by the Company in 1993 and the redenomination of share capital of $157m in 1999. The reserves are available for writing off goodwill arising on consolidation and, subject to guarantees given to preserve creditors at the date of the court order, are available for distribution.

## 24 Share capital

|  | Allotted, called-up and fully paid |  |  |
| --- | --- | --- | --- |
|  | 2022 $m | 2021 $m | 2020 $m |
| Issued Ordinary Shares ($0.25 each) | 387 | 387 | 328 |
| Redeemable Preference Shares (£1 each - £50,000) | - | - | - |
| At 31 December | 387 | 387 | 328 |

The Redeemable Preference Shares carry limited class voting rights and no dividend rights. This class of shares is capable of redemption at par at the option of the Company on the giving of seven days' written notice to the registered holder of the shares.

180 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

The Company does not have a limited amount of authorised share capital.

The movements in the number of Ordinary Shares during the year can be summarised as follows:

|  | No. of shares |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| At 1 January | 1,549,400,665 | 1,312,668,724 | 1,312,137,976 |
| Issue of share capital (business combinations) | - | 236,321,411 | - |
| Issue of shares (share schemes) | 399,365 | 410,530 | 530,748 |
| At 31 December | 1,549,800,030 | 1,549,400,665 | 1,312,668,724 |

#### Share issues

Issue of share capital (business combinations) represents share capital issued as part of the acquisition of Alexion (see Note 27).

#### Share repurchases

No Ordinary Shares were repurchased by the Company in 2022 (2021: nil; 2020: nil).

#### Shares held by subsidiaries

No shares in the Company were held by subsidiaries in any year.

### 25 Dividends to shareholders

|  | 2022 Per share | 2021 Per share | 2020 Per share | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- | --- | --- | --- |
| Second interim (March 2022) | $1.97 | $1.90 | $1.90 | 3,046 | 2,490 | 2,489 |
| First interim (September 2022) | $0.93 | $0.90 | $0.90 | 1,440 | 1,392 | 1,180 |
| Total | $2.90 | $2.80 | $2.80 | 4,486 | 3,882 | 3,669 |

The Company has exercised its authority in accordance with the provisions set out in the Company's Articles of Association, that the balance of unclaimed dividends outstanding past 12 years be forfeited. Unclaimed dividends of $1m (2021: $nil; 2020: $1m) have been adjusted for in Retained earnings in 2022.

The 2021 second interim dividend of $1.97 per share was paid on 28 March 2022. The 2022 first interim dividend of $0.93 per share was paid on 12 September 2022.

Reconciliation of dividends charged to equity to cash flow statement:

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Dividends charged to equity | 4,486 | 3,882 | 3,669 |
| Exchange losses on payment of dividend | 5 | 3 | 4 |
| Hedge contracts relating to payment of dividends (cash flow statement) | (127) | (29) | (101) |
| Dividends paid (cash flow statement) | 4,364 | 3,856 | 3,572 |

### 26 Non-controlling interests

The Group Financial Statements at 31 December 2022 reflect equity of $21m (2021: $19m; 2020: $16m) and total comprehensive income of $2m (2021: $3m; 2020: $3m) attributable to the non-controlling interests in AstraZeneca Pharma India Limited, P.T. AstraZeneca Indonesia and Beijing Falikang Pharmaceutical (China) Co. Limited.

In addition to the non-controlling interests in AstraZeneca Pharma India Limited, P.T. AstraZeneca Indonesia and Beijing Falikang Pharmaceutical (China) Co. Limited, the Group Financial Statements at 31 December 2022 also reflect total comprehensive losses of $nil (2021: $nil; 2020: $55m) attributable to the non-controlling interest in Acerta Pharma, resulting in reported total comprehensive income of $2m (2021: income of $3m, 2020: losses of $52m).

In February 2016, AstraZeneca acquired a 55% controlling stake in Acerta Pharma where the non-controlling interest was subject to put and call options. The put option gave rise to a liability (see Note 20). The ability of the parties to exercise their respective put and call options, as well as the timing and amount of exercise, was dependent on certain conditions, the last of which was based on regulatory outcomes of *Calquence* in the EU. In November 2020, *Calquence* received marketing approval in the EU, which removed all remaining conditionality in respect of the options. From November 2020, the minority shareholders were considered to have no further substantive variability in risk and reward related to their shares as it was considered highly likely that one of the options would be exercised, and the price of the options was fixed. Therefore, from November 2020, no further amounts of the consolidated AstraZeneca result were attributed to the minority shareholders of Acerta Pharma. The Non-controlling interests reserve relating to the minority shareholders of Acerta Pharma, totalling $1,401m, was reclassified into Retained earnings (see Consolidated Statement of Changes in Equity) in 2020. AstraZeneca exercised its option to acquire the remaining 45% of shares in Acerta Pharma in April 2021.

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-upon exercise price 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.

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022

181

# Notes to the Group Financial Statements

## 27 Acquisition of business operations

### Acquisitions of business operations in 2022

On 16 November 2022, AstraZeneca completed the acquisition of 100% of the issued shares of LogicBio Therapeutics, Inc. (LogicBio) based in Lexington, MA, US. LogicBio is a clinical-stage genetic medicine company pioneering genome editing and gene delivery platforms to address rare and serious diseases from infancy through adulthood. The total consideration was $72m. Cash of $68m was paid on the completion date, with $4m of outstanding options, which will be settled in cash, recorded in current Trade and other payables. Goodwill of $15m, assets of $82m, including $46m of intangible assets, and liabilities of $25m were recognised on acquisition. LogicBio's results have been consolidated into the Group's results from 16 November 2022.

### Acquisitions of business operations in 2021

On 21 July 2021, AstraZeneca completed the acquisition of 100% of the issued shares of Alexion Pharmaceuticals, Inc (Alexion), based in Boston, MA, US. Alexion is a global biopharmaceutical company focused on serving patients and families affected by rare diseases and devastating conditions through the discovery, development and commercialisation of life-changing medicines.

At closing, Alexion shareholders received 2.1243 AstraZeneca American Depository Shares (ADSs) and $60 in cash for each of their Alexion shares. Unvested Alexion employee share awards were converted to equivalent AstraZeneca share awards. The fair value of the purchase consideration was $41,058m, comprising AstraZeneca ADSs of $27,196m, cash of $13,349m and replacement employee share awards of $513m.

The Group funded the cash element of the acquisition with $8bn of new long-term debt, issued in May and June 2021, $4bn of term loans drawn in July 2021 under the $17.5bn committed bank facilities entered into in December 2020 to secure the acquisition financing, and existing cash balances. The Group cancelled the remaining $13.5bn of the facilities in June, July and October 2021. Loans and borrowings of $2.3bn acquired with Alexion were repaid in full shortly following completion of the acquisition.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with IFRS 3 'Business Combinations' and consequently the Alexion assets acquired, and liabilities assumed were recorded by AstraZeneca at fair value, with the excess of the purchase price over the fair value of the identifiable assets and liabilities being recognised as goodwill.

![info icon]() As part of the Alexion acquisition in 2021, we identified the assets (comprising principally launched products and IPR&D post pre-clinical stage) and liabilities acquired. Attributing fair values to assets acquired and liabilities assumed as part of business combinations is considered to be a key judgement. The purchase price allocation was performed with assistance from an independent valuer to advise on the valuation techniques and key assumptions in the valuation, in particular in respect of the valuation of the intangible assets and inventory.

The fair values assigned to the Alexion business combination in 2021 were:

|  | Fair value $m |
| --- | --- |
| Non-current assets |  |
| Property, plant and equipment | 1,135 |
| Right-of-use assets | 263 |
| Intangible assets | 26,855 |
| Other non-current assets | 301 |
|  | 28,554 |
| Current assets |  |
| Inventories | 6,769 |
| Trade and other receivables | 2,096 |
| Intangible assets | 100 |
| Cash and cash equivalents | 4,086 |
|  | 13,051 |
| Current liabilities |  |
| Interest-bearing loans and borrowings | (2,336) |
| Trade and other payables | (1,192) |
| Other current liabilities | (40) |
|  | (3,568) |
| Non-current liabilities |  |
| Lease liabilities | (228) |
| Deferred tax liabilities | (4,191) |
| Other non-current liabilities | (697) |
|  | (5,116) |
| Total net assets acquired | 32,921 |
| Less: non-controlling interests | (150) |
| Goodwill | 8,287 |
| Total fair value of consideration | 41,058 |
| Less: fair value of equity consideration | (27,196) |
| Less: fair value of replacement employee share awards | (513) |
| Less: cash and cash equivalents acquired | (4,086) |
| Net cash outflow | 9,263 |

182 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

The estimated fair value and useful lives of intangible assets were as follows:

|  | Fair value $m | Useful lives Years |
| --- | --- | --- |
| Launched products - C5 franchise ( Soliris/Ultomiris ) | 18,480 | 6 to 15 |
| Launched products - Strensiq, Kanuma, Andexxa | 5,215 | 11 to 17 |
| Products in development | 2,760 | Not amortised |
| Other intangibles | 500 | 5 to 10 |
|  | 26,955 |  |

The fair value attributed to intangible assets was $26,955m and primarily represents intellectual property rights over launched products of $23,695m and products under development of $2,760m. These were fair valued using the multi-period excess earnings method, which uses a number of estimates regarding the amount and timing of future cash flows. The key assumptions in the cash flows are PTRS, peak year sales and revenue erosion curves. In accordance with the Group’s policy on impairment assessments as set out on page 148, the assets were assessed for impairment in the final quarter of 2022 and 2021. Future milestones have been included in the valuation of the intangible assets (as a deduction of cash flows).

The fair value of inventory, which includes raw materials, work in progress and finished goods related to the launched products was estimated at $6,769m, an uplift of $5,635m on the carrying value prior to the acquisition. The fair value adjustment relates only to work in progress and finished goods and was calculated as the estimated selling price less costs to complete and sell the inventory, associated margins on these activities and holding costs. The vast majority of the fair value uplift has been unwound by 31 December 2022, with the unwind of the remaining inventory fair value uplift expected in 2023.

Property, plant and equipment principally comprises the manufacturing facilities in Dublin and Athlone, Ireland and was fair valued using a cost approach. The estimated fair value of $1,135m represents an uplift of $111m over carrying value.

The estimated fair value of contingent liabilities was $76m, relating to various claims and disputes in each case where there is a possible, but not probable, future financial exposure, and involve an assessment of the likelihood of a number of scenarios in relation to those matters. This amount has been included within other non-current liabilities of $697m.

The estimated fair value of trade and other receivables was $2,096m, which approximated the contractual cash flows.

The net deferred tax position reflected an adjustment of $5,215m related to the deferred tax impact of the fair value uplifts on intangible assets, inventories, property, plant and equipment and contingent liabilities as described above.

Goodwill amounting to $8,287m was recognised on acquisition and is underpinned by a number of elements, which individually could not be quantified. Most significant among these is the premium attributable to a pre-existing, well-positioned business in the innovation-intensive, high-growth rare diseases market with a highly skilled workforce and established reputation. Other important elements include the potential unidentified products that future research and development may yield and the core technological capabilities and knowledge base of the company. Goodwill is not expected to be deductible for tax purposes.

Non-controlling interests reflect Alexion’s pre-existing minority equity interest in Caelum Biosciences and have been valued at $150m, the agreed-upon exercise price 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 (Note 26).

Alexion’s results have been consolidated into the Group’s results from 21 July 2021. For the period from acquisition to 31 December 2021, before reflecting the fair value adjustments arising on the acquisition, Alexion’s Total Revenues were $3,071m and Profit after tax was $889m. If the acquisition had taken effect at the beginning of the reporting period in which the acquisition occurred (1 January 2021), on a pro forma basis, after reflecting the fair value adjustments arising on the acquisition, the Total Revenue of the combined Group for the year ended 31 December 2021 would have been $41,132m and the Loss after tax would have been $1,152m. This pro forma information does not purport to represent the results of the combined Group that actually would have occurred had the acquisition taken place on 1 January 2021 and should not be taken to be representative of future results.

Total acquisition-related costs of $4m (2021: $171m) have been incurred by the Group, which include advisory, legal and other professional fees. These costs are presented in the Statement of Comprehensive Income within Selling, general and administrative expense.

The terms of the acquisition include a retention bonus plan for legacy Alexion employees whereby up to $50m may be used for retention bonus awards to employees at the level of Vice President or below. These bonuses vested and were paid six months after the acquisition, or earlier. In 2022, a cost of $3m (2021: $24m) has been recorded in the Statement of Comprehensive Income.

Upon completion of the acquisition, all unvested Alexion employee share awards were converted into AstraZeneca restricted stock awards that continue to have, and shall be subject to, the same terms and conditions as applied in the corresponding Alexion awards immediately prior to completion. Alexion Performance Stock Plan (PSU) awards that included performance-based vesting conditions were converted using the greater of the original target level and Alexion’s assessment of the level of achievement immediately prior to completion (subject to a limit of 175 per cent. for the awards granted in 2019 and a limit of 150 per cent. for the awards granted in 2020). In the year, a cost of $257m (2021: $257m) has been recorded in the Statement of Comprehensive Income ($9m (2021: $9m)) in Cost of sales, $92m (2021: $73m) in Research and development expense and $156m (2021: $175m) in Selling, general and administrative expense). Payments made to the Employee Benefit Trust upon vesting of share awards recognised as part of the consideration for the acquisition of Alexion are recognised within investing activities in the Group’s Statement of Cash Flows as the cash payment relates to the settlement of the obligation that arose on the acquisition of Alexion that was included as part of the consideration for the acquisition.

There were no acquisitions of business operations in 2020.

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 183

# Notes to the Group Financial Statements

## 28 Financial risk management objectives and policies

The Group's principal financial instruments, other than derivatives, comprise bank overdrafts, loans and other borrowings, lease liabilities, current and non-current investments, cash and short-term deposits. The main purpose of these financial instruments is to manage the Group's funding and liquidity requirements. The Group has other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The principal financial risks to which the Group is exposed are those of liquidity, interest rate, foreign currency and credit. Each of these is managed in accordance with Board-approved policies. These policies, together with the Group's approach to capital management, are set out below.

### Capital management

The capital structure of the Group consists of Shareholders' equity (Note 24), Debt (Note 19), Other current investments (Note 12) and Cash (Note 17). For the foreseeable future, the Board will maintain a capital structure that supports the Group's strategic objectives through:

- maintaining a strong, investment-grade credit rating.

The Group utilises factoring arrangements for selected trade receivables. These factoring arrangements qualify for full derecognition of the associated trade receivables under IFRS 9. Amounts due on invoices that have not been factored at year end, from customers that are subject to factoring arrangements are disclosed in Note 16.

Funding and liquidity risk are reviewed regularly by the Board and managed in accordance with policies described below.

The Board regularly reviews its shareholders' distribution policy, which comprises a regular cash dividend and potentially a share repurchase component. No share repurchases have been made since 2012.

The Group's net debt position (loans and borrowings net of Cash and cash equivalents, Other investments and Derivative financial instruments) has decreased by $1,399m from a net debt position of $24,322m at the beginning of the year to a net debt position of $22,923m at 31 December 2022. Gross debt reduced from $30,781m to $29,232m, principally due to the repayment of the $1,000m 2.75% bond and a $250m floating rate note.

### Liquidity risk

The Board reviews the Group's ongoing liquidity risks annually as part of the planning process and on an ad hoc basis. The Board considers short-term requirements against available sources of funding, taking into account forecast cash flows. The Group manages liquidity risk by maintaining access to a number of sources of funding which are sufficient to meet anticipated funding requirements. Specifically, the Group uses US and European commercial paper, bank loans, committed bank facilities and cash resources to manage short-term liquidity and manages long-term liquidity by raising funds through the capital markets. At 31 December 2022, the Group was assigned short-term credit ratings of P-2 by Moody's and A-1 by Standard and Poor's. The Group's long-term credit rating was A3 Stable outlook by Moody's and A Stable outlook by Standard and Poor's.

In addition to Cash and cash equivalents of $6,166m, short-term fixed income investments of $13m, fixed deposits of $64m, less overdrafts of $183m at 31 December 2022, the Group has committed bank facilities of $4,875m available to manage liquidity. These committed bank facilities have no financial covenants and mature in April 2026. The Group regularly monitors the credit standing of the banks providing the facilities and currently does not anticipate any issue with drawing on the committed facilities should this be necessary. Advances under these facilities currently bear an interest rate per annum based on US dollar LIBOR (or other relevant benchmark rate) plus a margin. The facilities contain arrangements to switch to alternative risk free rate benchmarks before June 2023.

At 31 December 2022, the Group has $3,068m outstanding from debt issued under a Euro Medium Term Note programme and $20,651m under an SEC-registered programme. The funds made available under these facility agreements may be used for the general corporate purposes of the Group.

The maturity profile of the anticipated future contractual cash flows including interest in relation to the Group's financial liabilities, on an undiscounted basis and which, therefore, differs from both the carrying value and fair value, is as follows:

|  | Bank overdrafts and other loans $m | Bonds and bank loans $m | Lease liability $m | Trade and other payables $m | Total non-derivative financial instruments $m | Derivative financial instruments receivable $m | Derivative financial instruments payable $m | Total derivative financial instruments $m | Total $m |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Within one year | 667 | 2,136 | 207 | 15,812 | 18,822 | (9,719) | 9,620 | (99) | 18,723 |
| In one to two years | - | 1,839 | 168 | 2,584 | 4,591 | (60) | 67 | 7 | 4,598 |
| In two to three years | - | 2,101 | 120 | 1,658 | 3,879 | (59) | 67 | 8 | 3,887 |
| In three to four years | - | 1,617 | 82 | 1,728 | 3,427 | (1,151) | 1,080 | (71) | 3,356 |
| In four to five years | - | 2,502 | 53 | 722 | 3,277 | (36) | 40 | 4 | 3,281 |
| In more than five years | - | 16,921 | 108 | 1,435 | 18,464 | (1,707) | 1,652 | (55) | 18,409 |
|  | 667 | 27,116 | 738 | 23,939 | 52,460 | (12,732) | 12,526 | (206) | 52,254 |
| Effect of interest | - | (7,974) | - | - | (7,974) | 379 | (405) | (26) | (8,000) |
| Effect of discounting, fair values and issue costs | (1) | (109) | (57) | (2,070) | (2,237) | (70) | 24 | (46) | (2,283) |
| 31 December 2020 | 666 | 19,033 | 681 | 21,869 | 42,249 | (12,423) | 12,145 | (278) | 41,971 |

184 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

|  | Bank overdrafts and other loans $m | Bonds and bank loans $m | Lease liability $m | Trade and other payables $m | Total non-derivative financial instruments $m | Derivative financial instruments receivable $m | Derivative financial instruments payable $m | Total derivative financial instruments $m | Total $m |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Within one year | 387 | 1,981 | 256 | 19,007 | 21,631 | (11,766) | 11,774 | 8 | 21,639 |
| In one to two years | - | 5,647 | 210 | 2,521 | 8,378 | (55) | 66 | 11 | 8,389 |
| In two to three years | - | 5,242 | 163 | 1,669 | 7,074 | (1,060) | 1,079 | 19 | 7,093 |
| In three to four years | - | 2,591 | 130 | 862 | 3,583 | (35) | 39 | 4 | 3,587 |
| In four to five years | - | 2,970 | 96 | 233 | 3,299 | (118) | 111 | (7) | 3,292 |
| In more than five years | - | 19,727 | 221 | 2,212 | 22,160 | (1,521) | 1,480 | (41) | 22,119 |
|  | 387 | 38,158 | 1,076 | 26,504 | 66,125 | (14,555) | 14,549 | (6) | 66,119 |
| Effect of interest | - | (8,609) | - | - | (8,609) | 299 | (325) | (26) | (8,635) |
| Effect of discounting, fair values and issue costs | - | (142) | (89) | (2,633) | (2,864) | (36) | 7 | (29) | (2,893) |
| 31 December 2021 | 387 | 29,407 | 987 | 23,871 | 54,652 | (14,292) | 14,231 | (61) | 54,591 |

|  | Bank overdrafts and other loans $m | Bonds and bank loans $m | Lease liability $m | Trade and other payables $m | Total non-derivative financial instruments $m | Derivative financial instruments receivable $m | Derivative financial instruments payable $m | Total derivative financial instruments $m | Total $m |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Within one year | 365 | 5,777 | 249 | 19,065 | 25,456 | (12,445) | 12,478 | 33 | 25,489 |
| In one to two years | - | 5,233 | 208 | 2,086 | 7,527 | (1,012) | 1,078 | 66 | 7,593 |
| In two to three years | - | 2,608 | 172 | 872 | 3,652 | (34) | 38 | 4 | 3,656 |
| In three to four years | - | 2,983 | 128 | 595 | 3,706 | (103) | 103 | - | 3,706 |
| In four to five years | - | 1,267 | 84 | 814 | 2,165 | (32) | 35 | 3 | 2,168 |
| In more than five years | - | 18,156 | 184 | 3,177 | 21,517 | (1,436) | 1,378 | (58) | 21,459 |
|  | 365 | 36,024 | 1,025 | 26,609 | 64,023 | (15,062) | 15,110 | 48 | 64,071 |
| Effect of interest | (15) | (7,982) | - | - | (7,997) | 227 | (249) | (22) | (8,019) |
| Effect of discounting, fair values and issue costs | - | (113) | (72) | (3,299) | (3,484) | 63 | 7 | 70 | (3,414) |
| 31 December 2022 | 350 | 27,929 | 953 | 23,310 | 52,542 | (14,772) | 14,868 | 96 | 52,638 |

Where interest payments are on a floating rate basis, it is assumed that rates will remain unchanged from the last business day of each year ended 31 December.

The Group has $2bn of bank loans that mature in July 2023 and $2bn of bank loans that mature in July 2024, which the Group can repay before maturity at face value. Other than that, it is not expected that the cash flows in the maturity profile could occur significantly earlier or at significantly different amounts, with the exception of $2,222m of contingent consideration held within Trade and other payables (see Note 20).

## Market risk

### Interest rate risk

The Group maintains a Board-approved mix of fixed and floating rate debt and uses underlying debt, interest rate swaps and forward rate agreements to manage this mix.

At 31 December 2022, interest rate swaps with a notional value of $288m are fair valued through profit or loss and this has effectively converted the 7% guaranteed debentures payable in 2023 to floating rates. No new interest rate swaps were entered into during 2022.

The majority of surplus cash is currently invested in US dollar liquidity funds and investment-grade fixed income securities.

The interest rate profile of the Group's interest-bearing financial instruments are set out below. In the case of current and non-current financial liabilities, the classification includes the impact of interest rate swaps which convert the debt to floating rate.

|  | 2022 |  |  |  | 2021 |  |  |  | 2020 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Fixed rate $m | Floating rate $m | Total $m | Fixed rate $m | Floating rate $m | Total $m | Fixed rate $m | Floating rate $m | Total $m |
| Financial liabilities |  |  |  |  |  |  |  |  |  |
| Interest-bearing loans and borrowings |  |  |  |  |  |  |  |  |  |
| Current | 2,476 | 3,066 | 5,542 | 1,232 | 661 | 1,893 | 1,357 | 1,029 | 2,386 |
| Non-current | 21,511 | 2,179 | 23,690 | 23,985 | 4,903 | 28,888 | 17,005 | 989 | 17,994 |
| Total | 23,987 | 5,245 | 29,232 | 25,217 | 5,564 | 30,781 | 18,362 | 2,018 | 20,380 |
| Financial assets |  |  |  |  |  |  |  |  |  |
| Fixed deposits | 64 | - | 64 | 53 | - | 53 | 42 | - | 42 |
| Cash collateral pledged to counterparties | - | 162 | 162 | - | - | - | - | - | - |
| Cash and cash equivalents | 250 | 5,916 | 6,166 | - | 6,329 | 6,329 | - | 7,832 | 7,832 |
| Total | 314 | 6,078 | 6,392 | 53 | 6,329 | 6,382 | 42 | 7,832 | 7,874 |

In addition to the financial assets above, there are $9,546m (2021: $8,765m; 2020: $6,328m) of other current and non-current asset investments and other financial assets. Of these, $nil receive floating rate interest (2021: $nil; 2020: $nil).

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 185

# Notes to the Group Financial Statements
*continued*

## 28 Financial risk management objectives and policies *continued*

The Group is also exposed to market risk on other investments.

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Equity securities at fair value through Other comprehensive income (Note 12) | 1,056 | 1,168 | 1,108 |
| Non-current fixed income securities at fair value through profit and loss (Note 12) | 10 | - | - |
| Total | 1,066 | 1,168 | 1,108 |

### Foreign currency risk

The US dollar is the Group's most significant currency. As a consequence, the Group results are presented in US dollars and exposures are managed against US dollars accordingly.

### Translational

Approximately 61% of Group external sales in 2022 were denominated in currencies other than the US dollar, while a significant proportion of manufacturing, and research and development costs were denominated in pounds sterling and Swedish krona. Surplus cash generated by business units is substantially converted to, and held centrally in, US dollars. As a result, operating profit and total cash flow in US dollars will be affected by movements in exchange rates.

This currency exposure is managed centrally, based on forecast cash flows. The impact of movements in exchange rates is mitigated significantly by the correlations which exist between the major currencies to which the Group is exposed and the US dollar. Monitoring of currency exposures and correlations is undertaken on a regular basis and hedging is subject to pre-execution approval.

As at 31 December 2022, before the impact of derivatives, 2% of interest-bearing loans and borrowings were denominated in pounds sterling and 9% were denominated in euros. Where there is non-US dollar debt and an underlying net investment of that amount in the same currency, the Group applies net investment hedging. Exchange differences on the retranslation of debt designated as net investment hedges are recognised in Other comprehensive income to the extent that the hedge is effective. Any ineffectiveness is taken to profit. For details of non-US dollar debt in a designated hedging relationship please see the Hedge accounting section within this Note 28 from page 188.

