AstraZeneca PLC (AZN) 2009 Q2 法說會逐字稿

Good afternoon, and welcome, ladies and gentlemen, to AstraZeneca's half-year results conference call and webcast. Leading today's call is David Brennan, CEO of AstraZeneca. Joining David are Simon Lowth, CFO, and Anders Ekblom, Executive Vice President, Development. Also on the call are members of the finance and the investor relations team.

Before I hand over to David, I'd like to read the usual Safe Harbor Statement. The Company intends to use the Safe Harbor provisions of the United States Private Security Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. By their nature, forward-looking statements involve risk and uncertainty, and results may differ materially from those expressed or implied by these forward-looking statements. The Company undertakes no obligation to update forward-looking statements.

I'll now turn the call over to David Brennan, AstraZeneca's CEO. David.

Thank you, Jonathan, and good afternoon, ladies and gentlemen. Welcome to our webcast and conference call for AstraZeneca's second quarter and half-year 2009 financial results.

As you well know, a lot has happened in the world since January, when I presented our full-year 2008 results. We've seen the impact of recessionary pressures impacting many parts of the global economy, the threat of an H1N1 pandemic, and ongoing developments in healthcare reform.

What has not changed in the six months is the determined execution of our strategy to drive sales growth for key brands and regions, to reshape the business to improve productivity and efficiency, and to continue building a pipeline capable of sustainable value creation for shareholders and for society. Progress on all of these initiatives is reflected in our strong performance in the first half of 2009.

Here are the headline results for the first half. Simon will deal with the second quarter in his remarks. Sales in the first half were nearly $15.7b. That's an 8% increase in constant currency terms, flat on an actual basis, including the negative impact of currency movements on the top line.

There are three drivers to the strong top line performance. The first is the global economy. Back in January, we were well into the teeth of a world-wide recession, the likes of which we had not seen in decades. And we were only a matter of months distanced from a near meltdown of the global financial infrastructure. In this context, we were understandably cautious about the near-term outlook for the pharma sector and for our business.

Standing here six months later, I can assure you that market conditions are tough. To see that, you need only look to continued price and utilization pressures in Western Europe, or to the US, where market volume trends are essentially flat line, with branded product volumes down by double digits.

But that said, the impact of the global economy on our markets and on our business is less that we thought it would be when we put our plans together for the year. So, we are proving to be more recession resistant, though not wholly recession proof.

Second, we've also driven continued strong commercial execution behind our key brands and regions, in many cases significantly outperforming market benchmarks. Our capabilities in sales and marketing are a strategic asset, and are allowing us to outperform the competition in most markets around the world.

And third, we benefited from what I would call one-off upsides to performance, for example, a three-month delay in the entry of generic Casodex in the US or, more significantly, the increased sales of Toprol XL in the US in the wake of the market withdrawal of two generic products.

The last of these is clearly an unexpected opportunity that presented itself, but it took swift action by our operations people to put us in a position where we could supply the demand created by the withdrawal of the generics, and my thanks go out to that operations team.

Turning now to core operating profit, for the first half it was up 28% at CER, to just over $6.9b. The strong sales growth, higher other operating income from the Abraxane and Nordic OTC product disposals, and continued operating efficiencies from our business reshaping program and ongoing cost discipline has driven the strong growth in core operating profit.

Core earnings per share were up 28% to $3.22, in line with the growth in core operating profit. In bridging from core to reported EPS, in addition to the usual adjustments for amortization from Medimmune and our Merck arrangements and restructuring costs, there are two other adjustments worth noting. The Ethyol impairment in the first quarter of 2008 was $0.12. The second is $430m or $0.30 per share legal provisions which we've taken in the second quarter 2009, and Simon will cover those in his review. Net of these adjustments, reported EPS grew by 24% to $2.66 for the first half.

The Board has declared a first interim dividend of $0.59 per share, and that's an increase of 7% and in line with our dividend policy. And we've raised our financial guidance for the full year. The new range for core EPS is now between $5.70 and $6. Simon will cover guidance in his presentation as well.

Now, let's take a look at the first half performance through the lens of our key strategic priorities, growing the business, reshaping the business and strengthening the pipeline, all of which are unpinned by our commitment to doing business responsibly, which shapes our activities around the world and across the value chain.

There are two aspects of growing the business - driving key brands through strong commercial execution and extensive lifecycle development projects, and driving our business beyond the established markets in North America and Western Europe into the emerging markets that are an important source of growth for AstraZeneca's future.

Looking at our sales performance in the first half, you can see that all major regions contributed to our strong performance. Sales in North America were up 9%, a reflection of the 10% growth in the US. If we adjust for the Toprol XL effect, US sales were up 5%, still well ahead of the US market as a whole.

In the Rest of World established markets, sales were up 4%. Western Europe was up 2%. That's just a bit better than the 1% growth achieved in all of 2008. Sales in Japan were up 11%, with Crestor performing very well. And Crestor's performance in Australia fueled the 16% increase in other established markets. And we achieved double-digit sales growth in emerging markets in the first half, with China continuing to perform strongly at 29%.

In terms of our key brands, you can see the combined sales of these five products increased by 15% to $8.9b. We see a resilient performance for Nexium and strong growth across the board for the others. Seroquel up 15%, fueled by the launches of Seroquel XR and the focus on bipolar disorders. Crestor up 34%, well ahead of the statin market, as our positioning for higher risk patients is carving out a growing share of the market, despite the large generic segment. And then Symbicort, where the launch in the US and the rollout of Symbicort SMART in the rest of the world has driven 24% growth in the first half. So, strong sales performance for the key brands in all major regions.