The Group holds cross-currency swaps to hedge against the impact of fluctuations in foreign exchange rates. Fair value movements on the revaluation of the cross-currency swaps are recognised in Other comprehensive income to the extent that the hedge is effective, with any ineffectiveness taken to profit.

As at 31 December 2022, the Group operates in three countries designated as hyperinflationary, being Argentina, Venezuela and Turkey. The foreign exchange risk of these markets has been assessed and deemed to be immaterial.

### Transactional

The Group aims to hedge all its forecasted major transactional currency exposures on working capital balances, which typically extend for up to three months. Where practicable, these are hedged using forward foreign exchange contracts. In addition, external dividend payments in pounds sterling to UK shareholders and in Swedish krona to Swedish shareholders are fully hedged from announcement date to payment date. Foreign exchange gains and losses on forward contracts transacted for transactional hedging are taken to profit or to Other comprehensive income if the contract is in a designated cashflow hedge.

### Sensitivity analysis

The sensitivity analysis set out below summarises the sensitivity of the market value of our financial instruments to hypothetical changes in market rates and prices. The range of variables chosen for the sensitivity analysis reflects our view of changes which are reasonably possible over a one-year period. Market values are the present value of future cash flows based on market rates and prices at the valuation date. For long-term debt, an increase in interest rates results in a decline in the fair value of debt.

The sensitivity analysis assumes an instantaneous 100 basis point change in interest rates in all currencies from their levels at 31 December 2022, with all other variables held constant. Based on the composition of our long-term debt portfolio and cash reserves as at 31 December 2022, a 1% increase in interest rates would result in an additional $52m in interest expense on the debt and an additional $59m interest income on the cash reserves. The exchange rate sensitivity analysis assumes an instantaneous 10% change in foreign currency exchange rates from their levels at 31 December 2022, with all other variables held constant. The +10% case assumes a 10% strengthening of the US dollar against all other currencies and the -10% case assumes a 10% weakening of the US dollar.

Each incremental 10% movement in foreign currency exchange rates would have approximately the same effect as the initial 10% detailed in the table below and each incremental 1% change in interest rates would have approximately the same effect as the 1% detailed in the table below.

| 31 December 2020 | Interest rates |  | Exchange rates |  |
| --- | --- | --- | --- | --- |
|  | +1% | -1% | +10% | -10% |
| Increase/(decrease) in fair value of financial instruments ($m) | 1,696 | (1,758) | 114 | (132) |
| Impact on profit: (loss)/gain ($m) | - | - | (57) | 74 |
| Impact on equity: gain/(loss) ($m) | - | - | 171 | (206) |

| 31 December 2021 | Interest rates |  | Exchange rates |  |
| --- | --- | --- | --- | --- |
|  | +1% | -1% | +10% | -10% |
| Increase/(decrease) in fair value of financial instruments ($m) | 1,978 | (2,106) | 82 | (85) |
| Impact on profit: gain/(loss) ($m) | - | - | 24 | (9) |
| Impact on equity: gain/(loss) ($m) | - | - | 58 | (76) |

186 AstraZeneca Annual Report & Form 20-F Information 2022

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Strategic Report Corporate Governance Financial Statements Additional Information

| 31 December 2022 | Interest rates |  | Exchange rates |  |
| --- | --- | --- | --- | --- |
|  | +1% | -1% | +10% | -10% |
| Increase/(decrease) in fair value of financial instruments ($m) | 1,317 | (1,490) | 81 | (89) |
| Impact on profit: gain/(loss) ($m) | - | - | 26 | (15) |
| Impact on equity: gain/(loss) ($m) | - | - | 55 | (74) |

### Credit risk

The Group is exposed to credit risk on financial assets, such as cash investments, derivative instruments, and Trade and other receivables. The Group is also exposed in its Net asset position to its own credit risk in respect of the 2023 debentures which are accounted for at fair value through profit or loss. Under IFRS 9, the effect of the losses and gains arising from own credit risk on the fair value of bonds designated at fair value through profit or loss are recorded in Other comprehensive income.

### Financial counterparty credit risk

The majority of the AstraZeneca Group's cash is centralised within the Group treasury entity and is subject to counterparty risk on the principal invested. The level of the Group's cash investments and hence credit risk will depend on the cash flow generated by the Group and the timing of the use of that cash. The credit risk is mitigated through a policy of prioritising security and liquidity over return and, as such, cash is only invested in high credit-quality investments. Counterparty limits are set according to the assessed risk of each counterparty and exposures are monitored against these limits on a regular basis.

The Group's principal financial counterparty credit risks at 31 December 2022 were as follows:

#### Current assets

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Cash at bank and in hand | 1,411 | 1,461 | 1,182 |
| Money market liquidity funds | 4,486 | 4,772 | 6,602 |
| Other short-term cash equivalents | 269 | 96 | 48 |
| Total Cash and cash equivalents (Note 17) | 6,166 | 6,329 | 7,832 |
| Fixed income securities at fair value through profit and loss (Note 12) | 13 | 16 | 118 |
| Cash collateral pledged to counterparties (Note 12) | 162 | - | - |
| Fixed deposits (Note 12) | 64 | 53 | 42 |
| Total derivative financial instruments (Note 13) | 87 | 83 | 142 |
| Current assets subject to credit risk | 6,492 | 6,481 | 8,134 |

#### Non-current assets

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Derivative financial instruments (Note 13) | 74 | 102 | 171 |
| Non-current assets subject to credit risk | 74 | 102 | 171 |

The majority of the Group's cash is invested in US dollar AAA rated money market liquidity funds. The money market liquidity fund portfolios are managed by five external third-party fund managers to maintain an AAA rating. The Group's investments represent no more than 10% of each overall fund value. There were no other significant concentrations of financial credit risk at the reporting date.

All financial derivatives are transacted with commercial banks, in line with standard market practice. The Group has agreements with some bank counterparties whereby the parties agree to post cash collateral, for the benefit of the other, equivalent to the market valuation of the derivative positions above a predetermined threshold. The carrying value of such cash collateral held by the Group at 31 December 2022 was $89m (2021: $93m; 2020: $288m) and the carrying value of such cash collateral posted by the Group at 31 December 2022 was $162m (2021: $47m; 2020: $11m).

The impairment provision for other financial assets at 31 December 2022 was immaterial.

### Trade receivables

Trade receivable exposures are managed locally in the operating units where they arise and credit limits are set as deemed appropriate for the customer. The Group is exposed to customers ranging from government-backed agencies and large private wholesalers to privately owned pharmacies, and the underlying local economic and sovereign risks vary throughout the world. Where appropriate, the Group endeavours to minimise risks by the use of trade finance instruments such as letters of credit and insurance. The Group applies the expected credit loss approach to establish an allowance for impairment that represents its estimate of expected losses in respect of Trade receivables.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all Trade receivables. To measure expected credit losses, Trade receivables have been grouped based on shared credit characteristics and the days past due.

The expected loss rates are based on payment profiles over a period of 36 months before 31 December 2022, 31 December 2021 or 31 December 2020 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customer to settle the receivables.

On that basis, the loss allowance was determined as follows:

| 31 December 2020 | Current | 0-90 days past due | 90-180 days past due | Over 180 days past due | Total |
| --- | --- | --- | --- | --- | --- |
| Expected loss rate | 0.1% | 1.6% | 19.4% | 60.6% |  |
| Gross carrying amount ($m) | 3,659 | 124 | 21 | 25 | 3,829 |
| Loss allowance ($m) | 2 | 2 | 4 | 15 | 23 |

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 187

# Notes to the Group Financial Statements
*continued*

## 28 Financial risk management objectives and policies *continued*

| 31 December 2021 | Current | 0-90 days past due | 90-180 days past due | Over 180 days past due | Total |
| --- | --- | --- | --- | --- | --- |
| Expected loss rate | 0.1% | 1.2% | 22.6% | 11.0% |  |
| Gross carrying amount ($m) | 5,617 | 328 | 18 | 91 | 6,054 |
| Loss allowance ($m) | 5 | 4 | 4 | 10 | 23 |
| 31 December 2022 | Current | 0-90 days past due | 90-180 days past due | Over 180 days past due | Total |
| Expected loss rate | 0.03% | 0.3% | 32.0% | 40.6% |  |
| Gross carrying amount ($m) | 6,791 | 331 | 50 | 99 | 7,271 |
| Loss allowance ($m) | 2 | 1 | 16 | 40 | 59 |

Trade receivables are written off where there is no reasonable expectation of recovery.

Impairment losses on Trade receivables are presented as net impairment losses within Operating profit, any subsequent recoveries are credited against the same line.

In the US, sales to three wholesalers accounted for approximately 73% of US sales (2021: three wholesalers accounted for approximately 94%; 2020: three wholesalers accounted for approximately 95%).

The movements of the Group expected credit losses provision are follows:

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| At 1 January | 23 | 23 | 21 |
| Net movement recognised in income statement | 37 | (2) | 3 |
| Amounts utilised, exchange and other movements | (1) | 2 | (1) |
| At 31 December | 59 | 23 | 23 |

Given the profile of our customers, including large wholesalers and government-backed agencies, no further credit risk has been identified with the Trade receivables not past due other than those balances for which an allowance has been made. The income statement credit or charge is recorded in Operating profit.

### Hedge accounting

The Group uses foreign currency borrowings, foreign currency forwards and swaps, currency options, interest rate swaps and cross-currency interest rate swaps for the purpose of hedging its foreign currency and interest rate risks. The Group may designate certain financial instruments as fair value hedges, cash flow hedges or net investment hedges in accordance with IFRS 9. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. Sources of hedge effectiveness will depend on the hedge relationship designation but may include:

- > a significant change in the credit risk of either party to the hedging relationship
- > a timing mismatch between the hedging instrument and the hedged item
- > movements in foreign currency basis spread for derivatives in a fair value hedge
- > a significant change in the value of the foreign currency denominated net assets of the Group in a net investment hedge.

The hedge ratio for each designation will be established by comparing the quantity of the hedging instrument and the quantity of the hedged item to determine their relative weighting; for all of the Group's existing hedge relationships the hedge ratio has been determined as 1:1. Designated hedges are expected to be effective and therefore the impact of ineffectiveness on profit is not expected to be material. The accounting treatment for fair value hedges and debt designated as fair value through profit or loss is disclosed in the Group Accounting Policies section from page 142.

The following table represents the Group's continuing designated hedge relationships under IFRS 9.

2020

|  | Nominal amounts in local currency | Carrying value $m | Other comprehensive income |  |  |  | Closing balance 31 December 2020 $m | Average maturity year | Average USD FX rate | Average pay interest rate |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Opening balance 1 January 2020 $m | Fair value (gain)/loss deferred to OCI $m | Fair value loss recycled to the Income statement $m |  |  |  |  |  |
| Fair value hedge - foreign currency and interest rate risk 1 |  |  |  |  |  |  |  |  |  |  |
| Cross currency interest rate swap - Euro bond | EUR 300m | 43 | - | - | - | - | - | 2021 | 1.09 | USD LIBOR + 1.27% |
| Cash flow hedges - foreign currency and interest rate risk 2, 4, 5 |  |  |  |  |  |  |  |  |  |  |
| Cross currency interest rate swaps - Euro bonds | EUR 2,200m | 150 | (30) | (163) | 239 | 46 | - | 2025 | 1.14 | USD 2.69% |
| FX Forwards - short term FX risk | USD 618m | 5 | - | (20) | 15 | (5) | - | 2021 | - | - |
| Net investment hedge - foreign exchange risk 3, 4 |  |  |  |  |  |  |  |  |  |  |
| Transactions matured pre-2020 | - | - | (565) | - | - | (565) | - | - | - | - |
| Cross currency interest rate swap - JPY investment | JPY 58.5bn | 19 | (4) | (15) | - | (19) | - | 2029 | 108.03 | JPY 1.53% |
| Cross currency interest rate swap - CNY investment | CNY 458m | (2) | 1 | 1 | - | 2 | - | 2026 | 6.68 | CNY 4.80% |
| Foreign currency borrowing - GBP investment | GBP 350m | (475) | (251) | 18 | - | (233) | - | 2031 | n/a | GBP 5.75% |
| Foreign currency borrowing - EUR investment 6 | EUR 450m | (548) | 34 | 51 | - | 85 | - | 2021 | n/a | EUR 0.88% |
| Contingent consideration liabilities and Acerta Pharma put option liability - AZUK and AZAB USD investments | USD 5,252m | (5,252) | 2,053 | (642) | - | 1,411 | - | - | - | - |

188 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

2021

|  | Other comprehensive income |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Nominal amounts in local currency | Carrying value $m | Opening balance 1 January 2021 $m | Fair value (gain)/loss deferred to OCI $m | Fair value loss recycled to the Income statement $m | Closing balance 31 December 2021 $m | Average maturity year | Average USD FX rate | Average pay interest rate |
| Cash flow hedges - foreign currency and interest rate risk 2, 4, 5 |  |  |  |  |  |  |  |  |  |
| Cross currency interest rate swaps - Euro bonds | EUR 1,700m | (43) | 46 | 182 | (201) | 27 | 2026 | 1.14 | USD 2.85% |
| FX Forwards - short term FX risk | USD 1,220m | 12 | (5) | - | (7) | (12) | 2022 | - | - |
| Net investment hedge - foreign exchange risk 3, 4 |  |  |  |  |  |  |  |  |  |
| Transactions matured pre-2021 | - | - | (565) | - | - | (565) | - | - | - |
| Cross currency interest rate swap - JPY investment | JPY 58.3bn | 62 | (19) | (43) | - | (62) | 2029 | 108.03 | JPY 1.53% |
| Cross currency interest rate swap - CNY investment | CNY 458m | (2) | 2 | - | - | 2 | 2026 | 6.68 | CNY 4.80% |
| Foreign currency borrowing - GBP investment | GBP 350m | 470 | (233) | (5) | - | (238) | 2031 | n/a | GBP 5.75% |
| Foreign currency borrowing - EUR investment 6 | EUR 450m | - | 85 | (47) | - | 38 | 2021 | n/a | EUR 0.88% |
| Foreign currency borrowing - EUR investment 7 | EUR 800m | 898 | - | (50) | - | (50) | 2029 | n/a | EUR 0.38% |
| Contingent consideration liabilities and Acerta Pharma share purchase liability - AZUK and AZAB USD investments | USD 2,658m | (2,658) | 1,411 | 421 | - | 1,832 | - | - | - |

2022

|  | Other comprehensive income |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Nominal amounts in local currency | Carrying value $m | Opening balance 1 January 2022 $m | Fair value (gain)/loss deferred to OCI $m | Fair value (gain)/loss recycled to the Income statement $m | Closing balance 31 December 2022 $m | Average maturity year | Average USD FX rate | Average pay interest rate |
| Cash flow hedges - foreign currency and interest rate risk 2, 4, 5 |  |  |  |  |  |  |  |  |  |
| Cross currency interest rate swaps - Euro bonds | EUR 1,700m | (160) | 27 | 118 | (111) | 34 | 2026 | 1.14 | USD 2.85% |
| FX Forwards - short term FX risk | USD 1,126m | (12) | (12) | (14) | 38 | 12 | 2023 | - | - |
| Net investment hedge - foreign exchange risk 3, 4 |  |  |  |  |  |  |  |  |  |
| Transactions matured pre-2022 | - | - | (527) | - | - | (527) | - | - | - |
| Cross currency interest rate swap - JPY investment | JPY 58.3bn | 55 | (62) | 7 | - | (55) | 2029 | 108.03 | JPY 1.53% |
| Cross currency interest rate swap - CNY investment | CNY 458m | (4) | 2 | 2 | - | 4 | 2026 | 6.68 | CNY 4.80% |
| Foreign currency borrowing - GBP investment | GBP 350m | 420 | (238) | (50) | - | (288) | 2031 | n/a | GBP 5.75% |
| Foreign currency borrowing - EUR investment 7 | EUR 800m | 846 | (50) | (52) | - | (102) | 2029 | n/a | EUR 0.38% |
| Contingent consideration liabilities and Acerta Pharma share purchase liability - AZUK and AZAB USD investments | USD 2,093m | (2,093) | 1,832 | 384 | - | 2,216 | - | - | - |

$^{1}$ Swaps designated in a fair value hedge matured on 24 November 2021 and hedge ineffectiveness during 2022 was $nil (2021: $nil; 2020: gain of $1m).

$^{2}$ Hedge ineffectiveness recognised on swaps designated in a cash flow hedge during the period was $nil (2021: $nil; 2020: $nil).

$^{3}$ Hedge ineffectiveness recognised on swaps designated in a net investment hedge during the period was $nil (2021: $nil; 2020: $nil).

$^{4}$ Fair value movements on cross-currency interest rate swaps in cash flow hedge and net investment hedge relationships are shown inclusive of the impact of costs of hedging.

$^{5}$ Nominal amount of FX forwards in a cash flow hedge of $1,710m represents the USD equivalent notional of the FX forwards. By currency, the nominal amounts were SEK 8,148m at FX rate 10.4568, JPY 18,963m at 132.15, GBP 455m at 0.8288 and EUR 224m at 0.9389. All FX forwards in a cash flow hedge mature on 25 January 2023.

$^{6}$ The EUR 450m NIM matured in November 2021, when the hedging instrument, a EUR bond matured.

$^{7}$ On 3 June 2021, upon issuance of the EUR 800m 0.375% 2020 Non-callable bond, EUR 550m was designated in a net investment hedge of the foreign currency exposure in relation of an equivalent amount of EUR-denominated net assets. The remaining EUR 250m was subsequently designated in a net investment hedge upon maturity of the EUR 450m bond on 24 November 2021.

Key controls applied to transactions in derivative financial instruments are to use only instruments where good market liquidity exists, to revalue all financial instruments regularly using current market rates and to sell options only to offset previously purchased options or as part of a risk management strategy. The Group is not a net seller of options, and does not use derivative financial instruments for speculative purposes. The Group held no options during the reporting period.

## 29 Employee costs and share plans for employees

### Employee costs

The monthly average number of people, to the nearest hundred, employed by the Group is set out in the table below. In accordance with the Companies Act 2006, this includes part-time employees.

| Employees | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| UK | 9,800 | 8,900 | 7,900 |
| Rest of Europe | 20,600 | 18,300 | 16,600 |
| The Americas | 20,900 | 18,800 | 17,300 |
| Asia, Africa & Australasia | 30,700 | 33,600 | 33,000 |
| Continuing operations | 82,000 | 79,600 | 74,800 |

Geographical distribution described in the table above is by location of legal entity employing staff. Certain staff will undertake some or all of their activity in a different location.

The number of people employed by the Group at the end of 2022 was 83,500 (2021: 83,100; 2020: 76,100).

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 189

# Notes to the Group Financial Statements

### 29 Employee costs and share plans for employees *continued*

The costs incurred during the year in respect of these employees were:

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Wages and salaries | 8,656 | 7,633 | 6,273 |
| Social security costs | 991 | 886 | 726 |
| Pension costs | 546 | 564 | 435 |
| Other employment costs | 1,338 | 1,192 | 813 |
| Total | 11,531 | 10,275 | 8,247 |

Severance costs of $227m are not included above (2021: $238m; 2020: $116m).

The charge for share-based payments in respect of share plans is $619m (2021: $615m; 2020: $277m). Payments made to the Employee Benefit Trust upon vesting of share awards are recognised within operating cash flows, reflecting the substance of the arrangement in place between the group and the Trust. The plans are equity settled.

The Directors believe that, together with the basic salary system, the Group's employee incentive schemes provide competitive and market-related packages to motivate employees. They should also align the interests of employees with those of shareholders, as a whole, through long-term share ownership in the Company. The Group's current US, UK and Swedish schemes are described below, other arrangements apply elsewhere.

#### Bonus and share plans

##### US

In the US, there are two all-employee short-term or annual performance bonus plans in operation to differentiate and reward strong individual performance. Annual bonuses are paid in cash. There is also one senior staff long-term incentive scheme, under which 190 participants may be eligible for awards granted as AstraZeneca ADRs. AstraZeneca ADRs necessary to satisfy the awards are purchased in the market or funded via a share trust. The AstraZeneca Performance Share Plan and the AstraZeneca Global Restricted Stock Plan operate in respect of relevant employees in the US.

##### UK

##### The AstraZeneca UK Performance Bonus Plan

Employees of participating AstraZeneca UK companies are invited to participate in this bonus plan, which rewards strong individual performance. Bonuses are paid in cash.

##### The AstraZeneca UK All-Employee Share Plan

The Company offers UK employees the opportunity to buy Partnership Shares (Ordinary Shares). Employees may invest up to £150 a month to purchase Partnership Shares in the Company at the current market value. In 2010, the Company introduced a Matching Share element, the first award of which was made in 2011. Currently one Matching Share is awarded for every four Partnership Shares purchased. Partnership Shares and Matching Shares are held in the HM Revenue & Customs (HMRC)-approved All-Employee Share Plan. At the Company's AGM in 2002, shareholders approved the issue of new shares for the purposes of the All-Employee Share Plan.

##### Sweden

In Sweden, an all-employee performance bonus plan is in operation, which rewards strong individual performance. Bonuses are paid 50% into a fund investing in AstraZeneca equities and 50% in cash. The AstraZeneca Executive Annual Bonus Scheme, the AstraZeneca Performance Share Plan and the AstraZeneca Global Restricted Stock Plan all operate in respect of relevant AstraZeneca employees in Sweden.

Other bonus and share plans that operate across the Group are described below.

##### The AstraZeneca Executive Annual Bonus Scheme

This scheme is a performance bonus scheme for Directors and senior employees who do not participate in the AstraZeneca UK Performance Bonus Plan. Annual bonuses are paid in cash and reflect both corporate and individual performance measures. The Remuneration Committee has discretion to reduce or withhold bonuses if business performance falls sufficiently short of expectations in any year such as to make the payment of bonuses inappropriate.

##### The AstraZeneca Deferred Bonus Plan

This plan was introduced in 2006 and is used to defer a portion of the bonus earned under the AstraZeneca Executive Annual Bonus Scheme into Ordinary Shares in the Company for a period of three years. The plan currently operates only in respect of Executive Directors and members of the SET (with awards granted as AstraZeneca ADRs for members of SET employed within the US). Awards of shares under this plan are typically made in March each year, the first award having been made in February 2006.

##### The AstraZeneca Performance Share Plan

This plan was approved by shareholders in 2020 for a period of 10 years (subsequently amended by approval of shareholders in 2021) and replaces the 2014 AstraZeneca Performance Share Plan. Generally, awards can be granted at any time, but not during a closed period of the Company. The first grant of Performance Share Plan awards was made in May 2014 under the 2014 AstraZeneca Performance Share Plan. Awards granted under the plan vest after three years, or in the case of Executive Directors and members of the SET, after an additional two-year holding period, and is subject to the achievement of performance conditions. For awards granted to all participants in 2022, vesting is subject to a combination of measures focused on science and innovation, revenue growth, financial performance and carbon reduction. The Remuneration Committee has responsibility for agreeing any awards under the plan and for setting the policy for the way in which the plan should be operated, including agreeing performance targets and which employees should be invited to participate.

190 AstraZeneca Annual Report & Form 20-F Information 2022

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### The AstraZeneca Investment Plan

This plan was introduced in 2010 and approved by shareholders at the 2010 AGM. The final grant of awards under this plan took place in March 2016. Awards granted under the plan vest after eight years and are subject to performance conditions measured over a period of four years.

### The AstraZeneca Global Restricted Stock Plan

This plan was introduced in 2010. This plan provides for the grant of restricted stock unit (RSU) awards to selected below SET-level employees and is used in conjunction with the AstraZeneca Performance Share Plan to provide a mix of RSUs and performance shares. Awards typically vest on the third anniversary of the date of grant and are contingent on continued employment with the Company. The Remuneration Committee has responsibility for agreeing any awards under the plan and for setting the policy for the way in which the plan should be operated.

### The AstraZeneca Restricted Share Plan

This plan was introduced in 2008 and provides for the grant of restricted share awards to key employees, excluding Executive Directors. Awards are made on an ad hoc basis with variable vesting dates. The plan has been used four times in 2022 to make awards to 112 employees. The Remuneration Committee has responsibility for agreeing any awards under the plan and for setting the policy for the way in which the plan should be operated.

### The AstraZeneca Extended Incentive Plan

This plan was introduced in 2018 and provides for the grant of awards to key employees, excluding Executive Directors. Awards are made on an ad hoc basis and 50% of the award will normally vest on the fifth anniversary of grant, with the balance vesting on the tenth anniversary of grant. The award can be subject to the achievement of performance conditions. The Remuneration Committee has responsibility for agreeing any awards under the plan and for setting the policy for the way in which the plan should be operated, including agreeing performance targets (if any) and which employees should be invited to participate.

Details of share options outstanding during the year for the main share plans are shown below.

|  | The AstraZeneca Performance Share Plan |  | The AstraZeneca Global Restricted Stock Plan |  | The AstraZeneca Restricted Share Plan |  | The AstraZeneca Extended Incentive Plan |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Ordinary Shares '000 | ADR Shares '000 | Ordinary Shares '000 | ADR Shares '000 | Ordinary Shares '000 | ADR Shares '000 | Ordinary Shares '000 | ADR Shares '000 |
| Outstanding at 1 January 2020 | 2,859 | 5,206 | 1,328 | 9,770 | 176 | 649 | 282 | 65 |
| Granted | 932 | 1,767 | 689 | 3,671 | 80 | 295 | 18 | - |
| Forfeited | (191) | (478) | (113) | (1,077) | (6) | (79) | - | - |
| Cancelled | (3) | - | - | (9) | - | - | - | - |
| Exercised | (552) | (1,704) | (278) | (3,180) | (89) | (359) | - | - |
| Outstanding at 31 December 2020 | 3,045 | 4,791 | 1,626 | 9,175 | 161 | 506 | 300 | 65 |
| Granted | 1,275 | 2,082 | 902 | 4,509 | 139 | 481 | - | 175 |
| Forfeited | (220) | (494) | (158) | (1,254) | (18) | (42) | (18) | (45) |
| Cancelled | (9) | - | (1) | (8) | - | - | - | - |
| Exercised | (632) | (1,201) | (341) | (2,881) | (27) | (182) | - | - |
| Outstanding at 31 December 2021 | 3,459 | 5,178 | 2,028 | 9,541 | 255 | 763 | 282 | 195 |
| Granted | 1,059 | 2,339 | 1,237 | 6,478 | 75 | 216 | - | - |
| Forfeited | (132) | (570) | (190) | (1,627) | (25) | (136) | (23) | - |
| Cancelled | - | - | - | (3) | - | - | - | - |
| Exercised | (756) | (1,223) | (606) | (2,706) | (72) | (165) | - | - |
| Outstanding at 31 December 2022 | 3,630 | 5,724 | 2,469 | 11,683 | 233 | 678 | 259 | 195 |

$^{1}$ Shares issued to Alexion employees under the CRSP are covered under the Alexion employee share award below.

|  | The AstraZeneca Performance Share Plan |  | The AstraZeneca Global Restricted Stock Plan |  | The AstraZeneca Restricted Share Plan |  | The AstraZeneca Extended Incentive Plan |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | WAFV 1 pence | WAFV $ | WAFV pence | WAFV $ | WAFV pence | WAFV $ | WAFV pence | WAFV $ |
| WAFV of 2020 grants | 6664 | 43.24 | 7408 | 47.71 | 7931 | 52.92 | 8386 | - |
| WAFV of 2021 grants | 6012 | 41.56 | 6893 | 47.75 | 7415 | 53.96 | - | 56.83 |
| WAFV of 2022 grants | 8328 | 55.73 | 9167 | 61.21 | 9894 | 63.35 | - | - |

$^{1}$ Weighted average fair value.

### Alexion employee share award plan

At acquisition in 2021, Alexion employee share awards were converted into AstraZeneca restricted stock awards that continue to have, and shall be subject to, the same terms and conditions as applied in the corresponding Alexion awards immediately prior to completion. The fair value at the grant date was $57.54 and of the 15,220,000 ADR shares outstanding at 31 December 2021, 8,627,000 were exercised during 2022 and 980,000 were forfeited. During 2022, Alexion employees had the option to defer awards due to vest in July 2022 until February 2023 when they would also receive an additional vest equivalent to 15% of the shares deferred. As a result, 1,780,000 shares were deferred, resulting in an additional 267,000 ADR shares being issued under the Global Restricted Stock Plan, under original Alexion terms and conditions, with a grant date fair value of $65.62.

The weighted average fair value for awards granted under the AstraZeneca Performance Share Plan is primarily based on the market price at the point of grant adjusted for the market-based performance elements which are valued using a modified version of the Monte Carlo method. The fair values of all other plans are set using the market price at the point of award. These awards are settled in equity including dividends accumulated from the date of award to vesting.

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 191

# Notes to the Group Financial Statements

## 30 Commitments, contingent liabilities and contingent assets

| Commitments | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Contracts placed for future capital expenditure on Property, plant and equipment and software development costs not provided for in these financial statements | 502 | 388 | 689 |

Guarantees and contingencies arising in the ordinary course of business, for which no security has been given, are not expected to result in any material financial loss.

### Research and development collaboration payments

The Group has various ongoing collaborations, including in-licensing and similar arrangements with development partners. Such collaborations may require the Group to make payments on achievement of stages of development, launch or revenue milestones, although the Group generally has the right to terminate these agreements at no cost. The Group recognises research and development milestones as an intangible asset once it is committed to payment, which is generally when the Group reaches set trigger points in the development cycle. Revenue-related milestones are recognised as intangible assets on product launch at a value based on the Group's long-term revenue forecasts for the related product. The table below indicates potential development and revenue-related payments that the Group may be required to make under such collaborations.

|  | Total $m | Under 1 year $m | Years 1 and 2 $m | Years 3 and 4 $m | Years 5 and greater $m |
| --- | --- | --- | --- | --- | --- |
| Future potential research and development milestone payments | 11,729 | 1,320 | 2,662 | 2,698 | 5,049 |
| Future potential revenue milestone payments | 17,499 | 65 | 368 | 1,859 | 15,207 |

The table includes all potential payments for achievement of milestones under ongoing research and development arrangements. Revenue-related milestone payments represent the maximum possible amount payable on achievement of specified levels of revenue as set out in individual contract agreements, but exclude variable payments that are based on unit sales (e.g. royalty-type payments) which are expensed as the associated sale is recognised. The table excludes any payments already capitalised in the Financial Statements for the year ended 31 December 2022.

The future payments we disclose represent contracted payments and, as such, are not discounted and are not risk-adjusted. As detailed in the Risk section from page 56, the development of any pharmaceutical product candidate is a complex and risky process that may fail at any stage in the development process due to a number of factors (including items such as failure to obtain regulatory approval, unfavourable data from key studies, adverse reactions to the product candidate or indications of other safety concerns). The timing of the payments is based on the Group's current best estimate of achievement of the relevant milestone.

### Environmental costs and liabilities

The Group's expenditure on environmental protection, including both capital and revenue items, relates to costs that are necessary for implementing internal systems and programmes, and meeting legal and regulatory requirements for processes and products. This includes investment to conserve natural resources and otherwise minimise the impact of our activities on the environment.

They are an integral part of normal ongoing expenditure for carrying out the Group's research, manufacturing and commercial operations and are not separated from overall operating and development costs. There are no known changes in legal, regulatory or other requirements resulting in material changes to the levels of expenditure for 2020, 2021 or 2022.

In addition to expenditure for meeting current and foreseen environmental protection requirements, the Group incurs costs in investigating and cleaning up legacy land and groundwater contamination. In particular, AstraZeneca has environmental liabilities at some currently or formerly owned, leased and third-party sites.

In the US, Zeneca Inc., and/or its indemnitees, have been named as potentially responsible parties (PRPs) or defendants at a number of sites where Zeneca Inc. is likely to incur future environmental investigation, remediation, operation and maintenance costs under federal, state, statutory or common law environmental

liability allocation schemes (together, US Environmental Consequences). Similarly, Stauffer Management Company LLC (SMC), which was established in 1987 to own and manage certain assets of Stauffer Chemical Company acquired that year, and/or its indemnitees, have been named as PRPs or defendants at a number of sites where SMC is likely to incur US Environmental Consequences.

AstraZeneca has also given indemnities to third parties for a number of sites outside the US. These environmental liabilities arise from legacy operations that are not currently part of the Group's business and, at most of these sites, remediation, where required, is either completed or in progress. AstraZeneca has made provisions for the estimated costs of future environmental investigation, remediation, operation and maintenance activity beyond normal ongoing expenditure for maintaining the Group's R&D and manufacturing capacity and product ranges, where a present obligation exists, it is probable that such costs will be incurred and they can be estimated reliably. With respect to such estimated future costs, there were provisions at 31 December 2022 in the aggregate of $131m (2021: $90m; 2020: $100m), mainly relating to the US. Where we are jointly liable or otherwise have cost-sharing agreements with third parties, we reflect only our share of the obligation. Where the liability is insured in part or in whole by insurance or other arrangements for reimbursement, an asset is recognised to the extent that this recovery is virtually certain.

It is possible that AstraZeneca could incur future environmental costs beyond the extent of our current provisions. The extent of such possible additional costs is inherently difficult to estimate due to a number of factors, including: (i) the nature and extent of claims that may be asserted in the future; (ii) whether AstraZeneca has or will have any legal obligation with respect to asserted or unasserted claims; (iii) the type of remedial action, if any, that may be selected at sites where the remedy is presently not known; (iv) the potential for recoveries from or allocation of liability to third parties; and (v) the length of time that the environmental investigation, remediation and liability allocation process can take. As per our accounting policy on page 148, provisions for these costs are made when there is a present obligation and where it is probable that expenditure on remedial work will be required and a reliable estimate can be made of the cost. Notwithstanding and subject to the foregoing, we estimate the potential additional loss for future environmental investigation, remediation, remedial operation and maintenance activity above and beyond our provisions to be, in aggregate, between $113m and $188m (2021: $99m and $165m; 2020: $95m and $158m) which relates mainly to the US.

### Legal proceedings

AstraZeneca is involved in various legal proceedings considered typical to its business, including actual or threatened litigation and actual or potential government investigations relating to employment matters, product liability, commercial disputes, pricing, sales and

192 AstraZeneca Annual Report & Form 20-F Information 2022

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Strategic Report Corporate Governance Financial Statements Additional Information

marketing practices, infringement of IP rights, and the validity of certain patents and competition laws. The more significant matters are discussed below.

Most of the claims involve highly complex issues. Often these issues are subject to substantial uncertainties and, therefore, the probability of a loss, if any, being sustained and/or an estimate of the amount of any loss is difficult to ascertain.

There is one matter, which is considered probable that an outflow will be required, but for which we are unable to make an estimate of the possible loss or range of possible losses at this stage.

We do not believe that disclosure of the amounts sought by plaintiffs, if known, would be meaningful with respect to these legal proceedings. This is due to a number of factors, including (i) the stage of the proceedings (in many cases trial dates have not been set) and the overall length and extent of pre-trial discovery; (ii) the entitlement of the parties to an action to appeal a decision; (iii) clarity as to theories of liability, damages and governing law; (iv) uncertainties in timing of litigation; and (v) the possible need for further legal proceedings to establish the appropriate amount of damages, if any.

While there can be no assurance regarding the outcome of any of the legal proceedings referred to in this Note 30, based on management's current and considered view of each situation, we do not currently expect them to have a material adverse effect on our financial position including within the next financial year. This position could of course change over time, not least because of the factors referred to above.

In cases that have been settled or adjudicated, or where quantifiable fines and penalties have been assessed and which are not subject to appeal (or other similar forms of relief), or where a loss is probable and we are able to make a reasonable estimate of the loss, we indicate the loss absorbed or make a provision for our best estimate of the expected loss.

Where it is considered that the Group is more likely than not to prevail, legal costs involved in defending the claim are charged to profit as they are incurred.

Where it is considered that the Group has a valid contract which provides the right to reimbursement (from insurance or otherwise) of legal costs and/or all or part of any loss incurred or for which a provision has been established, and we consider recovery to be virtually certain, the best estimate of the amount expected to be received is recognised as an asset.

**IM** Assessments as to whether or not to recognise provisions or assets, and of the amounts concerned, usually involve a series of complex judgements about future events and can rely heavily on estimates and assumptions. AstraZeneca believes that the provisions recorded are adequate based on currently available information and that the insurance recoveries recorded will be received. However, given the inherent uncertainties involved in assessing the outcomes of these cases, and in estimating the amount of the potential losses and the associated insurance recoveries, we could in the future incur judgments or insurance settlements that could have a material adverse effect on our results in any particular period.

IP claims include challenges to the Group's patents on various products or processes and assertions of non-infringement of patents. A loss in any of these cases could result in loss of patent protection on the related product. The consequences of any such loss could be a significant decrease in Product Sales, which could have a material adverse effect on our results. The lawsuits filed by AstraZeneca for patent infringement against companies that have filed abbreviated new drug applications (ANDAs) in the US, seeking to market generic forms of products sold by the Group prior to the expiry of the applicable patents covering these products, typically also involve allegations of non-infringement, invalidity and unenforceability of these patents by the ANDA filers. In the event that the Group is unsuccessful in these actions or the statutory 30-month stay expires before a ruling is obtained, the ANDA filers involved will also have the ability, subject to FDA approval, to introduce generic versions of the product concerned.

AstraZeneca has full confidence in, and will vigorously defend and enforce, its IP.

Over the course of the past several years, including in 2022, a significant number of commercial litigation claims in which AstraZeneca is involved have been resolved, particularly in the US, thereby reducing potential contingent liability exposure arising from such litigation. Similarly, in part due to patent litigation and settlement developments, greater certainty has been achieved regarding possible generic entry dates with respect to some of our patented products. At the same time, like other companies in the pharmaceutical sector and other industries, AstraZeneca continues to be subject to government investigations around the world.

#### Patent litigation

**Legal proceedings brought against AstraZeneca considered to be contingent liabilities**

##### *Enhertu*

##### US patent proceedings

In October 2020, Seagen Inc. (Seagen) filed a complaint against Daiichi Sankyo Company, Limited in the US District Court for the Eastern District of Texas alleging that *Enhertu* infringes US Patent No. 10,808,039 (the '039 patent).

AstraZeneca Pharmaceuticals LP co-commercialises *Enhertu* with Daiichi Sankyo, Inc. in the US. After trial in April 2022, the jury found that the patent was infringed and awarded Seagen $41.82m in past damages. In July 2022, the District Court entered final judgment and declined to enhance damages on the basis of willfulness. The parties await consideration of post-trial motions.

In December 2020 and January 2021, AstraZeneca and Daiichi Sankyo, Inc. filed post-grant review (PGR) petitions with the US Patent and Trademark Office (USPTO) alleging, inter alia, that the Seagen patent is invalid for lack of written description and enablement. The USPTO initially declined to institute the PGRs, but, in April 2022, the USPTO granted the rehearing requests, instituting both PGR petitions. Seagen subsequently disclaimed all patent claims at issue in one of the PGR proceedings. In July 2022, the USPTO reversed its institution decision and declined to institute the other PGR petition. AstraZeneca and Daiichi Sankyo, Inc. have requested reconsideration of the decision not to institute review of the patent.

##### *Imfinzi*

##### US patent proceedings

In March 2022, Bristol-Myers Squibb Co. and E.R. Squibb & Sons, LLC filed a lawsuit in US District Court for the District of Delaware against AstraZeneca alleging that AstraZeneca's marketing of *Imfinzi* infringes several of their patents. Trial has been scheduled for April 2024.

##### Patent proceedings outside the US

In February 2022, in Japan, Ono Pharmaceuticals filed a lawsuit in Tokyo District Court, Civil Division against AstraZeneca alleging that AstraZeneca's marketing of *Imfinzi* in Japan infringes several of their patents.

##### *Imjudo*

##### US patent proceedings

In January 2023, Bristol-Myers Squibb Co. and E.R. Squibb & Sons, LLC filed a lawsuit in US District Court for the District of Delaware against AstraZeneca alleging that AstraZeneca's marketing of *Imjudo* infringes two of their patents.

##### *Tagrisso*

##### US patent proceedings

In September 2021, Puma Biotechnology, Inc. and Wyeth LLC filed a patent infringement lawsuit in the US District Court for the District of Delaware against AstraZeneca relating to *Tagrisso*. Trial has been scheduled for May 2024.

##### *Movantik*

##### US patent proceedings

In March 2020, Aether Therapeutics, Inc. filed a patent infringement lawsuit in the US District Court for the District of Delaware against AstraZeneca, Nektar Therapeutics and Daiichi Sankyo, Inc., relating to *Movantik*. Trial has been scheduled for March 2023.

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 193

# Notes to the Group Financial Statements
*continued*

## 30 Commitments, contingent liabilities and contingent assets *continued*

### Legal proceedings brought against

AstraZeneca which have been concluded
Roxadustat

#### US patent proceedings

In April 2021, Akebia Therapeutics, Inc. (Akebia) and Otsuka America Pharmaceutical, Inc. (Otsuka) served AstraZeneca with a complaint seeking a declaration of invalidity and non-infringement for several of FibroGen, Inc's (FibroGen) method of use patents related to HIF polyhydroxylase inhibitors. AstraZeneca is the exclusive licensee of FibroGen in the United States. In April 2022, this matter was dismissed and is now concluded.

#### *Ultomiris*

#### US patent proceedings

In November and December of 2018, Chugai Pharmaceutical Co., Ltd. (Chugai) filed lawsuits against Alexion in the Delaware District Court as well as in Tokyo District Court, alleging that *Ultomiris* infringed US and Japanese patents held by Chugai. In March 2022, Alexion entered into a settlement agreement with Chugai for $775m that resolved all patent disputes between the two companies related to *Ultomiris*. This matter is now concluded.

### Legal proceedings brought by AstraZeneca considered to be contingent assets

#### *Brilinta*

#### US patent proceedings

In 2015 and subsequently, in response to Paragraph IV notices from ANDA filers, AstraZeneca filed patent infringement lawsuits in the US District Court for the District of Delaware (the District Court) relating to patents listed in the FDA Orange Book with reference to *Brilinta*. In 2022, AstraZeneca entered into several separate settlements and the District Court entered consent judgments to dismiss each of the corresponding litigations. Additional proceedings are ongoing in the District Court. No trial date has been set.

#### *Calquence*

#### US patent proceedings

In February 2022, in response to Paragraph IV notices from multiple ANDA filers, AstraZeneca filed patent infringement lawsuits in the US District Court for the District of Delaware. In its complaint, AstraZeneca alleges that a generic version of *Calquence*, if approved and marketed, would infringe patents listed in the US FDA Orange Book with reference to *Calquence* that are owned or licensed by AstraZeneca. Trial has been scheduled for March 2025.

In February 2023, Sandoz Inc. filed a petition for inter partes review with the US Patent and Trademark Office (USPTO) of certain *Calquence* patent claims in US Patent No. 10,272,083 (the '083 patent). AstraZeneca has asserted claims for infringement of the '083 patent against Sandoz and other defendants in the US ANDA litigation. AstraZeneca is considering its response to Sandoz's petition before the USPTO.

#### *Daliresp*

#### US patent proceedings

In 2015 and subsequently, in response to Paragraph IV notices from ANDA filers, AstraZeneca filed patent infringement lawsuits in the US District Court for the District of New Jersey (the District Court) relating to patents listed in the FDA Orange Book with reference to *Daliresp*. In 2022, AstraZeneca entered into a settlement and the District Court entered a consent judgment to dismiss the corresponding litigation. Additional ANDA challenges are pending.

#### *Faslodex*

#### Patent proceedings outside the US

In 2021 in Japan, AstraZeneca received notice from the Japan Patent Office (JPO) that Sandoz K.K. and Sun Pharma Japan Ltd. (Sun) were seeking to invalidate the *Faslodex* formulation patent. AstraZeneca defended the challenged patent, and Sun withdrew from the JPO patent challenge. In May 2022, the JPO held the hearing in the matter and issued its preliminary decision in September 2022 upholding various claims of the challenged patent and determining that other patent claims were invalid. A final JPO decision is forthcoming.

#### *Tagrisso*

#### Patent proceedings outside the US

In Russia in October 2021, AstraZeneca filed a lawsuit in the Arbitration Court of the Moscow Region (the Court) against Axelpharm, LLC to prevent it from obtaining authorisation to market a generic version of *Tagrisso* prior to the expiration of AstraZeneca's patents covering *Tagrisso*. The lawsuit also names the Ministry of Health of the Russian Federation as a third party. In March 2022, the Court dismissed the lawsuit. In June 2022, the dismissal was affirmed on appeal. In January 2023, the dismissal was affirmed on further appeal. AstraZeneca is considering its option.

#### *Farxiga/Forxiga*

#### US patent proceedings

In 2018, in response to Paragraph IV notices, AstraZeneca initiated ANDA litigation against Zydus Pharmaceuticals (USA) Inc. (Zydus) in the US District Court for the District of Delaware (the District Court). In May 2021, trial against Zydus proceeded in the District Court and in October 2021, the District Court issued a decision finding the asserted claims of AstraZeneca's patent as valid and infringed by Zydus's ANDA product. In August 2022, Zydus appealed the District Court's decision. In November 2022, Zydus's appeal was dismissed. Additional ANDA challenges are pending.

#### *Lokelma*

#### US patent proceedings

In August 2022, in response to Paragraph IV notices, AstraZeneca initiated ANDA litigation against multiple generic filers in the US District Court for the District of Delaware. Trial has been scheduled for March 2025.

#### *Symbicort*

#### US patent proceedings

AstraZeneca is involved in ongoing ANDA litigations with Mylan Pharmaceuticals Inc. (Mylan) and Kindeva Drug Delivery L.P. (Kindeva) brought in the US District Court for the Northern District of West Virginia (the District Court). In the actions, AstraZeneca alleges that the defendants' generic versions of *Symbicort*, if approved and marketed, would infringe various AstraZeneca patents.

In one of those matters, in November 2022, the District Court determined that the asserted patent was invalid. In November 2022, AstraZeneca appealed that decision to the United States Court of Appeals for the Federal Circuit (the Federal Circuit). With respect to the other matter, following a stipulation of infringement and validity by Mylan and Kindeva that was subject to certain appeal issues, in December 2022, the District Court issued a Final Judgment in favour of AstraZeneca. In December 2022, Mylan and Kindeva appealed the Final Judgment to the Federal Circuit. Both appeals are scheduled to be heard in March 2023.

#### *Lynparza*

#### US patent proceedings

In December 2022, AstraZeneca received a Paragraph IV notice letter from an ANDA filer relating to patents listed in the FDA Orange Book with reference to *Lynparza*. AstraZeneca is reviewing the notice letter.

### Legal proceedings brought by AstraZeneca which have been concluded

#### *Tagrisso*

#### US patent proceedings

In February 2020, in response to Paragraph IV notices from multiple ANDA filers, AstraZeneca filed patent infringement lawsuits in the US District Court for the District of Delaware. In its complaint, AstraZeneca alleges that a generic version of *Tagrisso*, if approved and marketed, would infringe a US Orange Book-listed *Tagrisso* patent. In the fourth quarter of 2021 and April 2022, AstraZeneca entered into settlement agreements with Zydus Pharmaceuticals (USA) Inc., Cadila Healthcare Limited, MSN Laboratories Pvt. Ltd., MSN Pharmaceuticals Inc. and Alembic Pharmaceuticals Limited. These settlements resolve all US patent litigation between the parties relating to *Tagrisso*.

### Product liability litigation

#### Legal proceedings brought against AstraZeneca considered to be contingent liabilities

#### *Farxiga* and *Xigduo XR*

#### US proceedings

In several jurisdictions in the US, AstraZeneca has been named as a defendant in lawsuits involving plaintiffs claiming physical injury, including Fournier's Gangrene and necrotising fasciitis, from treatment with *Farxiga* and/or *Xigduo XR*. A majority of these claims are filed in Delaware state court and remain pending. One case, filed in state court in Minnesota, is scheduled for trial in October 2023.

194 AstraZeneca Annual Report & Form 20-F Information 2022

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Strategic Report Corporate Governance

Financial Statements

Additional Information

### *Nexium* and *Losec/Prilosec*

In the US, AstraZeneca is defending various lawsuits brought in federal and state courts involving multiple plaintiffs claiming that they have been diagnosed with various injuries following treatment with proton pump inhibitors (PPIs), including *Nexium* and *Prilosec*. The vast majority of those lawsuits relate to allegations of kidney injuries. In May 2017, counsel for a group of such plaintiffs claiming that they have been diagnosed with kidney injuries filed a motion with the Judicial Panel on Multidistrict Litigation (JPML) seeking the transfer of any currently pending federal court cases as well as any similar, subsequently filed cases to a coordinated and consolidated pre-trial multidistrict litigation (MDL) proceeding. In August 2017, the JPML granted the motion and consolidated the pending federal court cases in an MDL proceeding in District Court in New Jersey for pre-trial purposes. A bellwether trial has been scheduled for June 2023, with subsequent bellwether trials scheduled for July and September 2023. In addition to the MDL cases, there are cases filed in several state courts around the US; a case that was previously set to go to trial in Delaware state court was dismissed in October 2022.

In addition, AstraZeneca has been defending lawsuits involving allegations of gastric cancer following treatment with PPIs. One such claim is filed in the US District Court for the Middle District of Louisiana and was scheduled to go to trial in January 2023. That case has been postponed and a new trial date has not yet been set.

### **Canada proceedings**

In Canada, in July and August 2017, AstraZeneca was served with three putative class action lawsuits. Two of the lawsuits have been dismissed, one in 2019 and one in 2021. The third lawsuit seeks authorisation to represent individual residents in Canada who allegedly suffered kidney injuries from the use of proton pump inhibitors, including *Nexium* and *Losec*.

### *Onglyza* and *Kombiglyze*

#### **US proceedings**

In the US, AstraZeneca is defending various lawsuits alleging heart failure, cardiac injuries, and/or death from treatment with *Onglyza* or *Kombiglyze*. In February 2018, the Judicial Panel on Multidistrict Litigation ordered the transfer of various pending federal actions to the US District Court for the Eastern District of Kentucky (the District Court) for consolidated pre-trial proceedings with the federal actions pending in the District Court. In the California State Court coordinated proceeding, AstraZeneca's motion for summary judgment was granted in March 2022. The District Court granted AstraZeneca's motion for summary judgment in August 2022. Plaintiffs are in the process of appealing both decisions.

### **Legal proceedings brought against AstraZeneca which have been concluded**

#### *Byetta/Bydureon*

#### **US proceedings**

In the US, Amylin Pharmaceuticals, LLC (a wholly owned subsidiary of AstraZeneca) and AstraZeneca are among multiple defendants in various lawsuits filed in federal and state courts involving claims of physical injury from treatment with *Byetta* and/or *Bydureon*. The lawsuits allege several types of injuries including pancreatic cancer and thyroid cancer. A multidistrict litigation was established in the US District Court for the Southern District of California (the District Court) in regard to the alleged pancreatic cancer cases in federal courts. Further, a coordinated proceeding has been established in Superior Court in Los Angeles, California (the California Court) for cases in California state courts. In March and April 2021, the District Court and the California Court respectively granted the Defendants' summary judgment motions, dismissing all cases alleging pancreatic cancer with prejudice. All remaining claims in both courts, including those alleging thyroid cancer, have since been dismissed. This matter is now concluded.

### **Commercial litigation**

#### **Legal proceedings brought against AstraZeneca considered to be contingent liabilities**

In December 2016, putative securities class action lawsuits were filed in the US District Court for the District of Connecticut (the District Court) against Alexion and certain officers and directors, on behalf of purchasers of Alexion publicly traded securities during the period 30 January 2014 through 26 May 2017. The amended complaint alleges that defendants engaged in securities fraud, including by making misrepresentations and omissions in its public disclosures concerning Alexion's *Soliris* sales practices, management changes, and related investigations. In August 2021, the District Court issued a decision denying in part Defendants' motion to dismiss the matter. Plaintiffs' motion for class certification, which Alexion opposed in April 2022, remains pending.

### **Anti-Terrorism Act Civil Lawsuit**

In the US, in October 2017, AstraZeneca and certain other pharmaceutical and/or medical device companies were named as defendants in a complaint filed in US District Court for the District of Columbia (the District Court) by US nationals (or their estates, survivors, or heirs) who were killed or wounded in Iraq between 2005 and 2013. The plaintiffs allege that the defendants violated the US Anti-Terrorism Act and various state laws by selling pharmaceuticals and medical supplies to the Iraqi Ministry of Health. In July 2020, the District Court granted AstraZeneca's and the other defendants' motion and dismissed the lawsuit, and the plaintiffs appealed to the DC Circuit Court of Appeals (the Appellate Court). In January 2022, a panel

of the Appellate Court reversed the dismissal and remanded the case back to the District Court. AstraZeneca and the other defendants have filed petitions requesting en banc review by the entire Appellate Court, which were denied in February 2023.

### **AZD1222 Securities Litigation**

In January 2021, putative securities class action lawsuits were filed in the US District Court for the Southern District of New York (the District Court) against AstraZeneca PLC and certain officers, on behalf of purchasers of AstraZeneca publicly traded securities during a period later amended to cover 15 June 2020 through 29 January 2021. The Amended Complaint alleges that defendants made materially false and misleading statements in connection with the development of AZD1222, AstraZeneca's vaccine for the prevention of COVID-19. In September 2022, the District Court granted AstraZeneca's motion to dismiss the Amended Complaint with prejudice, disallowing any further amendments. Plaintiffs have appealed this decision.

### **Definiens**

In Germany, in July 2020, AstraZeneca received a notice of arbitration filed with the German Institution of Arbitration from the sellers of Definiens AG (the Sellers) regarding the 2014 Share Purchase Agreement (SPA) between AstraZeneca and the Sellers. The Sellers claim that they are owed approximately $140m in earn-outs under the SPA. The arbitration hearing has been scheduled for March 2023.

### **Employment Litigation (US)**

In December 2022, AstraZeneca was served with a lawsuit filed by seven former employees in the US District Court for the District of Delaware asserting age, religion, and disability discrimination claims related to AstraZeneca's COVID-19 vaccine mandate. These claims are pled on a single-plaintiff and class action basis.

### **Equity Litigation (US)**

AstraZeneca was defending a putative class and collective action matter in the US District Court for the Northern District of Illinois brought by three named plaintiffs, who are former AstraZeneca pharmaceutical sales representatives. The case involved claims under the federal and Illinois Equal Pay Acts, with the plaintiffs alleging they were paid less than male employees who performed substantially similar and/or equal work. The plaintiffs sought various damages on behalf of themselves and the putative class and/or collective, including without limitation backpay, liquidated damages, compensatory and punitive damages, attorneys' fees, and interest. In January 2023, the District Court granted AstraZeneca's motion to dismiss plaintiffs' complaint.

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 195

# Notes to the Group Financial Statements

### 30 Commitments, contingent liabilities and contingent assets *continued*

#### Portola Shareholder Litigation

In the US, in connection with Alexion's July 2020 acquisition of Portola Pharmaceuticals, Inc (Portola), Alexion assumed litigation to which Portola is a party. In January 2020, putative securities class action lawsuits were filed in the US District Court for the Northern District of California against Portola and certain officers and directors, on behalf of purchasers of Portola publicly traded securities during the period 8 January 2019 through 26 February 2020. The operative complaints allege that defendants made materially false and/or misleading statements or omissions with regard to *Andexxa*. In June 2022, the parties reached a settlement in principle of this matter, which is subject to court approval.

#### Seroquel XR (Antitrust Litigation)

In the US in 2019, AstraZeneca was named in several related complaints brought in the US District Court for the Southern District of New York (the District Court), including several putative class action lawsuits that were purportedly brought on behalf of classes of direct purchasers or end payors of *Seroquel XR*, that allege AstraZeneca and generic drug manufacturers violated US antitrust laws when settling patent litigation related to *Seroquel XR*. In July 2022, in response to AstraZeneca's motion, the District Court dismissed all claims relating to the settlement with one of the generic manufacturers but denied the motion with respect to all claims relating to the second generic manufacturer and allowed those claims to proceed.

#### Syntimmune

In connection with Alexion's prior acquisition of Syntimmune, Inc., (Syntimmune) in December 2020, Alexion was served with a lawsuit filed by the stockholders' representative for Syntimmune in Delaware State Court that alleged, among other things, breaches of contractual obligations relating to the 2018 merger agreement. The stockholders' representative alleges that Alexion failed to meet its obligations under the merger agreement to use commercially reasonable efforts to achieve the milestones. Alexion also filed a claim for breach of the representations in the 2018 merger agreement.

#### Legal proceedings brought against AstraZeneca which have been concluded

##### Array BioPharma

In December 2017, AstraZeneca was served with a complaint filed in New York State court by Array BioPharma, Inc. (Array) alleging breaches of contractual obligations relating to a 2003 collaboration agreement between AstraZeneca and Array. In May 2022, the parties resolved this dispute. This matter is now concluded.

#### Legal proceedings brought by AstraZeneca considered to be contingent assets

##### PARP Inhibitor Royalty Dispute

In October 2012, Tesaro, Inc. (now wholly owned by GlaxoSmithKline plc, 'GSK') entered into two worldwide, royalty-bearing patent license agreements with AstraZeneca related to GSK's product niraparib. In May 2021, AstraZeneca filed a lawsuit against GSK in the Commercial Court of England and Wales alleging that GSK has failed to pay all of the royalties due on niraparib sales under the license agreements. The case has been transferred to the Chancery Division and the trial has been scheduled for March 2023.

#### Government investigations/proceedings

#### Legal proceedings brought against AstraZeneca considered to be contingent liabilities

##### Brazilian tax assessment matter

In connection with an ongoing matter, in August 2019, the Brazilian Federal Revenue Service provided a Notice of Tax and Description of the Facts (the Tax Assessment) to two Alexion subsidiaries (the Brazil Subsidiaries), as well as to two additional entities, a logistics provider utilised by Alexion and a distributor. The Tax Assessment focuses on the importation of *Soliris* vials pursuant to Alexion's free drug supply to patients programme in Brazil.

Alexion prevailed in the first level of administrative appeals in the Brazilian federal administrative proceeding system based on a deficiency in the Brazil Tax Assessment. The decision was subject to an automatic (ex officio) appeal to the second level of the administrative courts, which is pending.

#### COVID-19 vaccine supply and manufacturing inquiries

In February 2022, a Brazilian Public Prosecutor filed a lawsuit against several defendants including the Brazilian Federal Government, AstraZeneca, and other COVID-19 vaccine manufacturers. In April 2022, a Brazilian Court issued an order dismissing the lawsuit. An appeal is pending.

#### Turkish Ministry of Health matter

In Turkey, in July 2020, the Turkish Ministry of Health (Ministry of Health) initiated an investigation regarding payments to healthcare providers by Alexion Turkey and former employees and consultants. The investigation arose from Alexion's disclosure of a $21.5m civil settlement with the US Securities & Exchange Commission (SEC) in July 2020 fully resolving the SEC's investigation into possible violations of the FCPA. In September 2021, the Ministry of Health completed its draft investigation report, and referred the matter to the Ankara Public Prosecutor's Office with a recommendation for further proceedings against certain former employees.

#### Texas Qui Tam

#### US proceedings

In December 2022, AstraZeneca was served with an unsealed civil lawsuit brought by a qui tam relator on behalf of the State of Texas in Texas state court, which alleges that AstraZeneca engaged in unlawful marketing practices.

#### Vermont US Attorney investigation

#### US proceedings

In April 2020, AstraZeneca received a Civil Investigative Demand from the US Attorney's Office in Vermont and the Department of Justice, Civil Division, seeking documents and information relating to AstraZeneca's relationships with electronic health-record vendors. AstraZeneca is cooperating with this enquiry.

#### Legal proceedings brought against AstraZeneca which have been concluded

##### Brazilian operations investigation

In May 2017, Brazilian authorities seized records and data from Alexion's Brazil offices as part of an investigation being conducted into Alexion's Brazilian operations. AstraZeneca cooperated with this enquiry. The prosecutor recommended discontinuance in September 2022 after determining that there was insufficient evidence to support a legal claim. The judicial authority approved discontinuance of the investigation, without any further enforcement action, in November 2022. This matter is now concluded.

#### COVID-19 vaccine supply and manufacturing inquiries

In June 2021, Argentina's Federal Criminal Prosecutor's Office (the Prosecutor) contacted AstraZeneca Argentina seeking documents and electronic records in connection with a local criminal investigation relating to the public procurement and supply of *Vaxzevria* in that country. In October 2021, the Prosecutor filed a submission with the presiding court requesting dismissal of the criminal investigation, and that request was granted by the court in February 2022. This matter is now closed.

#### Legal proceedings brought by AstraZeneca which have been concluded

##### Canadian pricing matter

In October 2017, Alexion filed proceedings in the Federal Court of Canada to seek judicial review of a determination by the Canadian Patented Medicine Prices Review Board (PMPRB) that Alexion had excessively priced *Soliris* in a manner inconsistent with the Canadian pricing rules and guidelines. In June 2022, the parties resolved this matter. This matter is now concluded.

196 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

# **Other**

# **US 340B litigations and proceedings  
US proceedings**

AstraZeneca is involved in several matters relating to its contract pharmacy recognition policy under the 340B Drug Pricing Program in the US. AstraZeneca has sought to intervene in three lawsuits against several US government agencies and their officials relating to the appropriate interpretation of the governing statute for the 340B Drug Pricing Program. Two of the three cases are currently stayed pending further proceedings and the third case has been dismissed.

Administrative Dispute Resolution proceedings have also been initiated against AstraZeneca before the US Health Resources and Services Administration.

As previously disclosed, in January 2021, AstraZeneca filed a separate lawsuit in the US District Court for the District of Delaware alleging that an Advisory Opinion issued by the Department of Health and Human Services violates the Administrative Procedure Act. In June 2021, the District Court found in favour of AstraZeneca, invalidating the Advisory Opinion. Prior to the District Court's ruling, however, in May 2021, the US government issued new and separate letters to AstraZeneca (and other companies) asserting that our contract pharmacy policy violates the 340B statute. AstraZeneca amended the complaint to include allegations challenging the letter sent in May, and in February 2022, the District Court ruled in favour of AstraZeneca invalidating those letters sent by the US Government. In January 2023, the Court of Appeals affirmed the District Court decision in AstraZeneca's favour.

In September 2021, AstraZeneca was served with a class-action antitrust complaint filed in the US District Court for the Western District of New York (the District Court) by Mosaic Health alleging a conspiracy to restrict access to 340B discounts in the diabetes market through contract pharmacies. In September 2022, the District Court granted Defendants' motion to dismiss the Complaint. Plaintiffs are now seeking leave to amend their complaint.

# **Additional government inquiries**

As is true for most, if not all, major prescription pharmaceutical companies, AstraZeneca is currently involved in multiple inquiries into drug marketing and pricing practices. In addition to the investigations described above, various law enforcement offices have, from time to time, requested information from the Group. There have been no material developments in those matters.

# **Tax**

AstraZeneca considers whether it is probable that a taxation authority will accept an uncertain tax treatment. If it is concluded that it is not probable that the taxation authority will accept an uncertain tax treatment, where tax exposures can be quantified, a tax liability is recognised based on either the most likely amount method or the expected value method depending on which method management expects to better predict the resolution of the uncertainty. Tax liabilities for uncertain tax treatments can be built up over a long period of time but the resolution of such tax exposures usually occurs at a point in time, and given the inherent uncertainties in assessing the outcomes of these exposures (which sometimes can be binary in nature), we could, in future periods, experience adjustments to the liabilities recognised in respect of uncertain tax treatments that have a material positive or negative effect on our results in any particular period. Details of the movements in relation to material uncertain tax treatments are discussed below.

**A**straZeneca faces a number of audits and reviews in jurisdictions around the world and, in some cases, is in dispute with the tax authorities. The issues under discussion are often complex and can require many years to resolve. Tax liabilities recognised for uncertain tax treatments require management to make key judgements with respect to the outcome of current and potential future tax audits, and actual results could vary from these estimates.

The total net tax liability recognised in the Group Financial Statements in respect of uncertain tax positions is $830m (2021: $768m; 2020: $1,014m). The net tax liability consists of $632m (2021: $702m; 2020: $852m) included within income tax payable, $20m (2021: $17m; 2020: $nil) included within deferred tax liability and $291m (2021: $(33)m; 2020: $76m) included within deferred tax asset, partially offset by $113m (2021: additional $82m; 2020: additional $86m) included within income tax receivable.

# **Transfer pricing**

The net tax liability included in the Group Financial Statements to cover the worldwide exposure to uncertain tax treatments is $260m (2021: $77m; 2020: $287m). These matters can be complex and judgemental. The liability includes uncertain tax treatments which are estimated using the expected value method and depend on AstraZeneca's assessment of the likelihood of the approach taken by the tax authorities and could change in the future to reflect progress in tax authority reviews, the extent that any tax authority challenge is concluded, or matters lapse including following expiry of the relevant statutes of limitation resulting in a reduction in the tax charge in future periods.

For transfer pricing matters, including items under tax audit, AstraZeneca estimates the potential for additional tax liabilities above the amount provided where the possibility of the additional liabilities falling due is more than remote, to be up to $245m (2021: $48m; 2020: $251m) including associated interest.

There were no uncertain tax treatments relating to transfer pricing which give rise to potential for additional tax liabilities where the possibility of the additional liabilities falling due is more than remote.

Management believes that it is unlikely that these additional liabilities will arise. It is possible that some of these contingencies may change in the future to reflect progress in tax authority reviews, to the extent that any tax authority challenge is concluded, or matters lapse including following expiry of the relevant statutes of limitation resulting in a reduction in the tax charge in future periods. Management continues to believe that AstraZeneca's positions on all its transfer pricing positions, audits and disputes are robust, and that AstraZeneca has recognised appropriate tax balances, including consideration of whether corresponding relief will be available under Mutual Agreement procedures or unilaterally.

The increase in the net tax liability for uncertain tax positions relating to transfer pricing of $183m compared with 2021 is mainly as a result of an increase of tax liabilities arising from updates to estimates of prior period tax liabilities following progression of tax authority reviews.

# **Other uncertain tax treatments**

Included in the net tax liability is $570m (2021: $691m; 2020: $727m) relating to a number of other uncertain tax treatments. The decrease of $121m in the net tax liability relating to the other uncertain tax treatments mainly relates to releases of tax liabilities following the expiry of the relevant statute of limitations and exchange rate effects. The majority of the liability relates to tax liabilities in respect of uncertain tax treatments which are estimated using the expected value method and depend on AstraZeneca's assessment of the likelihood of the approach taken by the tax authorities and could change in the future to reflect progress in tax authority reviews, the extent that any tax authority challenge is concluded, or matters lapse including following expiry of the relevant statutes of limitation resulting in a reduction in the tax charge in future periods.

For these other tax liabilities in respect of uncertain tax treatments, AstraZeneca estimates the potential for additional liabilities above the amount provided where the possibility of the additional liabilities falling due is more than remote, to be up to $209m (2021: $273m; 2020: $293m) including

Notes to the Group Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 197

# Notes to the Group Financial Statements

### 30 Commitments, contingent liabilities and contingent assets *continued*

associated interest. It is possible that some of these liabilities may reduce in the future if any tax authority challenge is concluded or matters lapse following expiry of the relevant statutes of limitation, resulting in a reduction in the tax charge in future periods.

For uncertain tax treatments relating to other tax matters for which no tax liability has been recognised, AstraZeneca estimates the potential for additional tax liabilities where the possibility of the additional liabilities falling due is more

than remote to be up to $280m (2021: $325m; 2020: $224m) including associated interest.

#### Timing of cash flows and interest

The Group is currently under audit in several countries and the timing of any resolution of these audits is uncertain.

It is not possible to estimate the timing of tax cash flows in relation to each outcome. It is anticipated that tax payments may be required in relation to a number of significant disputes

which may be resolved over the next one to two years. AstraZeneca considers the tax liabilities set out above to appropriately reflect the expected value of any final settlement. Some of the items discussed above are not currently within the scope of tax authority audits and may take longer to resolve.

Included within other payables is a net amount of interest arising on tax contingencies of $106m (2021: $85m; 2020: $82m).

### 31 Statutory and other information

|  | 2022 $m | 2021 $m | 2020 $m |
| --- | --- | --- | --- |
| Fees payable to PricewaterhouseCoopers LLP and its associates: |  |  |  |
| Group audit fee | 9.9 | 10.5 | 6.3 |
| Fees payable to PricewaterhouseCoopers LLP and its associates for other services: |  |  |  |
| The audit of subsidiaries pursuant to legislation | 15.1 | 15.2 | 10.8 |
| Attestation under s404 of Sarbanes-Oxley Act 2002 | 3.1 | 2.0 | 2.0 |
| Audit-related assurance services | 0.7 | 4.5 | 0.7 |
| Other assurance services | 0.2 | 3.4 | 0.2 |
| Fees payable to PricewaterhouseCoopers Associates in respect of the Group's pension schemes: |  |  |  |
| The audit of subsidiaries' pension schemes | 0.3 | 0.3 | 0.3 |
|  | 29.3 | 35.9 | 20.3 |

$0.6m of fees payable in 2022 are in respect of the Group audit and audit of subsidiaries related to prior years (2021: $0.4m in respect of the Group audit and audit of subsidiaries related to prior years).

$0.3m of 2021 Group audit fees and $0.7m of 2021 Audit-related assurance services and Other assurance services relate to pre-acquisition fees incurred by Alexion.

Included in the 2021 Audit-related assurance services and Other assurance services are $6.1m of services provided in relation to the acquisition of Alexion and related debt issuance.

#### Related party transactions

The Group had no material related party transactions which might reasonably be expected to influence decisions made by the users of these Financial Statements.

#### Key management personnel compensation

Key management personnel are defined for the purpose of disclosure under IAS 24 'Related Party Disclosures' as the members of the Board and the members of the SET.

|  | 2022 $'000 | 2021 $'000 | 2020 $'000 |
| --- | --- | --- | --- |
| Short-term employee benefits | 38,632 | 32,985 | 29,126 |
| Post-employment benefits | 1,388 | 1,378 | 1,602 |
| Share-based payments | 56,297 | 45,234 | 27,666 |
|  | 96,317 | 79,597 | 58,394 |

Total remuneration is included within employee costs (see Note 29).

### 32 Subsequent events

On 9 January 2023, it was announced that AstraZeneca had entered into a definitive agreement to acquire CinCor Pharma, Inc. (CinCor), a US-based clinical-stage biopharmaceutical company, focused on developing novel treatments for resistant and uncontrolled hypertension as well as chronic kidney disease. On 23 January 2023, AstraZeneca initiated a tender offer to acquire all of CinCor's outstanding shares for a price of $26 per share in cash at closing, plus a non-tradable contingent value right of $10 per share in cash payable upon a specified regulatory submission of a baxdrostat product. Combined, the upfront and maximum potential contingent value payments represent, if achieved, a transaction value of approximately $1.8bn. As part of the transaction, AstraZeneca will acquire the cash and marketable securities on CinCor's balance sheet, which totalled approximately $522m as of 30 September 2022. The transaction is expected to close in the first quarter of 2023.

On 16 January 2023, AstraZeneca completed the acquisition of Neogene Therapeutics Inc. (Neogene). AstraZeneca acquired all outstanding equity of Neogene for a total consideration of up to $320m, on a cash and debt free basis. This includes an initial payment of $200m on deal closing, and a further up to $120m in both contingent milestones-based and non-contingent consideration.

On 30 January 2023, AstraZeneca completed the sale of its West Chester site in Ohio, US, to National Resilience, Inc. On completion of the sale, the Property, plant and equipment assets associated with this transaction of $150m which were recorded as Assets held for sale as at 31 December 2022 have been disposed of, with no net impact recorded in the Consolidated Statement of Comprehensive Income.

On 2 February 2023, the Group entered into an additional $2.0bn of two-year committed bank facilities.

198 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

# Group Subsidiaries and Holdings

In accordance with section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, joint ventures and joint arrangements, the place of incorporation, registered office address, and the effective percentage of equity owned as at 31 December 2022 are disclosed below. Unless otherwise stated the share capital disclosed comprises ordinary shares which are indirectly held by AstraZeneca PLC.

Unless otherwise stated the accounting year ends of subsidiaries are 31 December. The Group Financial Statements consolidate the Financial Statements of the Company and its subsidiaries at 31 December 2022.

| At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest |
| --- | --- | --- | --- | --- | --- |
| Wholly owned subsidiaries |  | Brazil |  | AstraZeneca (Guangzhou) Pharmaceutical Co., Ltd |  |
| Algeria |  | AstraZeneca do Brasil Limitada |  | 100% |  |
| AAPM SARL | 100% | Rod. Raposo Tavares, KM 26, 9, Cotia, Brazil |  | Room 406-178, No. 1, Yichuang Street, (China-Singapore Guangzhou Knowledge City) Huangpu District, Guangzhou City, China |  |
| Number 20, Micro-Economic Zone, Hydra Business Center, Dar El Medina, Algiers, Algeria |  | Alexion Farmacêutica América Latina Serviços de Administração de Vendas Ltda. |  | AstraZeneca Investment Consulting (Wuxi) Co., Ltd |  |
| Argentina |  | Alexion Serviços e Farmacêutica do Brasil Ltda |  | 100% |  |
| AstraZeneca S.A. | 100% | Av. Dr Chucrí Zaidan, 1240, 15 1 andar, CEP 04711-130, Ed. Morumbi Corporate - Golden Tower Vila São Francisco, São Paulo, Brazil |  | Room 808, 8F, Building 99-2 Linghu Avenue, Xinwu District, Wuxi, Jiangsu, China |  |
| Nicolas de Vedia 3616, Piso 8, Ciudad Autónoma de Buenos Aires, Argentina |  | Bulgaria |  | AstraZeneca Pharmaceutical (Hangzhou) Co., Ltd |  |
| Alexion Pharma Argentina SRL | 100% | AstraZeneca Bulgaria EOOD |  | 100% |  |
| Avenida Leandro N. Alem 592 Piso 6, Buenos Aires, Argentina |  | 1057 Sofia, Izgrev Region, 36 Dragan Tsankov Blvd, Bulgaria |  | 12F & 14F, Building 1, Shuli Plaza, 758 Fei Jia Tang Road, Gongshu District, Hangzhou, Zhejiang Province, China |  |
| Australia |  | Canada |  | AstraZeneca Global R&D (China) Co., Ltd |  |
| AstraZeneca Holdings Pty Limited | 100% | AstraZeneca Canada Inc. 2 |  | 100% |  |
| AstraZeneca Pty Limited | 100% | Suite 5000, 1004 Middlegate Road, Ontario, L4Y 1M4, Canada |  | 16F, 88 Xizang North Road, Jing'an District, Shanghai, China |  |
| Alexion Pharmaceuticals Australasia Pty Ltd | 100% | Alexion Pharma Canada Corporation |  | AstraZeneca Pharmaceutical (Chengdu) Co., Ltd. |  |
| 66 Talavera Road, Macquarie Park, NSW 2113, Australia |  | 1300-1969 ST Upper Water, Halifax, NS B3J3R7, Canada |  | 10th Floor, Building 11 (Building E11), No. 366, Hemin Street, Chengdu High-tech Zone, China (Sichuan) Pilot Free Trade Zone, China |  |
| LogicBio Australia Pty Limited | 100% | Cayman Islands |  | AstraZeneca Pharmaceutical (Shanghai) Co., Ltd |  |
| Level 40, 2-26 Park Street, Sydney, NSW 2000, Australia |  | AZ Reinsurance Limited |  | 100% |  |
| Austria |  | 18 Forum Lane, 2nd Floor, Camana Bay, Grand Cayman, P.O. BOX 69, Cayman Islands |  | B1F, 8F & 9F, 88 Xizang North Road, Jing'an District, Shanghai, China |  |
| AstraZeneca Österreich GmbH | 100% | Chile |  | Alexion Pharmaceuticals (Shanghai) Company Limited |  |
| Landstraßer Hauptstraße 1A, A-1030 Wien, Austria |  | AstraZeneca S.A. |  | 100% |  |
| Alexion Pharma Austria GmbH | 100% | AstraZeneca Farmaceutica Chile Limitada |  | 100% |  |
| Donau-City-Straße 7, 30. Stock, DC Tower, Vienna 1220, Austria |  | Av. Isidora Goyenechea 3477, 2nd Floor, Las Condes, Santiago, Chile |  | Room 702, No 1539 West Nanjing Road, Jing'an District, Shanghai, China |  |
| Portola Österreich GmbH (in liquidation) | 100% | China |  | Colombia |  |
| Mooslackengasse 17, 1190 Wien, Austria |  | AstraZeneca Pharmaceutical Co., Limited |  | 100% |  |
| Belgium |  | No. 2, Huangshan Road, Wuxi, Jiangsu Province, China |  | Av Carrera 9 No. 101-67 Office 601, Bogotá, 110231, Colombia |  |
| AstraZeneca S.A. / N.V. | 100% | AstraZeneca (Wuxi) Trading Co. Ltd |  | 100% |  |
| Alfons Gossellaan 40 bus 201 at 1702 Groot-Bijgaarden, Belgium |  | Building E, Huirong Plaza, Jinghui Road East, Xinwu District, Wuxi, Jiangsu Province, China |  | Carrera 9 # 115 - 06/30 Edificio Tierra Firme Oficina 2904 Bogota D.C., Colombia |  |
| Alexion Pharma Belgium Sprl | 100% | AstraZeneca Investment (China) Co., Ltd |  | Costa Rica |  |
| Alexion Services Europe Sprl | 100% | 199 Liangjing Road, China (Shanghai) Pilot Free Trade Zone, Shanghai, China |  | 100% |  |
| de Meeussquare 37, Bruxelles 1000, Belgium |  | AstraZeneca Pharmaceutical (China) Co. Ltd |  | 100% |  |
| Bermuda |  | No 9 Medical Avenue, , Jiangsu Province, Taizhou, China |  | San José, Escazú, Roble Corporate Center, 5to piso, Costa Rica |  |
| Alexion Bermuda Holding ULC | 100% | AstraZeneca Pharmaceutical (Beijing) Co., Ltd |  | Croatia |  |
| Alexion Bermuda Limited | 100% | 1F, Building No.4, No.8 Courtyard, No.1 Kegu Street, Beijing Economic-Technological Development Area, Beijing 100176, China |  | 100% |  |
| Alexion Bermuda Partners LP | 100% |  |  | AstraZeneca d.o.o. |  |
| Canon's Court, 22 Victoria St., Hamilton Bermuda |  |  |  | Radnicka cesta 80, 10000 Zagreb, Croatia |  |
|  |  |  |  | Czech Republic |  |
|  |  |  |  | AstraZeneca Czech Republic, s.r.o. |  |
|  |  |  |  | U Trezorky 921/2, 158 00 Prague 5, Czech Republic |  |
|  |  |  |  | Alexion Pharma Czech s.r.o. |  |
|  |  |  |  | Novodvorská 994/138, Braník, 142 00 Prague, Czech Republic |  |

Group Subsidiaries and Holdings

AstraZeneca Annual Report & Form 20-F Information 2022 199

# Group Subsidiaries and Holdings
*continued*

| At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest |
| --- | --- | --- | --- | --- | --- |
| Denmark |  | Hungary |  | Luxembourg |  |
| AstraZeneca A/S | 100% | AstraZeneca Kft | 100% | AstraZeneca Luxembourg S.A. | 100% |
| World Trade Center Ballerup, Borupvang 3, DK- 2750 Ballerup, Denmark |  | 1st floor, 4 building B, Aliz str., Budapest, 1117, Hungary |  | Rue Nicolas Bové 2A - L-1253, Luxembourg |  |
| Egypt |  | India |  | Malaysia |  |
| AstraZeneca Egypt for Pharmaceutical Industries SAE | 100% | AstraZeneca India Private Limited 1 | 100% | AstraZeneca Asia-Pacific Business Services Sdn Bhd | 100% |
| 6th of October City, 6th Industrial Zone, Plot 2, Giza, Egypt |  | Block A, Neville Tower, 11th Floor, Ramanujan IT SEZ, Taramani, Chennai, Tamil Nadu, PIN 600113, India |  | 12th Floor, Menara Symphony, No 5 Jalan Prof, Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan, Malaysia |  |
| AstraZeneca Egypt LLC | 100% | Alexion Business Services Private Limited | 100% | AstraZeneca Sdn Bhd | 100% |
| 47 St. 270 New Maadi, Maddi, Cairo, Egypt |  | 9th Floor, Platina, G BlockPlot No. C-59, Bandra-Kurla Complex Bandra (East), Mumbai 400051, India |  | Nucleus Tower, Level 11 & 12, No. 10 Jalan PJU 7/6, Mutiara Damansara, 47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia |  |
| Drimex LLC | 100% | Iran |  | Mexico |  |
| Plot 133, Banks' District, 5th Settlement, New Cairo, Cairo, Egypt |  | AstraZeneca Pars Company | 100% | AstraZeneca Health Care Division, S.A. de C.V. | 100% |
| Estonia |  | Suite 1, 1st Floor No. 39, Alvand Ave., Argantin Sq., Tehran 1516673114, Iran |  | AstraZeneca, S.A. de C.V. | 100% |
| AstraZeneca Eesti OÜ | 100% | Ireland |  | Av. Periferico Sur 4305 interior 5, Colonia Jardines en la Montaña, Mexico City, Tlalpan Distrito Federal, CP 14210, Mexico |  |
| Harju maakond, Tallinn, Lasnamäe linnaosa, Valukoja tn 8/1, 11415, Estonia |  | AstraZeneca Pharmaceuticals (Ireland) Designated Activity Company | 100% | Alexion Pharma Mexico S. de R.L. de C.V. | 100% |
| Finland |  | 4th Floor, South Bank House, Barrow Street, Dublin, 4, Republic of Ireland |  | Paseo de los Tamarindos 90, Torre 1 piso 6 - ACol., Bosques de la Lomas, CP 05120 D.F, Mexico |  |
| AstraZeneca OY. | 100% | Alexion Pharma Holding Limited | 100% | Morocco |  |
| Itsehallintokuja 4, Espoo, 02600, Finland |  | Alexion Pharma International Operations Limited | 100% | AstraZeneca Maroc SARLAU | 100% |
| France |  | Alexion Pharma Development Limited | 100% | 92 Boulevard Anfa ETG 2, Casablanca 20000, Morocco |  |
| AstraZeneca S.A.S | 100% | College Business & Technology Park |  | The Netherlands |  |
| AstraZeneca Reims Production SAS | 100% | Blanchardstown Road North Dublin 15, Republic of Ireland |  | AstraZeneca B.V. | 100% |
| Tour Carpe Diem-31, Place des Corolles, 92400 Courbevoie, France |  | Israel |  | AstraZeneca Continent B.V. | 100% |
| AstraZeneca Dunkerque Production SCS | 100% | AstraZeneca (Israel) Ltd | 100% | AstraZeneca Gamma B.V. | 100% |
| 224 Avenue de la Dordogne, 59640 Dunkerque, France |  | Atirei Yeda 1, Building O-Tech 2, POB 8044, Kfar Saba, 4464301, Israel |  | AstraZeneca Holdings B.V. | 100% |
| Alexion Europe S.A.S. | 100% | Alexion Pharma Israel Ltd | 100% | AstraZeneca Jota B.V. | 100% |
| Alexion Pharma France S.A.S. | 100% | 4 Weizmann Str., Tel-Aviv-Jaffa, Israel |  | AstraZeneca Rho B.V. | 100% |
| 103-105 Rue Anatole France 92300 Levallois-Perret, France |  | Italy |  | AstraZeneca Sigma B.V. | 100% |
| Germany |  | Simesa SpA | 100% | AstraZeneca Treasury B.V. | 100% |
| AstraZeneca Holding GmbH | 100% | AstraZeneca SpA | 100% | AstraZeneca Zeta B.V. | 100% |
| AstraZeneca GmbH | 100% | Alexion Pharma Italy Srl | 100% | Prinses Beatrixlaan 582, 2595BM, The Hague, The Netherlands |  |
| Friesenweg 26, 22763, Hamburg, Germany |  | Viale Decumano 39, 20157, Milan, Italy |  | AstraZeneca Nijmegen B.V. | 100% |
| Sofotec GmbH | 100% | Japan |  | Lagelandseweg 78, 6545 CG Nijmegen, The Netherlands |  |
| Benzstrasse 1-3, 61352, Bad Homburg v.d. Hohe, Germany |  | AstraZeneca K.K. | 100% | Acerta Pharma B.V. | 100% |
| AstraZeneca Computational Pathology GmbH 2 | 100% | Grand Front Osaka Tower B, 3-1, Ofuka-cho, Kita-ku, Osaka, 530-0011, Japan |  | Aspire Therapeutics B.V. | 100% |
| Bernhard-Wicki-Straße 5, 80636, Munich, Germany |  | Alexion Pharma GK | 100% | Kloosterstraat 9, 5349 AB, Oss, The Netherlands |  |
| Portola FRG GmbH | 100% | Ebisu First Square, 18-14, Ebisu 1-chome, Shibuya-ku, Tokyo, Japan |  | Portola Netherlands B.V. | 100% |
| Fraunhoferstraße 12, Planegg, 82152, Germany |  | Kenya |  | Prins Bernhardplein 200JB Amsterdam 1097, The Netherlands |  |
| Alexion Pharma Germany GmbH | 100% | AstraZeneca Pharmaceuticals Limited | 100% | Alexion Pharma Netherlands B.V. | 100% |
| Landsberger Straße 300, 80687 Munich, Germany |  | L.R. No.1/1327, Avenue 5, 1st Floor, Rose Avenue, Nairobi, Kenya |  | Herengracht 282 Amsterdam 1016BX, The Netherlands |  |
| Greece |  | Latvia |  | Alexion Holding B.V. | 100% |
| AstraZeneca S.A. | 100% | AstraZeneca Latvija SIA | 100% | Alexion Pharma Foreign Holdings, B.V. | 100% |
| Agisilaou 6-8 Marousi, Athens, Greece |  | Skanstes iela 50, Riga, LV-1013, Latvia |  | Prinses Beatrixlaan 582, 5895 BM, The Hague, The Netherlands |  |
| Hong Kong |  | Lithuania |  |  |  |
| AstraZeneca Hong Kong Limited | 100% | AstraZeneca Lietuva UAB | 100% |  |  |
| Unit 1 - 3, 11/F., 18 King Wah Road, North Point, Hong Kong |  | Spaudos g., Vilnius, LT-05132, Lithuania |  |  |  |

200 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

| At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest |
| --- | --- | --- | --- | --- | --- |
| New Zealand |  | Russia |  |  |  |
| AstraZeneca Limited | 100% | AstraZeneca Industries, LLC | 100% | Astra Tech International Aktiebolag | 100% |
| Pharmacy Retailing (NZ) Limited t/a Healthcare Logistics, 58 Richard Pearse Drive, Mangere, Auckland, 1142, New Zealand |  | 8 1st Vostochniy lane, Dobrino village, Borovskiy district, Kaluga region 249006, Russian Federation |  | Box 14, 431 21 Molndal, Sweden |  |
| Nigeria |  | AstraZeneca Pharmaceuticals, LLC | 100% | Alexion Pharma Nordics Holding AB | 100% |
| AstraZeneca Nigeria Limited | 100% | Building 1, 21 First Krasnogvardeyskiy lane, floor 30, rooms 13 and 14, Moscow, 123112, Russian Federation |  | Alexion Pharma Nordics AB | 100% |
| 11A, Alfred Olaiya Street, Awuse Estate, Off Salvation Street, Opebi, Ikeja, Lagos, Nigeria |  | Alexion Pharma OOO LLC | 100% | Kungsgatan 3, Stockholm 111 43, Sweden |  |
| Norway |  | Building 1, 21 First Krasnogvardeyskiy lane, floor 29, Moscow, 123112, Russian Federation |  | Switzerland |  |
| AstraZeneca AS | 100% | Singapore |  | AstraZeneca AG | 100% |
| Karvesvingen 7, 0579 Oslo, Norway |  | AstraZeneca Singapore Pte Limited | 100% | Neuhofstrasse 34, 6340 Baar, Switzerland |  |
| Pakistan |  | 10 Kallang Avenue #12-10, Aperia Tower 2, 339510, Singapore |  | Spirogen Sarl ® | 100% |
| AstraZeneca Pharmaceuticals Pakistan (Private) Limited 4 | 100% | South Africa |  | Rue du Grand-Chêne 5, CH-1003 Lausanne, Switzerland |  |
| Office No 1, 2nd Floor, Sasi Arcade, Block 7, Main Clifton Road, Karachi, Pakistan |  | AstraZeneca Pharmaceuticals (Pty) Limited | 100% | Portola Schweiz GmbH (in liquidation) | 100% |
| Panama |  | 17 Georgian Crescent West, Northdowns Office Park, Bryanston, 2191, South Africa |  | c/o Tom Schaffner Schärer Rechtsanwälte Hintere Bahnhofstrasse 6, 5000 Aarau, Switzerland |  |
| AstraZeneca CAMCAR, S.A. | 100% | South Korea |  | Alexion Pharma GmbH | 100% |
| Bodega #1, Parque Logistico MIT, Carretera Hacia Coco Solo, Colon, Panama |  | AstraZeneca Korea Co. Ltd | 100% | Giesshübelstrasse 30, Zürich 8045, Switzerland |  |
| Peru |  | 21st Floor, Asem Tower, 517, Yeongdong-daero, Gangnam-gu, Seoul, 06164, Republic of Korea |  | Taiwan |  |
| AstraZeneca Peru S.A. | 100% | Alexion Pharma Korea LLC | 100% | AstraZeneca Taiwan Limited | 100% |
| Calle Las Orquideas N° 675, Int. 802, Edificio Pacific Tower, San Isidro, Lima, Peru |  | 41 FL., 152 Teheran-ro (Yeoksam-dong Gangnam Finance Center), Gangnam-gu, Seoul, Republic of Korea |  | 21st Floor, Taipei Metro Building 207, Tun Hwa South Road, SEC 2 Taipei, Taiwan |  |
| Philippines |  | Spain |  | Alexion Pharma Taiwan Ltd | 100% |
| AstraZeneca Pharmaceuticals (Phils.) Inc. | 100% | AstraZeneca Farmaceutica Holding Spain, S.A. | 100% | Room 1153, 11F, No1, Songzhi Rd Taipei, 11047 Taiwan |  |
| 16th Floor, Inoza Tower, 40th Street, Bonifacio Global City, Taguig 1634, Philippines |  | AstraZeneca Farmaceutica Spain S.A. | 100% | Thailand |  |
| Poland |  | Laboratorio Beta, S.A. | 100% | AstraZeneca (Thailand) Limited | 100% |
| AstraZeneca Pharma Poland Sp.z.o.o. | 100% | Laboratorio Lailan, S.A. | 100% | Asia Centre 19th floor, 173/20, South Sathorn Rd, Khwaeng Thungmahamek, Khet Sathorn, Bangkok, 10120, Thailand |  |
| Alexion Pharma Poland Sp.z.o.o. | 100% | Laboratorio Tau S.A. | 100% | Tunisia |  |
| Postepu 14, 02-676, Warszawa, Poland |  | Fundación AstraZeneca | 100% | AstraZeneca Tunisie SaRL | 100% |
| Portugal |  | Parque Norte, Edificio Álamo, C/Serrano Galvache no 56., 28033 Madrid, Spain |  | Lot n°1.5.5 les jardins du lac, bloc B les berges du lac Tunis, Tunisia |  |
| Astra Alpha Produtos Farmaceuticos Lda | 100% | Alexion Pharma Spain S.L. | 100% | Turkey |  |
| AstraZeneca Produtos Farmaceuticos Lda | 100% | Av Diagonal Num.601 P.1, Barcelona 08028, Spain |  | AstraZeneca Ilac Sanayi ve Ticaret Limited Sirketi | 100% |
| Novastra Promoção e Comércio Farmacêutico Lda | 100% | Sweden |  | YKB Plaza, B Blok, Kat:3-4, Levent/Besiktas, Istanbul, Turkey |  |
| Novastuart Produtos Farmaceuticos Lda | 100% | Astra Export & Trading Aktiebolag | 100% | Zeneca Ilac Sanayi Ve Ticaret Anonim Sirketi | 100% |
| Stuart-Produtos Farmacêuticos Lda | 100% | Astra Lakemedel Aktiebolag | 100% | Büyükdere Cad., Y.K.B. Plaza, B Blok, Kat:4, Levent/Besiktas, Istanbul, Turkey |  |
| Zeneca Epsilon - Produtos Farmacêuticos Lda | 100% | AstraZeneca AB | 100% | Alexion Ilac Ticaret Limited Sirketi | 100% |
| Zenecapharma Produtos Farmaceuticos, Unipessoal Lda | 100% | AstraZeneca Biotech AB | 100% | Içerenköy Mahallesi Umut Sk. and Ofi SIT, No: 1012/73 Atasehir Istanbul 10-12/73 Turkey |  |
| Rua Humberto Madeira, No 7, Queluz de Baixo, 2730-097, Barcarena, Portugal |  | AstraZeneca BioVentureHub AB | 100% | Ukraine |  |
| Puerto Rico |  | AstraZeneca Holding Aktiebolag ® | 100% | AstraZeneca Ukraina LLC | 100% |
| IPR Pharmaceuticals, Inc. | 100% | AstraZeneca International Holdings Aktiebolag ® | 100% | 54 Simi Prakhovykh street, Kiev, 01033, Ukraine |  |
| Road 188, San Isidro Industrial Park, Canóvanas, 00729, Puerto Rico |  | AstraZeneca Nordic AB | 100% | United Arab Emirates |  |
| Romania |  | AstraZeneca Pharmaceuticals Aktiebolag | 100% | AstraZeneca FZ-LLC | 100% |
| AstraZeneca Pharma S.R.L. | 100% | AstraZeneca Södertälje 2 AB | 100% | P.O. Box 505070, Block D, Dubai Healthcare City, Oud Mehta Road, Dubai, United Arab Emirates |  |
| 12 Menuetului Street, Bucharest Business Park, Building D, West Wing, 1st Floor, Sector 1, Bucharest, 013713, Romania |  | Stuart Pharma Aktiebolag | 100% | Alexion Pharma Middle East FZ-LLC | 100% |
|  |  | Tika Lakemedel Aktiebolag | 100% | Dubai Science Park, 501, Floor 5, EIB Building No. 2, Dubai, United Arab Emirates |  |
|  |  | SE-151 85 Södertälje, Sweden |  |  |  |
|  |  | Aktiebolaget Hassle | 100% |  |  |
|  |  | Symbicom Aktiebolag ® | 100% |  |  |
|  |  | 431 83 Molndal, Sweden |  |  |  |

Group Subsidiaries and Holdings

AstraZeneca Annual Report & Form 20-F Information 2022 201

# Group Subsidiaries and Holdings
*continued*

| At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest |
| --- | --- | --- | --- | --- | --- |
| United Kingdom |  | United States |  |  |  |
| Ardea Biosciences Limited | 100% | Amylin Ohio LLC 7 | 100% | Portola USA, Inc | 100% |
| Arrow Therapeutics Limited | 100% | Amylin Pharmaceuticals, LLC 7 | 100% | Portola Pharmaceuticals LLC | 100% |
| Astra Pharmaceuticals Limited | 100% | AstraZeneca Collaboration Ventures, LLC 7 | 100% | 270 East Grand Avenue, South San Francisco, CA 94080, United States |  |
| AstraPharm 8 | 100% | AstraZeneca Pharmaceuticals LP 8 | 100% | Achillion Pharmaceuticals Inc, | 100% |
| AstraZeneca China UK Limited | 100% | Atkemix Nine Inc. | 100% | Alexion Delaware Holding LLC | 100% |
| AstraZeneca Death In Service Trustee Limited | 100% | Atkemix Ten Inc. | 100% | Alexion Pharma LLC | 100% |
| AstraZeneca Employee Share Trust Limited | 100% | BMS Holdco, Inc. | 100% | Alexion Pharmaceuticals, Inc. | 100% |
| AstraZeneca Finance Limited | 100% | Corpus Christi Holdings Inc. | 100% | Syntimmune, Inc. | 100% |
| AstraZeneca Intermediate Holdings Limited 9 | 100% | Omthera Pharmaceuticals, Inc. | 100% | Alexion US1 LLC | 100% |
| AstraZeneca Investments Limited | 100% | Optein, Inc. | 100% | Savoy Therapeutics Corp | 100% |
| AstraZeneca Japan Limited | 100% | Stauffer Management Company LLC 7 | 100% | Wilson Therapeutics USA, Inc. | 100% |
| AstraZeneca Nominees Limited | 100% | Zeneca Holdings Inc. | 100% | TeneoTwo, Inc | 100% |
| AstraZeneca Quest Limited | 100% | Zeneca Inc. | 100% | LogicBio Therapeutics, Inc | 100% |
| AstraZeneca Share Trust Limited | 100% | Zeneca Wilmington Inc. 5 | 100% | 121 Seaport BoulevardBoston, MA 02210, United States |  |
| AstraZeneca Sweden Investments Limited | 100% | AstraZeneca Finance LLC 7 | 100% | Acerta Pharma LLC 7 | 100% |
| AstraZeneca Treasury Limited 8 | 100% | AstraZeneca Finance and Holdings Inc. | 100% | 121 Oyster Point Boulevard, South San Francisco, CA 94080, United States |  |
| AstraZeneca UK Limited | 100% | Namor Merger Sub, Inc 8 | 100% | LogicBio Securities Corporation | 100% |
| AstraZeneca US Investments Limited 9 | 100% | Ardea Biosciences, Inc | 100% | 65 Hayden Avenue, Lexington, MA 92421, United States |  |
| AZENCO2 Limited | 100% | 1800 Concord Pike, Wilmington, DE 19803, United States |  |  |  |
| AZENCO4 Limited | 100% | ZS Pharma Inc. | 100% | Uruguay |  |
| Cambridge Antibody Technology Group Limited | 100% | 1100 Park Place, Suite 300, San Mateo, CA 94403, United States |  | AstraZeneca S.A. | 100% |
| KuDOS Horsham Limited | 100% | AlphaCore Pharma, LLC 7 | 100% | Yaguarón 1407 of 1205, 11.100, Montevideo, Uruguay |  |
| KuDOS Pharmaceuticals Limited | 100% | 333 Parkland Plaza, Suite 5, Ann Arbor, MI 48103, United States |  |  |  |
| Zenco (No. 8) Limited | 100% | AZ-Mont Insurance Company | 100% | Venezuela |  |
| Zeneca Finance (Netherlands) Company | 100% | 76 St Paul Street, Suite 500, Burlington, VT 05401, United States |  | AstraZeneca Venezuela S.A. | 100% |
| MedImmune Limited | 100% | MedImmune, LLC 7 | 100% | Gotland Pharma S.A. | 100% |
| 1 Francis Crick Avenue, Cambridge Biomedical Campus, Cambridge, CB2 0AA, United Kingdom | 100% | MedImmune Ventures, Inc. | 100% | Av. La Castellana, Torre La Castellana, Piso 5, Oficina 5-G, 5-H, 5-I, Urbanización La Castellana, Municipio Chacao, Estado Bolivariano de Miranda, Venezuela |  |
| MedImmune U.K. Limited | 100% | One MedImmune Way, Gaithersburg, MD 20878, United States |  |  |  |
| Plot 6, Renaissance Way, Boulevard Industry Park, Liverpool, L24 9JW, United Kingdom | 100% | Pearl Therapeutics, Inc. | 100% | Vietnam |  |
| Syntimmune Limited | 100% | 200 Cardinal Way, Redwood City, CA 94063, United States |  | AstraZeneca Vietnam Company Limited | 100% |
| 21 Holborn Viaduct, London, EC1A 2DY United Kingdom | 100% | Caelum Biosciences Inc. | 100% | 18th Floor, A&B Tower, 76 Le Lai, Ben Thanh Ward, District 1, Ho Chi Minh City, Vietnam |  |
| Alexion Pharma UK Limited | 100% | 1200 Florence Columbus Road, Bordentown, NJ 08505, United States |  |  |  |
| Portola Pharma UK Limited (in liquidation) | 100% | Alexion Services Latin America Inc. | 100% |  |  |
| 3 Furzeground Way, Stockley Park, Uxbridge, Middlesex UB11 1EZ United Kingdom | 100% | 600 Brickell Ave, Miami, FL 33131, United States |  |  |  |

202 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

| At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest | At 31 December 2022 | Group Interest |
| --- | --- | --- | --- | --- | --- |
| Subsidiaries where the effective interest is less than 100% |  | Significant Holdings |  | Associated Holdings |  |
| India |  | China |  | France |  |
| AstraZeneca Pharma India Limited 3 | 75% | Dizal (Jiangsu) Pharmaceutical Co., Ltd. | 26.95% | Medetia SAS | 10% |
| Block N1, 12th Floor, Manyata Embassy Business Park, Rachenahalli, Outer Ring Road, Bangalore-560 045, India |  | 199 Liangjing Rd, Zhangjiang Hi-Tech Park, Pudong District, Shanghai, 201203, China |  | Institute Imagine 24, Boulevard du Montparnasse 75015, Paris, France |  |
| Indonesia |  | Wuxi AstraZeneca-CICC Venture Capital Partnership (Limited Partnership) | 22.13% | Israel |  |
| P.T. AstraZeneca Indonesia | 95% | Room 808, 8F, Building 99-2 Linghu Avenue, Xinwu District, Wuxi, Jiangsu, China |  | AION Labs | 19.23% |
| Perkantoran Hijau Arkadia Tower F, 3rd Floor, Jl. T.B. Simatupang Kav. 88, South Jakarta, 12520, Indonesia |  | Beijing Falikang Pharmaceutical (China) Co. Ltd | 49% | Oppenheimer 4 Rehovot, 7670104, Israel |  |
| Joint Ventures |  | No. 69 Fushi Road, Haidian District, Beijing, 100143, China |  | Sweden |  |
| China |  | United Kingdom |  | Swedish Orphan Biovitrum AB (publ) | 9.90% |
| WuXi MedImmune Biopharmaceutical Co., Limited (in liquidation) | 50% | VaxEquity | 40% | Tontebodavägen 23A, Stockholm, Sweden |  |
| Room 1902, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong |  | Lab 4 Cambridge Science Park, Unit 204 Milton Road, Cambridge CB4 0GZ, United Kingdom |  | Ondosis | 19.30% |
| IHP HK Holdings Limited | 50% | United States |  | BioVentureHub, Pepparedsleden 1, 431 83 Mölndal, Sweden |  |
| Unit 5805, 58/F., Two International Finance Centre 8 Finance Street, Central, China |  | C.C. Global Chemicals Company | 37.50% | United Kingdom |  |
| United Kingdom |  | PO Box 7, MS2901, Texas, TX76101-0007, United States |  | Niox Group plc | 16.97% |
| Archigen Biotech Limited (in liquidation) | 50% |  |  | Hayakawa Building, Edmund Halley Road, Oxford Science Park, Oxford, OX4 4GB, United Kingdom |  |
| Centus Biotherapeutics Limited | 50% |  |  | United States |  |
| 1 Francis Crick Avenue, Cambridge Biomedical Campus, Cambridge, CB2 0AA, United Kingdom |  |  |  | AbMed Corporation | 18% |
| Ireland |  |  |  | 68 Cummings Park Drive, Woburn, MA 01801, United States |  |
| Centus Biotherapeutics Europe Limited (in liquidation) | 50% |  |  | Aristea Therapeutics, Inc. | 11.85% |
| 6th Floor, South Bank House, Barrow Street, Dublin 4, Republic of Ireland |  |  |  | 122770 High Bluff Drive, #380, San Diego, CA 92130, United States |  |
| United States |  |  |  | Baergic Bio, Inc. | 19.95% |
| Montrose Chemical Corporation of California | 50% |  |  | 1111 Kane Concourse, Suite 301 Bay Harbor Islands, FL 33154, United States |  |
| Suite 380, 600 Ericksen Ave N/E, Bainbridge Island, United States |  |  |  | Regio Biosciences | 19.95% |
|  |  |  |  | 2277 Research Blvd, Suite 225, Rockville, MD 20850, United States |  |
| Employee Benefit Trust |  |  |  |  |  |
| The AstraZeneca Employee Benefit Trust |  |  |  |  |  |

$^{1}$ Ownership held in ordinary and class B special shares.

$^{2}$ Ownership held in common shares, preferred shares 2003, preferred shares 2003 ex (A), preferred shares 2003 ex (B), preferred shares Series D, preferred shares Series E and preferred shares Series F.

$^{3}$ Accounting year end is 31 March.

$^{4}$ Accounting year end is 30 June.

$^{5}$ Directly held by AstraZeneca PLC.

$^{6}$ Ownership held in Ordinary A shares and Ordinary B shares.

$^{7}$ Ownership held as membership interest.

$^{8}$ Ownership held as partnership interest.

$^{9}$ With effect from 13 January 2023, Namor Merger Sub Inc. was merged with and into Neogene Therapeutics, Inc., with Neogene Therapeutics, Inc. being the surviving corporation.

Group Subsidiaries and Holdings

AstraZeneca Annual Report & Form 20-F Information 2022 203

# Company Balance Sheet

at 31 December

## AstraZeneca PLC

|  | Notes | 2022 $m | 2021 $m |
| --- | --- | --- | --- |
| Fixed assets |  |  |  |
| Fixed asset investments | 1 | 63,555 | 65,624 |
|  |  | 63,555 | 65,624 |
| Current assets |  |  |  |
| Debtors - other |  | 4 | 9 |
| Debtors - amounts owed by Group undertakings |  | 2,608 | 6,321 |
|  |  | 2,612 | 6,330 |
| Creditors: Amounts falling due within one year |  |  |  |
| Other payables | 2 | (194) | (198) |
| Amounts owed to Group undertakings | 3 | (283) | - |
| Interest-bearing loans and borrowings | 3 | (2,648) | (1,249) |
|  |  | (3,125) | (1,447) |
| Net current (liabilities)/assets |  | (513) | 4,883 |
| Total assets less current liabilities |  | 63,042 | 70,507 |
| Creditors: Amounts falling due after more than one year |  |  |  |
| Amounts owed to Group undertakings | 3 | - | (283) |
| Interest-bearing loans and borrowings | 3 | (17,939) | (20,781) |
| Other payables | 2 | (23) | (32) |
|  |  | (17,962) | (21,096) |
| Net assets |  | 45,080 | 49,411 |
| Capital and reserves |  |  |  |
| Called-up share capital | 4 | 387 | 387 |
| Share premium account |  | 35,155 | 35,126 |
| Capital redemption reserve |  | 153 | 153 |
| Other reserves |  | 1,927 | 2,182 |
| Profit and loss account |  | 7,458 | 11,563 |
| Shareholders' funds |  | 45,080 | 49,411 |

$m means millions of US dollars.

The Company's profit for the year was $380m (2021: $5,141m).

The Company Financial Statements from pages 204 to 210 were approved by the Board and were signed on its behalf by

**Pascal Soriot**

Director

9 February 2023

**Aradhana Sarin**

Director

Company's registered number 02723534

204 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

# Company Statement of Changes in Equity

for the year ended 31 December

|  | Share capital $m | Share premium account $m | Capital redemption reserve $m | Other reserves 1 $m | Profit and loss account 2 $m | Total equity $m |
| --- | --- | --- | --- | --- | --- | --- |
| At 1 January 2021 | 328 | 7,971 | 153 | 2,382 | 10,304 | 21,138 |
| Total comprehensive income for the period |  |  |  |  |  |  |
| Profit for the period | - | - | - | - | 5,141 | 5,141 |
| Total comprehensive income for the period | - | - | - | - | 5,141 | 5,141 |
| Transactions with owners, recorded directly in equity |  |  |  |  |  |  |
| Dividends | - | - | - | - | (3,882) | (3,882) |
| Capital contributions for share-based payments | - | - | - | (200) | - | (200) |
| Issue of Ordinary Shares | 59 | 27,155 | - | - | - | 27,214 |
| Total contributions by and distributions to owners | 59 | 27,155 | - | (200) | (3,882) | 23,132 |
| At 31 December 2021 | 387 | 35,126 | 153 | 2,182 | 11,563 | 49,411 |
| Total comprehensive income for the period |  |  |  |  |  |  |
| Profit for the period | - | - | - | - | 380 | 380 |
| Total comprehensive income for the period | - | - | - | - | 380 | 380 |
| Transactions with owners, recorded directly in equity |  |  |  |  |  |  |
| Dividends | - | - | - | - | (4,485) | (4,485) |
| Capital contributions for share-based payments | - | - | - | (255) | - | (255) |
| Issue of Ordinary Shares | - | 29 | - | - | - | 29 |
| Total contributions by and distributions to owners | - | 29 | - | (255) | (4,485) | (4,711) |
| At 31 December 2022 | 387 | 35,155 | 153 | 1,927 | 7,458 | 45,080 |

$^{1}$ The Other reserves arose from the cancellation of £1,255m share premium by the Company in 1993 and the redenomination of share capital of $157m in 1999. Included within Other reserves at 31 December 2022 is $86m (31 December 2021: $341m) in respect of cumulative share-based payment awards, which are not available for distribution.

$^{2}$ At 31 December 2022, the Profit and loss account reserve of $7,458m (31 December 2021: $11,563m) was available for distribution, subject to filing these Financial Statements with Companies House. When making a distribution to shareholders, the Directors determine profits available for distribution by reference to guidance on realised and distributable profits under the Companies Act 2006 issued by the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The profits of the Company have been received in the form of receivables due from subsidiaries. The availability of distributable reserves in the Company is dependent on those receivables meeting the definition of qualifying consideration within the guidance, and in particular on the ability of subsidiaries to settle those receivables within a reasonable period of time. The Directors consider that, based on the nature of these receivables and the available cash resources of the Group and other accessible sources of funds, at 31 December 2022, all (31 December 2021: all) of the Company's profit and loss reserves were available for distribution.

Company Statement of Changes in Equity

AstraZeneca Annual Report & Form 20-F Information 2022 205

# Company Accounting Policies

## Basis of presentation of financial information

These financial statements were prepared in accordance with FRS 101 'Reduced Disclosure Framework'.

In preparing these financial statements, the Company applied the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the UK (UK-adopted International Accounting Standards), but made amendments where necessary in order to comply with the Companies Act 2006 and to take advantage of FRS 101 disclosure exemptions.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

- > Statement of Cash Flows and related notes
- > disclosures in respect of transactions with wholly owned subsidiaries
- > disclosures in respect of capital management
- > the effects of new but not yet effective IFRSs
- > disclosures in respect of the compensation of Key Management Personnel.

As the Group Financial Statements (presented on pages 138 to 203) include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:

- > IFRS 2 'Share-based Payment' in respect of Group settled share-based payments
- > certain disclosures required by IFRS 13 'Fair Value Measurement' and the disclosures required by IFRS 7 'Financial Instruments: Disclosures'.

No individual profit and loss account is prepared as provided by section 408 of the Companies Act 2006.

## Basis of accounting

The Company Financial Statements are prepared under the historical cost convention and on a going concern basis, in accordance with the Companies Act 2006.

The following paragraphs describe the main accounting policies, which have been applied consistently.

## Estimates and judgements

The preparation of the Company Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and judgements that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There are no key judgements or significant estimates.

## Foreign currencies

Foreign currency transactions, being transactions denominated in a currency other than the Company's functional currency, are translated into US dollars at average rates for the relevant monthly accounting periods, which approximate to actual rates.

Monetary assets and liabilities arising from foreign currency transactions are retranslated at exchange rates prevailing at the reporting date. Exchange gains and losses on loans and on short-term foreign currency borrowings and deposits are included within Finance expense. Exchange differences on all other foreign currency transactions are recognised in Operating profit.

Non-monetary items arising from foreign currency transactions are not retranslated in the Company's accounting records.

## Taxation

The current tax payable is based on taxable profit for the year. Taxable profit differs from reported profit because taxable profit excludes items that are either never taxable or tax deductible or items that are taxable or tax deductible in a different period. The Company's current tax assets and liabilities are calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that there are future taxable temporary differences or it is probable that future taxable profit will be available against which the asset can be utilised. This requires judgements to be made in respect of the availability of future taxable income.

No deferred tax asset or liability is recognised in respect of temporary differences associated with investments in subsidiaries and branches where the Company is able to control the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

The Company's deferred tax assets and liabilities are calculated using tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates that have been enacted or substantively enacted by the reporting date.

Liabilities for uncertain tax positions require management to make judgements of potential exposures in relation to tax audit issues. Tax benefits are not recognised unless the tax positions will probably be accepted by the tax authorities. This is based upon management's interpretation of applicable laws and regulations and the expectation of how the tax authority will resolve the matter. Once considered probable of not being accepted, management reviews each material tax benefit and reflects the effect of the uncertainty in determining the related taxable result.

Liabilities for uncertain tax positions are measured using either the most likely amount or the expected value amount depending on which method the Company expects to better predict the resolution of the uncertainty.

## Investments

Fixed asset investments, including investments in subsidiaries, are stated at cost and reviewed for impairment if there are indications that the carrying value may not be recoverable.

## Debtors

Amounts owed by Group undertakings are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.

The recoverability of these balances has been assessed in accordance with IFRS 9 and no impairment has been identified. The amounts owed by Group undertakings are considered to have low credit risk, due to timely payment of interest and settlement of principal amount on agreed due dates, limiting the loss allowance to 12-month expected credit losses.

206 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

Amounts owed by Group undertakings are written off where there is no reasonable expectation of recovery. Impairment losses are presented as net impairment losses within Operating profit, any subsequent recoveries are credited against the same line.

### Other payables

Liabilities included in Other payables are recognised initially at fair value. Subsequent to initial recognition they are re-measured at either amortised cost using the effective interest rate method or at fair value using an expected credit loss model.

### Financial instruments

Interest-bearing loans are initially measured at fair value (with direct transaction costs being amortised over the life of the loan) and are subsequently measured at amortised cost using the effective rate method at each reporting date. Changes in carrying value are recognised in profit.

### Share-based payments

The issuance by the Company to employees of its subsidiaries of a grant of awards over the Company’s shares, represents additional capital contributions by the Company to its subsidiaries. An additional investment in subsidiaries results in a corresponding increase in shareholders’ equity. The additional capital contribution is based on the fair value of the grant issued, allocated over the underlying grant’s vesting period, less the market cost of shares charged to subsidiaries in settlement of such share awards.

### Litigation

Through the normal course of business, the AstraZeneca Group is involved in legal disputes, the settlement of which may involve cost to the Company. Provision is made where an adverse outcome is probable and associated costs, including related legal costs, can be estimated reliably. In other cases, appropriate disclosures are included.

Company Accounting Policies

AstraZeneca Annual Report & Form 20-F Information 2022 207

# Notes to the Company Financial Statements

## 1 Fixed asset investments

|  | Investments in subsidiaries |  |  |
| --- | --- | --- | --- |
|  | Shares $m | Loans $m | Total $m |
| At 1 January 2021 | 15,817 | 17,451 | 33,268 |
| Additions during the year | 33,745 | 290 | 34,035 |
| Transfer to Debtors - amounts owed by Group undertakings | - | (1,249) | (1,249) |
| Capital reimbursement | (13) | - | (13) |
| Exchange | - | (172) | (172) |
| Amortisation | - | 13 | 13 |
| Disposals and other movements | 32 | (290) | (258) |
| At 31 December 2021 | 49,581 | 16,043 | 65,624 |
| Transfer to Debtors - amounts owed by Group undertakings | - | (1,531) | (1,531) |
| Capital reimbursement | (380) | - | (380) |
| Exchange | - | (161) | (161) |
| Amortisation | - | 12 | 12 |
| Disposals and other movements | (9) | - | (9) |
| At 31 December 2022 | 49,192 | 14,363 | 63,555 |

Loans to subsidiaries consists of bonds which are issued externally and are issued back to Group undertakings with comparable terms on interest rates and are repayable on maturity, details of which are disclosed in Note 2. The recoverability of these inter-company loans has been assessed in accordance with IFRS 9 with no impairment identified. The inter-company balances are considered to have low credit risk due to timely payment of interest and settlement of principal amount on agreed due dates, limiting the loss allowance to 12-month expected credit losses. In 2022, there have been no credit losses (2021: $nil).

The other movements comprise $9m representing revaluation of fair value of a guarantee provided to Group companies as explained in Notes 2 and 3.

## 2 Other payables

|  | 2022 $m | 2021 $m |
| --- | --- | --- |
| Amounts due within one year |  |  |
| Other creditors | 184 | 187 |
| Deferred income | 3 | 4 |
| Amounts owed to Group undertakings | 7 | 7 |
|  | 194 | 198 |
| Amounts due after more than one year |  |  |
| Other creditors | 23 | 32 |
|  | 23 | 32 |

Non-current other creditors include an amount representing the fair value of the guarantee provided by the Company to its subsidiary for the bonds issued externally as explained in Note 3. As at 31 December 2022, the fair value of the guarantee was $23m (2021: $32m).

208 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

### 3 Loans and borrowings

|  |  | Repayment dates | 2022 $m | 2021 $m |
| --- | --- | --- | --- | --- |
| Amounts due within one year |  |  |  |  |
| Amounts owed to Group undertakings (unsecured) |  |  |  |  |
| 7.2% Loan |  | 2023 | 283 | - |
| Interest-bearing loans and borrowings (unsecured) |  |  |  |  |
| Floating rate notes | US dollars | 2022 | - | 250 |
| 2.375% Callable bond | US dollars | 2022 | - | 999 |
| 0.3% Callable bond | US dollars | 2023 | 1,399 | - |
| Floating rate notes | US dollars | 2023 | 400 | - |
| 3.5% Callable bond | US dollars | 2023 | 849 | - |
|  |  |  | 2,931 | 1,249 |
| Amounts due after more than one year |  |  |  |  |
| Amounts owed to Group undertakings (unsecured) |  |  |  |  |
| 7.2% Loan | US dollars | 2023 | - | 283 |
| Interest-bearing loans and borrowings (unsecured) |  |  |  |  |
| Floating rate notes | US dollars | 2023 | - | 400 |
| 0.3% Callable bond | US dollars | 2023 | - | 1,397 |
| 3.5% Callable bond | US dollars | 2023 | - | 848 |
| 0.75% Callable bond | euros | 2024 | 957 | 1,014 |
| 2024 Floating rate bank loan | US dollars | 2024 | 1,998 | 1,997 |
| 3.375% Callable bond | US dollars | 2025 | 1,992 | 1,988 |
| 0.7% Callable bond | US dollars | 2026 | 1,195 | 1,193 |
| 3.125% Callable bond | US dollars | 2027 | 746 | 745 |
| 1.25% Callable bond | euros | 2028 | 845 | 896 |
| 4% Callable bond | US dollars | 2029 | 995 | 994 |
| 0.375% Callable bond | euros | 2029 | 846 | 898 |
| 1.375% Callable bond | US dollars | 2030 | 1,293 | 1,292 |
| 5.75% Non-callable bond | pounds sterling | 2031 | 420 | 470 |
| 6.45% Callable bond | US dollars | 2037 | 2,724 | 2,724 |
| 4% Callable bond | US dollars | 2042 | 988 | 988 |
| 4.375% Callable bond | US dollars | 2045 | 981 | 980 |
| 4.375% Callable bond | US dollars | 2048 | 737 | 737 |
| 2.125% Callable bond | US dollars | 2050 | 487 | 486 |
| 3% Callable bond | US dollars | 2051 | 735 | 734 |
| Total amounts due after more than one year |  |  | 17,939 | 21,064 |
| Total loans and borrowings |  |  | 20,870 | 22,313 |
|  |  |  | 2022 $m | 2021 $m |
| Loans and borrowings are repayable: |  |  |  |  |
| After five years from balance sheet date |  |  | 11,051 | 11,944 |
| From two to five years |  |  | 3,933 | 6,192 |
| From one to two years |  |  | 2,955 | 2,928 |
| Within one year |  |  | 2,931 | 1,249 |
| Total unsecured |  |  | 20,870 | 22,313 |

All borrowings are issued with fixed interest rates with the exception of two borrowings, the 2023 floating rate notes and the $2bn USD 2024 floating rate loan pay interest linked to 1 month LIBOR. The Company has the right to switch these loans to compounded daily USD Secured Overnight Funding Rate (SOFR) with five days notice. The loans will automatically switch to compounded SOFR on 30 June 2023 if the Group has not already switched before this date. All other floating rate debt is not impacted by LIBOR references it either uses non-LIBOR fixing or will mature before the relevant LIBOR rate is withdrawn.

In addition, the Company acts as guarantor for bonds and loans issued by its wholly owned subsidiaries, AstraZeneca Finance LLC and AstraZeneca Finance and Holdings Inc., AstraZeneca Finance LLC is the issuer of $1,600m 0.700% Notes due 2024, $1,250m 1.200% Notes due 2026, $1,250m 1.750% Notes due 2028 and $750m 2.250% Notes due 2031 (the “AstraZeneca Finance Notes”) and AstraZeneca Finance and Holdings Inc. has a $2bn bank loan due 2023. Each series of AstraZeneca Finance Notes and the bank loan has been fully and unconditionally guaranteed by the Company. Each of the guarantees by AstraZeneca PLC is full and unconditional and joint and several.

The guarantee by AstraZeneca PLC of the AstraZeneca Finance Notes is the senior unsecured obligation of AstraZeneca PLC and ranks equally with all of AstraZeneca PLC’s existing and future senior unsecured and unsubordinated indebtedness. Each guarantee by AstraZeneca PLC is effectively subordinated to any secured indebtedness of AstraZeneca PLC to the extent of the value of the assets securing such indebtedness. The AstraZeneca Finance Notes are structurally subordinated to indebtedness and other liabilities of the subsidiaries of AstraZeneca PLC, none of which guarantee the AstraZeneca Finance Notes.

Notes to the Company Financial Statements

AstraZeneca Annual Report & Form 20-F Information 2022 209

# Notes to the Company Financial Statements

### 4 Called-up share capital

Details of share capital movements in the year are included in Note 24 to the Group Financial Statements.

### 5 Contingent liabilities

The Company has guaranteed the external borrowing of a subsidiary in the amount of $286m (2021: $286m).

### Vermont US Attorney Investigation

In April 2020, AstraZeneca received a Civil Investigative Demand from the US Attorney's Office in Vermont and the Department of Justice, Civil Division, seeking documents and information relating to AstraZeneca's relationships with electronic health-record vendors. AstraZeneca is cooperating with this enquiry.

### AZD1222 Securities Litigation

In January 2021, putative securities class action lawsuits were filed in the US District Court for the Southern District of New York (the District Court) against AstraZeneca PLC and certain officers, on behalf of purchasers of AstraZeneca publicly traded securities during a period later amended to cover 15 June 2020 through 29 January 2021. The Amended Complaint alleges that defendants made materially false and misleading statements in connection with the development of AZD1222, AstraZeneca's vaccine for the prevention of COVID-19. In September 2022, the District Court granted AstraZeneca's motion to dismiss the Amended Complaint with prejudice, disallowing any further amendments. Plaintiffs have appealed this decision.

### 6 Statutory and other information

The Directors of the Company were paid by another Group company in 2022 and 2021.

### 7 Subsequent events

On 2 February 2023, the Group entered into an additional $2.0bn of two-year committed bank facilities.

210 AstraZeneca Annual Report & Form 20-F Information 2022

Financial Statements

Strategic Report Corporate Governance Financial Statements Additional Information

# Group Financial Record

| For the year ended 31 December | 2018 $m | 2019 $m | 2020 $m | 2021 $m | 2022 $m |
| --- | --- | --- | --- | --- | --- |
| Revenue and profits |  |  |  |  |  |
| Product Sales | 21,049 | 23,565 | 25,890 | 36,541 | 42,998 |
| Collaboration Revenue | 1,041 | 819 | 727 | 876 | 1,353 |
| Cost of sales | (4,936) | (4,921) | (5,299) | (12,437) | (12,391) |
| Distribution expense | (331) | (339) | (399) | (446) | (536) |
| Research and development expense | (5,932) | (6,059) | (5,991) | (9,736) | (9,762) |
| Selling, general and administrative expense | (10,031) | (11,682) | (11,294) | (15,234) | (18,419) |
| Other operating income and expense | 2,527 | 1,541 | 1,528 | 1,492 | 514 |
| Operating profit | 3,387 | 2,924 | 5,162 | 1,056 | 3,757 |
| Finance income | 138 | 172 | 87 | 43 | 95 |
| Finance expense | (1,419) | (1,432) | (1,306) | (1,300) | (1,346) |
| Share of after tax losses in associates and joint ventures | (113) | (116) | (27) | (64) | (5) |
| Profit/(loss) before tax | 1,993 | 1,548 | 3,916 | (265) | 2,501 |
| Taxation | 57 | (321) | (772) | 380 | 792 |
| Profit for the period | 2,050 | 1,227 | 3,144 | 115 | 3,293 |
| Other comprehensive income/(loss) for the period, net of tax | (1,059) | (611) | 1,608 | (145) | (878) |
| Total comprehensive income/(loss) for the period | 991 | 616 | 4,752 | (30) | 2,415 |
| Profit attributable to: |  |  |  |  |  |
| Owners of the Parent | 2,155 | 1,335 | 3,196 | 112 | 3,288 |
| Non-controlling interests | (105) | (108) | (52) | 3 | 5 |
| Earnings per share |  |  |  |  |  |
| Basic earnings per $0.25 Ordinary Share | $1.70 | $1.03 | $2.44 | $0.08 | $2.12 |
| Diluted earnings per $0.25 Ordinary Share | $1.70 | $1.03 | $2.44 | $0.08 | $2.11 |
| Dividends | $2.80 | $2.80 | $2.80 | $2.80 | $2.90 |

Group Financial Record

AstraZeneca Annual Report & Form 20-F Information 2022 211

# Additional Information

Shareholder information 213
Directors' report 215
Sustainability supplementary information 218
Trade Marks 219
Glossary 220
Cautionary statement regarding forward-looking statements 224

![img-0.jpeg](img-0.jpeg)

212 AstraZeneca Annual Report & Forecast | 1st Year from 2022

Additional Information

Strategic Report Corporate Governance Financial Statements Additional Information

# Shareholder information

This section of the Annual Report contains information for shareholders that is required by regulation in the UK. Further information that may be of use to shareholders is available on the Shareholder information page of our website at www.astrazeneca.com. Additional information required by SEC regulations is included in AstraZeneca's Form 20-F filing for 2022, which is available on the SEC website at www.sec.gov.

The principal markets for trading in AstraZeneca shares are the London Stock Exchange, Nasdaq Stockholm and the Nasdaq Global Select Market (Nasdaq). AstraZeneca shares were listed on Nasdaq on 25 September 2020, prior to which they were listed on the New York Stock Exchange. Ordinary Shares of $0.25 each in AstraZeneca PLC are listed on the London Stock Exchange and the shareholder register is maintained by Equiniti Limited, the Ordinary Share registrar. Shares listed on Nasdaq Stockholm are issued under the Euroclear Services Agreement by Euroclear Sweden AB, the Swedish Central Securities Depository. Shares listed on Nasdaq are in the form of American Depositary Shares (ADSs), evidenced by American Depositary Receipts (ADRs) issued by the Company's ADR depository, Deutsche Bank Trust Company Americas (Deutsche Bank). Two ADSs are equivalent to one Ordinary Share. Before 27 July 2015, the ratio was one ADS per one Ordinary Share. Shares are listed on all three markets under the stock symbol AZN.

## Ordinary Share registrar

Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
UK
Tel (freephone in UK): +44 (0)800 389 1580
Tel (outside UK): +44 (0)121 415 7033

## Swedish Central Securities Depository

Euroclear Sweden AB
PO Box 191
SE-101 23 Stockholm
Sweden
Tel: +46 (0)8 402 9000

## ADR depository

Deutsche Bank Trust Company Americas
c/o American Stock Transfer & Trust
Company, LLC
6201 15th Avenue
Brooklyn NY 11219
USA
Tel (toll free in the US): +1 (888) 697 8018
Tel (outside US): +1 (718) 921 8137
db@astfinancial.com

## Annual General Meeting (AGM)

The 2023 AGM will be held on 27 April 2023 and further details will be set out in the Notice of Meeting. If you hold shares listed on Nasdaq Stockholm or hold ADRs, information relating to voting and attendance will be included in the relevant Notice of AGM. If you hold your shares through a nominee, your nominee provider will be able to advise you of their arrangements in relation to voting and attendance.

## Dividends

Dividend dates for 2023 are shown in the financial calendar below. A first interim dividend is normally announced in July/August and paid in September and a second interim dividend is normally announced in January/February and paid in March. Dividends are paid in GBP, SEK and USD, depending on where the eligible shares are listed.

For further information on dividends declared, see the Shareholder information section of our website, www.astrazeneca.com.

## Financial calendar

| Event | Provisional date |
| --- | --- |
| Second interim dividend for 2022 |  |
| Ex-dividend date | 23 February 2023 |
| Record date | 24 February 2023 |
| Payment date | 27 March 2023 |
| Announcement of first quarter results for 2023 |  |
|  | 27 April 2023 |
| Annual General Meeting (AGM) |  |
|  | 27 April 2023 |
| Announcement of second quarter and half-year results for 2023 |  |
|  | 28 July 2023 |
| First interim dividend for 2023 |  |
| Ex-dividend date | 10 August 2023 |
| Record date | 11 August 2023 |
| Payment date | 11 September 2023 |
| Announcement of third quarter results for 2023 |  |
|  | 9 November 2023 |
| Financial year end |  |
|  | 31 December 2023 |

## Related party transactions

During the period 1 January 2023 to 31 January 2023, there were no transactions, loans, or proposed transactions between the Company and any related parties which were material to either the Company or the related party, or which were unusual in their nature or conditions (see also Note 31 to the Financial Statements on page 198).

## Conflicts of interest

The Articles enable the Directors to authorise any situation in which a Director has an interest that conflicts or has the potential to conflict with the Company's interests and which would otherwise be a breach of the Director's duty, under section 175 of the Companies Act 2006. The Board has a formal system in place for Directors to declare such situations to be considered for authorisation by those Directors who have no interest in the matter being considered.

In deciding whether to authorise a situation, the non-conflicted Directors must act in the way they consider, in good faith, would be most likely to promote the success of the Company, and they may impose limits or conditions when giving the authorisation, or subsequently, if they think this is appropriate. Situations considered by the Board and authorisations given are recorded in the Board minutes and in a register of conflicts maintained by the Company Secretary and are reviewed annually by the Board. The Board believes that this system operates effectively.

## Shareholder fraud warning

Shareholders of AstraZeneca and many other companies have reported receiving unsolicited calls and correspondence relating to their shareholdings and investment matters. Shareholders are advised to be very cautious of any unsolicited approaches and to note that reputable firms authorised by the Financial Conduct Authority (FCA) are very unlikely to make such approaches. Such approaches are likely to be part of a 'boiler room scam' attempting to defraud shareholders.

Shareholders are advised to familiarise themselves with the information on scams available on the FCA website, www.fca.org.uk/consumers and within the FAQs in the Investors section of our website, www.astrazeneca.com.

Any suspected scams or fraudulent approaches should be reported to the FCA via its website and to AstraZeneca's Ordinary Share registrar, using the contact details on this page.

Shareholder information

AstraZeneca Annual Report & Form 20-F Information 2022 213

# Shareholder information

## Issued share capital, shareholdings and share prices

At 31 December 2022, the Company had 68,771 registered holders of 1,549,800,030 Ordinary Shares. There were 165,574 holders of Ordinary Shares held under the Euroclear Services Agreement, representing 10.2% of the issued share capital of the Company and 1,653 registered holders of ADSs, representing 19.4% of the issued share capital of the Company.

Information on the Company's share price, including historical closing prices and volumes, and an interactive share price graph can be found on the Investor Relations page on our website, www.astrazeneca.com.

## Ordinary Shares in issue

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Ordinary Shares in issue - millions |  |  |  |
| At year end | 1,550 | 1,549 | 1,313 |
| Weighted average for year | 1,548 | 1,418 | 1,312 |
| Stock market closing price per Ordinary Share (London Stock Exchange) |  |  |  |
| Highest (pence) | 11440 | 9444 | 9320 |
| Lowest (pence) | 8282 | 6794 | 6221 |
| At year end (pence) | 11218 | 8678 | 7324 |

## Analysis of shareholdings as a percentage of issued share capital at 31 December

| Number of Ordinary Shares 1 | 2022% | 2021% | 2020% |
| --- | --- | --- | --- |
| 1 - 250 | 0.3 | 0.3 | 0.4 |
| 251 - 500 | 0.3 | 0.3 | 0.4 |
| 501 - 1,000 | 0.4 | 0.4 | 0.5 |
| 1,001 - 5,000 | 0.5 | 0.6 | 0.7 |
| 5,001 - 10,000 | 0.2 | 0.2 | 0.2 |
| 10,001 - 50,000 | 1.1 | 1.1 | 1.1 |
| 50,001 - 1,000,000 | 1.1 | 1.1 | 11.2 |
| Over 1,000,000 | 96.1 | 96.0 | 85.5 |

$^{1}$ Includes Euroclear and ADR holdings.

## US holdings

At 31 January 2023, the proportion of Ordinary Shares represented by ADSs was 19.4% of the issued share capital of the Company. At 31 January 2023, there were 68,434 registered holders of Ordinary Shares, of which 623 were based in the US and there were 1,649 record holders of ADRs, of which 1,631 were based in the US.

## Exchange controls and other limitations affecting security holders

There are no governmental laws, decrees or regulations in the UK restricting the import or export of capital or affecting the remittance of dividends, interest or other payments to non-resident holders of Ordinary Shares or ADRs.

There are no limitations under English law or the Articles on the right of non-resident or foreign owners to be the registered holders of, or to exercise voting rights in relation to, Ordinary Shares or ADRs or to be registered holders of notes or debentures of the Company or its wholly owned subsidiaries, Zeneca Wilmington Inc. and AstraZeneca Finance LLC.

214 AstraZeneca Annual Report & Form 20-F Information 2022

Additional Information

Strategic Report Corporate Governance Financial Statements Additional Information

# Directors' Report

The Directors' Report includes information required to be given in accordance with the Companies Act 2006.

Relevant information below, which is contained elsewhere in the Annual Report, is incorporated by cross reference herein.

## Subsidiaries and principal activities

The Company is the holding company for a group of subsidiaries whose principal activities are described in this Annual Report. The Group's subsidiaries and their locations are set out in Group Subsidiaries and Holdings in the Financial Statements from page 199.

## Branches and countries in which the Group conducts business

In accordance with the Companies Act 2006, we disclose below countries of our representative, scientific or branch offices outside of the UK established through various subsidiaries of the Company:

Algeria, Angola, Costa Rica, Cuba, Denmark, Egypt, Georgia, Ghana, Jordan, Kazakhstan, Lebanon, Norway, Portugal, Romania, Russia, Saudi Arabia, Serbia, Slovakia, Slovenia, Syria, Ukraine, United Arab Emirates, United States, Vietnam and Yemen.

## Disclosure of information to auditors

The Directors who held office at the date of approval of this Annual Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditors are unaware; and each Director has taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

## Going concern accounting basis

Information on the business environment in which AstraZeneca operates, including the factors underpinning the industry's future growth prospects, is included in the Strategic Report. Details of the product portfolio of the Group are contained in the Strategic Report (in the Therapy Area Review from page 18). For information on patent expiry dates for key marketed products, see the Patent Expiries Supplement on our website, www.astrazeneca.com/annualreport2022. Our approach to product development is covered in detail with additional information by therapy area in the Strategic Report. For information on our development pipeline, see the Development Pipeline Supplement on our website, www.astrazeneca.com/annualreport2022.

The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review from page 60. In addition, Note 28 to the Financial Statements from page 184 includes the Group's objectives, policies and processes for: managing capital; financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit, market and liquidity risk. Further details of the Group's cash balances and borrowings are included in Notes 17 and 19 to the Financial Statements from page 167.

Having assessed the Principal Risks and other matters considered in connection with the Viability statement on page 57, the Board considers it appropriate to adopt the going concern basis of accounting in preparing the Annual Report and Financial Statements.

## Shares

☐ For more information, see Issued share capital, shareholdings and share prices on page 214.

A shareholders' resolution was passed at the 2022 AGM authorising the Company to purchase its own shares. The Company did not purchase any of its own shares in 2022. On 31 December 2022, the Company did not hold any shares in treasury.

## Rights, preferences and restrictions attaching to shares

As at 31 December 2022, the Company had 1,549,800,030 Ordinary Shares and 50,000 Redeemable Preference Shares in issue. The Ordinary Shares represent 99.98% and the Redeemable Preference Shares represent 0.02% of the Company's total share capital (these percentages have been calculated by reference to the 8am WM/Reuters USD/GBP exchange rate on 31 December 2022).

As agreed by the shareholders at the Company's AGM held on 29 April 2010, the Articles were amended with immediate effect to remove the requirement for the Company to have an authorised share capital, the concept of which was abolished under the Companies Act 2006. Each Ordinary Share carries the right to vote at general meetings of the Company. The rights and restrictions attaching to the Redeemable Preference Shares differ from those attaching to Ordinary Shares as follows:

- The Redeemable Preference Shares carry no rights to receive dividends.
- The holders of Redeemable Preference Shares have no rights to receive notices of, attend or vote at general meetings except in certain limited circumstances. They have one vote for every 50,000 Redeemable Preference Shares held.

> On a distribution of assets of the Company, on a winding-up or other return of capital (subject to certain exceptions), the holders of Redeemable Preference Shares have priority over the holders of Ordinary Shares to receive the capital paid up on those shares.

> Subject to the provisions of the Companies Act 2006, the Company has the right to redeem the Redeemable Preference Shares at any time on giving not less than seven days' written notice.

There are no specific restrictions on the transfer of shares in the Company, which is governed by the Articles and prevailing legislation.

The Company is not aware of any agreements between holders of shares that may result in restrictions on the transfer of shares or that may result in restrictions on voting rights. The Company is also not aware of any arrangements under which financial rights are held by a person other than the holder of the shares.

## Action necessary to change the rights of shareholders

In order to vary the rights attached to any class of shares, the consent in writing of the holders of three quarters in nominal value of the issued shares of that class or the sanction of a special resolution passed at a general meeting of such holders is required.

## Changes in share capital

Changes in the Company's Ordinary Share capital during 2022, including details of the allotment of new shares under the Company's share plans, are given in Note 24 to the Financial Statements from page 180.

## Employee share trust ownership rights

The trustee of the AstraZeneca Employee Benefit Trust (the EBT, the Trustee) will not exercise voting rights attached to shares held in the EBT (Shares). Any decision as to acceptance or rejection of an offer for Shares subject to subsisting awards would be made by the Trustee, having regard to the interests of award holders.

Directors' Report

AstraZeneca Annual Report & Form 20-F Information 2022 215

# Directors' Report
*continued*

## Major shareholdings

At 31 December 2022, the following persons had disclosed an interest in the issued Ordinary Share capital of the Company in accordance with the requirements of rules 5.1.2 or 5.1.5 of the UK Listing Authority's Disclosure Guidance and Transparency Rules.

Changes in the percentage ownerships disclosed by major shareholders are set out below. Major shareholders do not have different voting rights.

| Shareholder | Date of the latest disclosure to the Company 1 | Number of Ordinary Shares disclosed | Number of Ordinary Shares disclosed as a percentage of issued share capital at: |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Date of the latest disclosure to the Company | 31 December 2020 | 31 December 2021 | 31 December 2022 | 31 January 2023 |
| BlackRock, Inc. | 4 December 2009 | 100,885,181 | 6.96 | 7.69 | 6.51 | 6.51 | 6.51 |
| Investor AB | 3 April 2019 | 51,587,810 | 3.93 | 3.93 | 3.33 | 3.33 | 3.33 |
| The Capital Group Companies, Inc. | 17 July 2018 | 63,802,495 | 5.04 | 4.86 | 4.12 | 4.12 | 4.12 |
| Wellington Management Group LLP 2 | 21 July 2020 | 65,120,892 | 4.96 | 4.96 | 4.20 | 4.20 | 4.20 |
| Wellington Management Company LLP 2 | 21 July 2020 | 65,118,411 | 4.96 | 4.96 | 4.20 | 4.20 | 4.20 |

$^{1}$ Since the date of disclosure to the Company, the interest of any person listed above in Ordinary Shares may have increased or decreased. No requirement to notify the Company of any increase or decrease arises unless the holding passes a notifiable threshold in accordance with rules 5.1.2 or 5.1.5 of the UK Listing Authority's Disclosure Guidance and Transparency Rules.

$^{2}$ The Company was notified at the time of the disclosure that Wellington Management Company LLP was a subsidiary of Wellington Management Group LLP and that the shareholding percentage notified by Wellington Management Company LLP was included within the aggregate shareholding percentage notified by Wellington Management Group LLP.

So far as the Company is aware, no other person held a notifiable interest in the issued Ordinary Share capital of the Company. No changes to major shareholdings were disclosed to the Company between 31 December 2022 and 31 January 2023.

So far as the Company is aware, it is neither directly nor indirectly owned or controlled by one or more corporations or by any government.

The Company does not know of any arrangements, the operation of which might result in a change in the control of the Company.

## Directors', officers' and SET shareholdings

At 31 January 2023, the total amount of the Company's voting securities owned by Directors and officers of the Company and other SET members was:

| Title of class | Amount owned | Percentage of class |
| --- | --- | --- |
| Ordinary Shares | 545,338 | 0.04 |

## Options to purchase securities from registrant or subsidiaries

(a) At 31 January 2023, options outstanding to subscribe for Ordinary Shares were:

| Number of shares | Subscription price (pence) | Normal expiry date |
| --- | --- | --- |
| 1,126,431 | 3597-9064 | 2023-2028 |

The weighted average subscription price of options outstanding at 31 January 2023 was 7131 pence. All options were granted under Company employee share schemes.

(b) Included in paragraph (a) are options granted to officers of the Company and SET members as follows:

| Number of shares | Subscription price (pence) | Normal expiry date |
| --- | --- | --- |
| 526 | 6839 | 2024 |

(c) During 2022, no options were held by Directors.

During the period 1 January 2023 to 31 January 2023, no Director was granted or exercised any options.

## Distributions to shareholders - dividends for 2022

Details of our distribution policy are set out in the Financial Review from page 60 and Note 28 to the Financial Statements from page 184.

The Company's dividend for 2022 of $2.90 (239.2 pence, SEK 30.18) per Ordinary Share is estimated to amount to, in aggregate, a total dividend payment to shareholders of $4,493 million. Two employee share trusts, AstraZeneca Employee Benefit Trust and AstraZeneca Share Trust Limited, waived their rights to a dividend on the Ordinary Shares they hold and instead received nominal dividends.

☐ For more information, see Financial calendar on page 213.

## Articles of Association

AstraZeneca PLC's current Articles were adopted by shareholders at the Company's AGM held on 18 May 2018. Any amendment to the Articles requires the approval of shareholders by a special resolution at a general meeting of the Company. The Company is proposing to update its Articles and will include details of the proposed amendments in the 2023 AGM Notice of Meeting.

## Objects

The Company's objects are unrestricted.

## Directors

The Board has the authority to manage the business of the Company, for example, through powers to allot and repurchase its shares, subject where required to shareholder resolutions. Subject to certain exceptions,

Directors do not have power to vote at Board meetings on matters in which they have a material interest.

The quorum for meetings of the Board is a majority of the full Board, of whom at least four must be Non-Executive Directors. In the absence of a quorum, the Directors do not have power to determine compensation arrangements for themselves or any member of the Board.

The Board may exercise all the powers of the Company to borrow money. Variation of these borrowing powers would require the passing of a special resolution of the Company's shareholders.

All Directors must retire from office at the Company's AGM each year and may present themselves for election or re-election. Directors are not prohibited, upon reaching a particular age, from submitting themselves for election or re-election.

☐ For more information on the Directors, see Board of Directors on pages 60 and 61.

## General meetings

AGMs require 21 clear days' notice to shareholders. Subject to the Companies Act 2006, other general meetings require 14 clear days' notice.

For all general meetings, a quorum of two shareholders present in person or by proxy, and entitled to vote on the business transacted, is required unless each of the two persons present is a corporate representative of the same corporation, or each of the two persons present is a proxy of the same shareholder.

216 AstraZeneca Annual Report & Form 20-F Information 2022

Additional Information

Strategic Report Corporate Governance Financial Statements Additional Information

Shareholders and their duly appointed proxies and corporate representatives are entitled to be admitted to general meetings.

#### Limitations on the rights to own shares

There are no limitations on the rights to own shares.

#### Gender diversity

|  | Directors of the Company's subsidiaries* |
| --- | --- |
| Men | 234 (62%) |
| Women | 141 (38%) |
| Total | 375 |
|  | Senior Executive Team* |
| Men | 7 (58%) |
| Women | 5 (42%) |
| Total | 12 |

All numbers as at 31 December 2022.

* For the purposes of section 414C(8)(c)(ii) of the Companies Act 2006, 'Senior Managers' are the Senior Executive Team (SET), the Directors of all of the subsidiaries of the Company and other individuals holding named positions within those subsidiaries.

#### Stakeholder engagement

The discussion on stakeholder engagement and the impact of these interactions is contained in Connecting with our Stakeholders from page 86 and throughout the Strategic Report. This includes engagement with our employees, suppliers and other stakeholders, as well as the impact of our operations on the community and environment.

Information on how we encourage employee involvement in the Company's performance is set out in People and Sustainability from page 17. Details of some of the employee share plans are described in the Directors' Remuneration Report from page 104, and in Note 29 to the Financial Statements from page 189. All employees are provided with information on matters of concern to them through regular meetings and updates on the Group's intranet and internal social media. 'Townhall' meetings and Q&A sessions are hosted regularly by members of senior management, including the SET, including global and targeted broadcasts on internal social media. During 2022, these broadcasts provided updates on the business, including pipeline developments and leadership changes, as well as the Group's response to global issues such as climate change and the Russia-Ukraine conflict. In addition, information about the Group's quarterly results is shared with employees. These updates inform employees of the financial and economic factors which affect the performance of the Company.

#### Political donations

Neither the Company nor its subsidiaries made any EU political donations or incurred any EU political expenditure in 2022 and they do not intend to do so in the future in respect of which shareholder authority is required, or for which disclosure in this Annual Report is required, under the Companies Act 2006. However, to enable the Company and its subsidiaries to continue to support interest groups or lobbying organisations concerned with the review of government policy or law reform without inadvertently breaching the Companies Act 2006, which defines political donations and other political expenditure in broad terms, a resolution will be put to shareholders at the 2023 AGM, similar to that passed at the 2022 AGM, to authorise the Company and its subsidiaries to:

- > make donations to political parties or independent election candidates
- > make donations to political organisations other than political parties
- > incur political expenditure, up to an aggregate limit of $250,000.

Corporate political contributions in the US are permitted in defined circumstances under the First Amendment of the US Constitution and are subject to both federal and state laws and regulations. In 2022, the Group's US legal entities made contributions amounting in aggregate to $1,316,950 (2021: $1,142,200) to national political organisations, state-level political party committees and to campaign committees of various state candidates. No corporate political donations were made at the federal level and all contributions were made only where allowed by US federal and state law. We publicly disclose details of our corporate US political contributions, which can be found on our website, www.astrazeneca-us.com/sustainability/corporate-transparency.

The annual corporate contributions budget is reviewed and approved by the US Vice-President, Corporate Affairs and the President of our US business to ensure robust governance and oversight. US citizens or individuals holding valid green cards exercised decision making over the contributions and the funds were not provided or reimbursed by any non-US legal entity. Such contributions do not constitute political donations or political expenditure for the purposes of the Companies Act 2006 and were made without any involvement of persons or entities outside the US.

#### Significant agreements

There are no significant agreements to which the Company is a party that take effect, alter or terminate on a change of control of the Company following a takeover bid. There are no persons with whom we have contractual or other arrangements, who are deemed by the Directors to be essential to our business.

#### Use of financial instruments

The Notes to the Financial Statements, including Note 28 from page 184, include further information on our use of financial instruments.

#### Insurance and indemnities

The Company maintained Directors' and officers' liability insurance cover throughout 2022. The Directors are also able to obtain independent legal advice at the expense of the Company, as necessary, in their capacity as Directors.

The Company has entered into a deed of indemnity in favour of each Board member since 2006. These deeds of indemnity are still in force and provide that the Company shall indemnify the Directors to the fullest extent permitted by law and the Articles, in respect of all losses arising out of, or in connection with, the execution of their powers, duties and responsibilities as Directors of the Company or any of its subsidiaries. This is in line with current market practice and helps us attract and retain high-quality, skilled Directors.

#### Compliance requirements under Listing Rule 9.8.4

The only matter to report is the shareholder waiver of dividends on page 216.

#### Directors' Report

The Directors' Report, which has been prepared in accordance with the requirements of the Companies Act 2006, comprises the following sections:

- > Chair's Statement
- > Chief Executive Officer's Review
- > Therapy Area Review
- > Business Review
- > Risk Overview
- > Financial Review: Financial risk management
- > Corporate Governance: including the Corporate Governance Overview, Corporate Governance Report, Nomination and Governance Committee Report, Science Committee Report, Sustainability Committee Report and Audit Committee Report
- > Directors' responsibility statement
- > Shareholder information
- > Sustainability supplementary information

and has been approved by the Board and signed on its behalf.

On behalf of the Board

**A C N Kemp**
Company Secretary
9 February 2023

Directors' Report

AstraZeneca Annual Report & Form 20-F Information 2022 217

# Sustainability supplementary information

## External assurance

Bureau Veritas has provided independent external assurance to a limited level on the following sustainability information contained within this Annual Report:

- > Commitment to society, see page 5.
- > Bioethics, including Clinical trial transparency, Research use of human biological samples and Animal research, see page 38.
- > Healthcare in low- and middle-income countries, see page 41.
- > Responsible sales and marketing, see page 41.
- > Anti-bribery and anti-corruption, see page 41.
- > Responsible Supply Chain, see page 42.
- > Performance indicators, Sustainability, see page 44.
- > Human rights, see page 46.
- > Employee relations, see page 46.
- > Workforce safety and health, see page 46.
- > Sustainability, including our approach to sustainability, Governance, Benchmarking and assurance and Sustainability strategy see page 48.
- > Access to healthcare, including Equitable access, Affordability and pricing, Health system resilience, see page 49.
- > Environmental protection, including Ambition Zero Carbon, Product sustainability, Natural resources, see page 50.
- > Ethics and transparency, including Code of ethics, see page 51.
- > EU Taxonomy, see page 52.
- > Task Force on Climate-related Financial Disclosures Summary Statement, see pages 53 to 55. See our full TCFD statement on our website, www.astrazeneca.com/annualreport2022.
- > GHG reporting, see page 218.

![Green checkmark icon]() Used throughout this Annual Report to denote the sustainability information listed above, which has been independently assured by Bureau Veritas.

Based on the evidence provided and subject to the scope, objectives and limitations defined in the full assurance statement, nothing has come to the attention of Bureau Veritas causing them to believe that the sustainability information contained within this Annual Report is materially misstated. Bureau Veritas is a professional services company that has a long history of providing independent assurance services in environmental, health, safety, social and ethical management and disclosure.

The full assurance statement, which includes Bureau Veritas' scope of work, methodology, overall opinion, and limitations and exclusions, is available on our website, www.astrazeneca.com.

## GHG reporting ![GHS logo]()

We have reported on all of the emission sources required under the Quoted Companies GHG Emissions (Directors' Reports) Regulations 2013. These sources fall within our consolidated Financial Statements. We do not have responsibility for any emission sources that are not included in our consolidated Financial Statements.

### Global GHG emissions data for the period 1 January 2022 to 31 December 2022$^{1}$

|  | Tonnes CO 2 e |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Emissions from: |  |  |  |
| Scope 1: Combustion of fuel and operation of facilities 1,2 | 245,117 | 246,705 | 239,459 |
| Scope 2 (Market-based): Electricity (net of market instruments), heat, steam and cooling purchased for own use 1,3 | 18,491 | 21,135 | 32,218 |
| Scope 2 (Location-based): Electricity, heat, steam and cooling purchased for own use 1,3 | 195,126 | 207,003 | 228,727 |
| Company's chosen intensity measurement: Scope 1 + Scope 2 (Market-based) emissions reported above normalised to million US dollar revenue | 5.94 | 7.00 | 8.00 |
| Scope 3 Total: Emissions from all 15 GHG Protocol Scope 3 Categories | 6,388,133 | 6,017,727 | 5,689,936 |
| Scope 3 intensity measurement: Scope 3 emissions from all 15 GHG Protocol Scope 3 Categories normalised to million US dollar revenue | 144.04 | 147.66 | 174.07 |
|  |  | MegaWatt hours (MWh) |  |
| Total energy consumption 4,5 | 1,636,031 | 1,740,519 | 1,699,868 |

$^{1}$ Regular review of the data is carried out to ensure accuracy, consistency and reflect major business changes. This has led to changes in the data from previous years. The majority of adjustments made are not material individually, except for (i) Scope 3 category 1 purchased goods and services (methodology update to transition relevant procurement spend categories from a spend based emissions database to product life cycle assessment (LCA) data, thereby improving accuracy; Additional small improvements have been made to spend based methodology emission factors in this category; (ii) Scope 3 Category 9 downstream transportation and distribution (methodology update to use production data and updated assumptions to account for the footprint associated with patient travel). High uncertainty of this category means further review is ongoing to improve the methodology; (iii) Scope 3 Category 12 end of life treatment of sold products (methodology update to transition from spend based approach to emissions calculated using production and LCA data).

$^{2}$ Included in this section are GHGs from direct fuel combustion, process and engineering emissions at our sites and from fuel use in our vehicle fleet.

$^{3}$ GHGs from imported electricity are calculated using the GHG Protocol Scope 2 Guidance (January 2015) requiring dual reporting using two emissions factors for each site - Market-based and Location-based. Our corporate emissions reporting and targets follow the Market-based approach. We have used the GHG Protocol Corporate Accounting and Reporting Standard (revised edition). Emission factors for electricity have been derived from the International Energy Agency, USEPA eGRID, US Green-e and the Association of Issuing Bodies databases and for all other fuels and emission sources from the 2006 IPCC Guidelines for National Greenhouse Gas Inventories.

$^{4}$ The aggregate of: (i) the annual quantity of energy consumed from activities for which the Company is responsible, including the combustion of fuel at a facility or the operation of any facility and (ii) the annual quantity of energy consumed resulting from the purchase of electricity, heat, steam or cooling by the Company for its own use.

$^{5}$ Under the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, the Company needs to disclose what proportion of this figure relates to energy use in the UK and offshore area. For 2022, the proportion of total global energy and emissions originating from AstraZeneca's UK and offshore area footprint were as follows: energy use 371 GWh (21%); Scope 1 site energy and road fleet emissions 60 ktCO$_{2}$e (24%); Scope 2 site imported energy emissions using Market-based accounting 0 ktCO$_{2}$e (0%); Scope 2 site imported energy emissions using Location-based accounting 12 ktCO$_{2}$e (6%). In the period covered by the report AstraZeneca has installed LED lighting, implemented cooling tower improvements on the combined heat and power plant, and maintained ISO16001 at its Macclesfield, UK, manufacturing facility.

![Green checkmark icon]() For more information, see Environmental protection from page 50.

![Green checkmark icon]() For more information, see our Sustainability Report on our website, www.astrazeneca.com/sustainability.

218 AstraZeneca Annual Report & Form 20-F Information 2022

Additional Information

Strategic Report Corporate Governance Financial Statements Additional Information

# Trade Marks

AstraZeneca, the AstraZeneca logotype, and the AstraZeneca symbol are all trade marks of the Group.

The following medicine names which appear in italics in this Annual Report are trade marks of the Group:

| Trade mark |  |  |  |
| --- | --- | --- | --- |
| Airsupra | Crestor | Koselugo | Seroquel XR 4 |
| Andexxa | Daliresp | Losec 4 | Soliris |
| Arimidex 1 | Daxas | Lokelma | Strensiq |
| Atacand 2 | Epanova | Lumoxiti | Symbicort |
| Atacand HCT | Eousheld | Lynparza | Symbicort Turbuhaler |
| Atacand Plus 2 | Farxiga | Mooantik | Symlin |
| BCise | Fasenra | Moventig | Synagis 5 |
| Betaloc | Faslodex | Nexium | Tagrisso |
| Bevespi Aerosphere | Fluenz | Ondexxya | Toprol-XL |
| Breztri | FluMist | Onglyza | Trixeo |
| Breztri Aerosphere | Forxiga | Orpathys | Trixeo Aerosphere |
| Brilinta | Genuair | Plendil 3 | Turbuhaler |
| Brilique | Imfinzi | Prilosec | Ultomiris |
| Bydureon | Imjudo | Pulmicort | Vaxzeoria |
| Byetta | Iressa | Qtern | Vimovo 6 |
| Calquence | Kanuma | Saphnelo | Xigduo |
| Casodex 7 | Kombiglyze | Seloken | Zoladex |
| Cosudex | Komboglyze | Seroquel 4 |  |

$^{1}$ AstraZeneca divested these trade marks in a number of European, African and other markets to Juvise Pharmaceuticals effective 19 December 2019.

$^{2}$ AstraZeneca divested these trade marks in Europe to Cheplapharm effective 28 September 2018, and in more than 70 other markets effective 31 December 2020.

$^{3}$ Effective 18 May 2022; AstraZeneca divested Plendil in 35 markets to Glenwood.

$^{4}$ AstraZeneca divested these trade marks in Europe and Russia to Cheplapharm effective 13 December 2019.

$^{5}$ Effective 25 January 2019; AstraZeneca sold its rights to Synagis in the US to Sols. AbbVie transferred its ownership rights to this trademark to MedImmune LLC, effective 1 July 2021.

$^{6}$ AstraZeneca divested the global rights (excluding the US and Japan) for this trade mark to Grünenthal, effective 3 December 2018.

The following medicine names, which appear in italics in this Annual Report, are trade marks licensed to the Group by the entities set out below:

| Trade mark | Licensor or Owner |
| --- | --- |
| Anticalin | Pieris AG |
| Beyfortus | Sanofi Pasteur Inc. |
| Duaklir | Almirall, S.A. |
| Eklira | Almirall, S.A. |
| Enhertu | Daiichi Sankyo Company, Limited |
| Linzess | Ironwood Pharmaceuticals, Inc. |
| Tezspire | Amgen Inc. |
| Tudorza | Almirall, S.A. |

The following medicine names, which appear in italics in this Annual Report, are not owned by or licensed to the Group and are owned by the entities set out below:

| Trade mark | Owner |
| --- | --- |
| messenger RNA Therapeutics | Moderna |
| Covishield | Serum Institute of India |

Trade Marks

AstraZeneca Annual Report & Form 20-F Information 2022 219

# Glossary

## Market definitions$^{1}$

| Region | Country |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| US | US |  |  |  |  |
| Europe | Austria* | Estonia* | Ireland | Netherlands | Slovenia* |
|  | Belgium | Finland | Israel* | Norway | Spain |
|  | Bulgaria* | France | Italy | Poland | Sweden |
|  | Croatia | Germany | Latvia* | Portugal | Switzerland |
|  | Cyprus* | Greece | Lithuania* | Romania | UK |
|  | Czech Republic | Hungary | Luxembourg* | Serbia and Montenegro* |  |
|  | Denmark | Iceland* | Malta* | Slovakia* |  |
| Established RoW | Australia | Canada | Japan | New Zealand* |  |
| Emerging Markets | Algeria | Colombia | Iraq* | Nigeria* | Sri Lanka* |
|  | Angola* | Costa Rica | Jamaica* | Oman* | Sudan* |
|  | Argentina | Cuba* | Jordan | Other Africa* | Syria* |
|  | Aruba* | Dominican Republic | Kazakhstan | Pakistan* | Taiwan |
|  | Bahamas* | Ecuador* | Kenya* | Palestine* | Thailand |
|  | Bahrain* | Egypt | Kuwait | Panama | Trinidad and Tobago* |
|  | Barbados* | El Salvador | Lebanon* | Paraguay | Tunisia* |
|  | Belize* | Georgia* | Libya* | Peru | Turkey |
|  | Bermuda* | Ghana* | Malaysia | Philippines | Ukraine |
|  | Botswana* | Guatemala | Maldives | Qatar* | United Arab Emirates |
|  | Brazil | Honduras | Mauritius* | Russia | Uruguay* |
|  | Brunei | Hong Kong | Mexico | Saudi Arabia | Uzbekistan |
|  | Cambodia | India | Mongolia | Singapore | Venezuela* |
|  | Chile | Indonesia | Morocco* | South Africa | Vietnam* |
|  | China | Iran* | Nicaragua | South Korea | Yemen* |

\* Q3 2022 IQVIA, IQVIA Midas Quantum Q3 2022 data are not available or AstraZeneca does not subscribe for IQVIA quarterly data for these countries.

$^{1}$ The above table is not an exhaustive list of all the countries in which AstraZeneca operates, and excludes countries with revenue in 2022 of less than $1 million.

Established Markets means US, Europe and Established RoW.

North America means US.

Other Emerging Markets means all Emerging Markets except China.

Other Africa includes Ethiopia, Mozambique, Namibia, Eswatini, Tanzania, Uganda, Zambia and Zimbabwe.

Asia Area comprises India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.

## US equivalents

| Terms used in this Annual Report | US equivalent or brief description |
| --- | --- |
| Accruals | Accrued expenses |
| Called-up share capital | Issued share capital |
| Earnings | Net income |
| Employee share schemes | Employee stock benefit plans |
| Fixed asset investments | Non-current investments |
| Freehold | Ownership with absolute rights in perpetuity |
| Loans | Long-term debt |
| Prepayments | Prepaid expenses |
| Profit | Income |
| Share premium account | Additional paid-in capital or paid-in surplus (not distributable) |
| Short-term investments | Redeemable securities and short-term deposits |
| Trade Payables | Accounts payable |
| Trade Receivables | Accounts receivable |

220 AstraZeneca Annual Report & Form 20-F Information 2022

Additional Information

Strategic Report Corporate Governance Financial Statements Additional Information

The following abbreviations and expressions have the meanings given below when used in this Annual Report:

**AbbVie** - AbbVie Inc.

**Acerta Pharma** - Acerta Pharma B.V.

**Actavis** - Actavis plc.

**ADC** - antibody drug conjugate(s).

**ADRs** - American Depositary Receipts.

**ADSs** - American Depositary Shares.

**AGM** - an Annual General Meeting of the Company.

**AI** - artificial intelligence.

**Alexion** - Alexion Pharmaceuticals, Inc.

**Allergan** - Allergan Plc.

**Almirall** - Almirall, S.A.

**Amgen** - Amgen Inc.

**Amplimmune** - Amplimmune, Inc.

**Annual Report** - this Annual Report and Form 20-F Information 2022.

**API** - active pharmaceutical ingredient.

**Ardea** - Ardea Biosciences, Inc.

**Articles** - the Articles of Association of the Company.

**Astellas** - Astellas Pharma Inc.

**Astra** - Astra AB, being the company with whom the Company merged in 1999.

**AstraZeneca** - the Company and its subsidiaries.

**Atnahs** - Atnahs Pharma UK Ltd.

**ATTR** - Transthyretin amyloidosis.

**biologic(s) or biologic medicine(s)** - a class of drugs that are produced in living cells.

**Baxter** - Baxter International Inc.

**BMS** - Bristol-Myers Squibb Company.

**Board** - the Board of Directors of the Company.

**BRCA** - BReast CAncer gene.

**BRCAm** - BRCA-mutated.

**Bureau Veritas** - Bureau Veritas UK Limited.

**CDP (formerly the Carbon Disclosure Project)** - a not-for-profit organisation that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

**CEO** - the Chief Executive Officer of the Company.

**CER** - constant exchange rates.

**CFO** - the Chief Financial Officer of the Company.

**Cheplapharm** - Cheplapharm Arzneimittel GmbH.

**CKD** - chronic kidney disease.

**CLL** - chronic lymphocytic leukaemia.

**Code of Ethics** - the Group’s Code of Ethics, see page 51.

**Company or Parent Company** - AstraZeneca PLC (formerly Zeneca Group PLC (Zeneca)).

**COPD** - chronic obstructive pulmonary disease.

**COVAX** - the vaccines pillar of the Access to COVID-19 Tools (Act) Accelerator. COVAX is co-led by CEPI, the Coalition for Epidemic Preparedness Innovations; Gavi, the Vaccines Alliance; and the WHO, working in collaboration with developed and developing country vaccine manufacturers, UNICEF, the World Bank and others.

**COVID-19** - the official WHO name for the disease caused by the 2019 novel coronavirus.

**CV** - cardiovascular.

**CVRM** - Cardiovascular, Renal & Metabolism.

**Daiichi Sankyo** - Daiichi Sankyo, Inc. or a company within the Daiichi Sankyo group of companies.

**Director** - a director of the Company.

**DTR** - UK Disclosure Guidance and Transparency Rules.

**EBITDA** - Reported Profit before tax plus net finance expense, share of after tax losses of joint ventures and associates and charges for depreciation, amortisation and impairment.

**EFPIA** - European Federation of Pharmaceutical Industries and Associations.

**EGFR** - epidermal growth factor receptor.

**EGFRm** - EGFR-mutated.

**EPS** - earnings per share: profit for the year after tax and non-controlling interests, divided by the weighted average number of Ordinary Shares in issue during the year.

**ESG** - environmental, social and governance.

**ESMO** - European Society for Medical Oncology.

**EVP** - Executive Vice-President.

**EU** - the European Union.

Glossary

AstraZeneca Annual Report & Form 20-F Information 2022 221

# Glossary

**FDA** - the US Food and Drug Administration, which is part of the US Department of Health and Human Services Agency, which is the regulatory authority for all pharmaceuticals (including biologics and vaccines) and medical devices in the US.

**FibroGen** - FibroGen, Inc.

**FRC** - the UK Financial Reporting Council.

**FX** - foreign exchange.

**GAAP** - Generally Accepted Accounting Principles.

**GHG** - greenhouse gas.

**GIA** - the Group’s Internal Audit function.

**Gilead** - Gilead Sciences Ltd.

**GLP1** - glucagon-like peptide-1.

**Gross margin** - the margin, as a percentage, by which sales exceed the cost of sales, calculated by dividing the difference between the two by the sales figure.

**Group** - AstraZeneca PLC and its subsidiaries.

**Grünenthal** - Grünenthal Group.

**GSK** - GlaxoSmithKline plc.

**GWP** - Global Warming Potential.

**HCPs** - healthcare practitioners.

**HF** - heart failure.

**HK** - hyperkalaemia.

**Honeywell** - Honeywell International Inc.

**IAS** - International Accounting Standards.

**IASB** - International Accounting Standards Board.

**ICAEW** - Institute of Chartered Accountants in England and Wales.

**ICS** - inhaled oral corticosteroid.

**IFPMA** - International Federation of Pharmaceutical Manufacturers and Associations.

**IFRS** - International Financial Reporting Standards or International Financial Reporting Standard, as the context requires.

**Innate Pharma** - Innate Pharma S.A.

**IQVIA** - IQVIA Solutions HQ Limited.

**Ironwood** - Ironwood Pharmaceuticals, Inc.

**IS** - information services.

**ISAs** - International Standards on Auditing.

**IT** - information technology.

**KPI** - key performance indicator.

**krona or SEK** - references to the currency of Sweden.

**LABA** - long-acting beta2-agonist.

**LAMA** - long-acting muscarinic antagonist.

**LCA** - Life-Cycle Assessment.

**LCM projects** - significant life-cycle management projects (as determined by potential revenue generation), or line extensions.

**Lilly** - Eli Lilly and Company.

**LoE** - Loss of Exclusivity.

**LMICs** - low- and middle-income countries.

**mAb** - monoclonal antibody, a biologic that is specific, meaning it binds to and attacks one particular antigen.

**major market** - US, Europe, Japan and China.

**MAT** - moving annual total.

**mCRPC** - metastatic castration-resistant prostate cancer.

**MedImmune** - MedImmune, LLC (formerly MedImmune, Inc.).

**MET** - tyrosine kinase receptor.

**MI** - myocardial infarction.

**Moderna** - Moderna Therapeutics, Inc.

**MSD** - Merck & Co., Inc., which is known as Merck in the US and Canada, and MSD in other territories.

**n/m** - not meaningful.

**Nasdaq** - Nasdaq Global Select Market.

**Nasdaq Stockholm** - previously the Stockholm Stock Exchange.

**Neogene** - Neogene Therapeutics Inc.

**NME** - new molecular entity.

**NMOSD** - neuromyelitus optica spectrum disorder

**Novartis** - Novartis Pharma AG.

**NRDL** - National Reimbursement Drug List, China.

**NSCLC** - non-small cell lung cancer.

**NYSE** - the New York Stock Exchange.

**OECD** - the Organisation for Economic Co-operation and Development.

**operating profit** - sales, less cost of sales, less operating costs, plus operating income.

**Ordinary Share** - an ordinary share of $0.25 each in the share capital of the Company.

**Orphan Drug** - a drug that has been approved for use in a relatively low-incidence indication (an orphan indication) and has been rewarded with a period of market exclusivity; the period of exclusivity and the available orphan indications vary between markets.

**Paediatric Exclusivity** - in the US, a six-month period of exclusivity to market a drug which is awarded by the FDA in return for certain paediatric clinical studies using that drug. This six-month period runs from the date of relevant patent expiry. Analogous provisions are available in certain other territories (such as European Supplementary Protection Certificate (SPC) paediatric extensions).

**PARP** - an oral poly ADP-ribose polymerase.

**PD-L1** - an anti-programmed death-ligand 1.

**Pearl Therapeutics** - Pearl Therapeutics, Inc.

**Pfizer** - Pfizer, Inc.

222 AstraZeneca Annual Report & Form 20-F Information 2022

Additional Information

Strategic Report Corporate Governance Financial Statements Additional Information

**PFS** - progression-free survival. The length of time during and after the treatment of a disease, such as cancer, that a patient lives with the disease without it getting worse.

**PhRMA** - Pharmaceutical Research and Manufacturers of America.

**Phase I** - the phase of clinical research where a new drug or treatment is tested in small groups of people (20 to 80) to check that the drug can achieve appropriate concentrations in the body, determine a safe dosage range and identify side effects. This phase includes healthy volunteer studies.

**Phase II** - the phase of clinical research which includes the controlled clinical activities conducted to evaluate the effectiveness of the drug in patients with the disease under study and to begin to determine the safety profile of the drug. Phase II studies are typically conducted in small- or medium-sized groups of patients and can be divided into Phase IIa studies, which tend to be designed to assess dosing requirements, and Phase IIb studies, which tend to assess safety and efficacy.

**Phase III** - the phase of clinical research which is performed to gather additional information about effectiveness and safety of the drug, often in a comparative setting, to evaluate the overall benefit/risk profile of the drug. Phase III studies usually include between several hundred and several thousand patients.

**Pieris Pharmaceuticals** - Pieris Pharmaceuticals, Inc.

**pMDI** - pressurised metered-dose inhaler.

**pound sterling, £, GBP or pence** - references to the currency of the UK.

**primary care** - general healthcare provided by physicians who ordinarily have first contact with patients and who may have continuing care for them.

**PROTACs** - a proteolysis targeting chimera, which is a heterobifunctional small molecule composed of two active domains and a linker capable of removing specific unwanted proteins.

**PTE** - Patent Term Extension, an extension of up to five years in the term of a US patent relating to a drug which compensates for delays in marketing resulting from the need to obtain FDA approval. The analogous right in the EU is an SPC.

**Pulse survey** - an AstraZeneca employee opinion survey, which seeks employees’ views of the business.

**PwC** - PricewaterhouseCoopers LLP.

**R&D** - research and development.

**R&I** - Respiratory & Immunology.

**Rare disease** - the EU defines a disease or condition as rare if it affects fewer than 1 in 2,000 people within the general population and in the US, the Orphan Drug Act defines a rare disease as a disease or condition that affects less than 200,000 people in the United States.

**Redeemable Preference Share** - a redeemable preference share of £1 each in the share capital of the Company.

**RICs** - radio-immuno conjugates.

**RNA** - ribonucleic acid.

**Roche** - F. Hoffmann-La Roche AG.

**ROW** - rest of world.

**RSV** - respiratory syncytial virus.

**SABA** - short-acting beta2-agonist.

**Sanofi** - Sanofi S.A./Sanofi Pasteur, Inc.

**Sarbanes-Oxley Act** - the US Sarbanes-Oxley Act of 2002.

**Scope 1** - Combustion of fuel and operation of facilities.

**Scope 2** - (Market-based): Electricity (net of market instruments), heat, steam and cooling purchased for own use.

**Scope 3** - (Location-based): Electricity, heat, steam and cooling purchased for own use.

**SEC** - the US Securities and Exchange Commission, the governmental agency that regulates the US securities industry and stock markets.

**SEK** - Swedish krona (or kronor).

**SET** - the Senior Executive Team.

**SG&A costs** - selling, general and administrative costs.

**siRNA** - small interfering RNA.

**Sobi** - Swedish Orphan Biovitrum AB.

**SPC** - supplementary protection certificate.

**specialty care** - specific healthcare provided by medical specialists who do not generally have first contact with patients.

**Spirogen** - Spirogen Sàrl.

**SoC** - standard of care. Treatment that is accepted by medical experts as a proper treatment for a certain type of disease and that is widely used by healthcare professionals.

**SVP** - Senior Vice-President.

**Takeda** - Takeda Pharmaceutical Company Limited.

**TCFD** - Task Force on Climate-related Financial Disclosures.

**TeneoTwo** - TeneoTwo, Inc.

**TerSera** - TerSera Therapeutics LLC.

**Total Revenue** - the sum of Product Sales and Collaboration Revenue.

**TROP2** - trophoblast cell-surface antigen 2.

**TSR** - total shareholder return, being the total return on a share over a period of time, including dividends reinvested.

**UK** - United Kingdom of Great Britain and Northern Ireland.

**UK Corporate Governance Code** - the UK Corporate Governance Code published by the FRC in July 2018 that sets out standards of good practice in corporate governance for the UK.

**US** - United States of America.

**US dollar, US$, USD or $** - references to the currency of the US.

**VBP** - value-based procurement.

**Viela Bio** - Viela Bio, Inc.

**WHO** - World Health Organization, the United Nations’ specialised agency for health.

**ZS Pharma** - ZS Pharma, Inc.

Glossary

AstraZeneca Annual Report & Form 20-F Information 2022 223

# Important information for readers of this Annual Report

## Cautionary statement regarding forward-looking statements

The purpose of this Annual Report is to provide information to the members of the Company. The Company and its Directors, employees, agents and advisers do not accept or assume responsibility to any other person to whom this Annual Report is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. In order, among other things, to utilise the 'safe harbour' provisions of the US Private Securities Litigation Reform Act of 1995 and the UK Companies Act 2006, we are providing the following cautionary statement:

This Annual Report contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group, including, among other things, statements about expected revenues, margins, earnings per share or other financial or other measures. Forward-looking statements are statements relating to the future which are based on information available at the time such statements are made, including information relating to risks and uncertainties. Although we believe that the forward-looking statements in this Annual Report are based on reasonable assumptions, the matters discussed in the forward-looking statements may be influenced by factors that could cause actual outcomes and results to be materially different from those predicted. The forward-looking statements reflect knowledge and information available at the date of the preparation of this Annual Report and the Company undertakes no obligation to update these forward-looking statements. We identify the forward-looking statements by using the words 'anticipates', 'believes', 'expects', 'intends' and similar expressions in such statements. Important factors that could cause actual results to differ materially from those contained in forward-looking statements, certain of which are beyond our control, include, among other things:

- > the risk of failure or delay in delivery of pipeline or launch of new medicines
- > the risk of failure to meet regulatory or ethical requirements for medicine development or approval
- > the risk of failures or delays in the quality or execution of our commercial strategies
- > the impact of pricing, affordability and competitive pressures
- > the risk of failure to maintain supply of compliant, quality medicines
- > the risk of illegal trade in our medicines
- > the impact of reliance on third-party goods and services
- > the risk of failure in IT or cybersecurity
- > the risk of failure of critical processes
- > the risk of failure to collect and manage data in line with legal and regulatory requirements and strategic objectives

- > the risk of failure to attract, develop, engage and retain a diverse, talented and capable workforce
- > the risk of failure to meet regulatory or ethical expectations on environmental impact, including climate change
- > the risk of the safety and efficacy of marketed medicines being questioned
- > the risk of adverse outcome of litigation and/or governmental investigations
- > the risks related to IP protection of our products
- > the risk of failure to achieve strategic plans or meet targets or expectations
- > the risk of failure in financial control or the occurrence of fraud
- > the risk of unexpected deterioration in our financial position
- > the impact that the COVID-19 global pandemic may have or continue to have on these risks, on the Group's ability to continue to mitigate these risks, and on the Group's operations, financial results or financial condition.

Certain of these factors are discussed in more detail, without limitation, in the Risk Supplement available on our website, www.astrazeneca.com/annualreport2022, and reproduced in AstraZeneca's Form 20-F filing for 2022, available on the SEC website www.sec.gov. Nothing in this Annual Report should be construed as a profit forecast.

## Inclusion of Reported performance, Core financial measures and constant exchange rate growth rates

AstraZeneca's determination of non-GAAP measures together with our presentation of them within our financial information may differ from similarly titled non-GAAP measures of other companies.

## Statements of competitive position, growth rates and sales

In this Annual Report, except as otherwise stated, market information regarding the position of our business or products relative to its or their competition is based upon published statistical sales data for the 12 months ended 30 September 2022 obtained from IQVIA, a leading supplier of statistical data to the pharmaceutical industry. Unless otherwise noted, for the US, dispensed new or total prescription data and audited sales data are taken, respectively, from IQVIA National Prescription Audit and IQVIA National Sales Perspectives for the 12 months ended 31 December 2022; such data are not adjusted for Medicaid and similar rebates. Except as otherwise stated, these market share and industry data from IQVIA have been derived by comparing our sales revenue with competitors' and total market sales revenues for that period, and except as otherwise stated, growth rates are given at CER. For the purposes of this Annual Report,

unless otherwise stated, references to the world pharmaceutical market or similar phrases are to the 50 countries contained in the IQVIA database, which amounted to approximately 92% (in value) of the countries audited by IQVIA. Changes in data subscriptions, exchange rates and subscription coverage, as well as restated IQVIA data, have led to the restatement of total market values for prior years.

## AstraZeneca websites

Information on or accessible through our websites, including www.astrazeneca.com, and www.astrazeneca clinicaltrials.com and on any websites referenced in this Annual Report, does not form part of and is not incorporated into this Annual Report.

## External/third-party websites

Information on or accessible through any third-party or external website does not form part of and is not incorporated into this Annual Report.

## Figures

Figures in parentheses in tables and in the Financial Statements are used to represent negative numbers.

## Supplements

For detailed information on our Development Pipeline, Patent Expiries of Key Marketed Products, Risk and Task Force on Climate-related Financial Disclosures Statement, see our website, www.astrazeneca.com/annualreport2022.

224 AstraZeneca Annual Report & Form 20-F Information 2022

Additional Information

Design and production
Superunion, London.
www.superunion.com

Board photography
Marcus Lyon
Igor Emmerich

SET photography
Scott Nibauer
Graham Carlow
Philip Mynott
Ossi Piispanen

This Annual Report is printed on Revive Silk 100 paper, manufactured from FSC® Recycled certified fibre derived from 100% pre and post-consumer waste and Carbon Balanced with the World Land Trust.

Printed in the UK by Pureprint using its pureprint® environmental printing technology, and vegetable inks were used throughout. Pureprint is a CarbonNeutral® company. Both the manufacturing mill and the printer are registered to the Environmental Management System ISO14001 and are FSC® chain-of-custody certified.

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**Registered office and
corporate headquarters**

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This Annual Report is also available on our website,
www.astrazeneca.com/annualreport2022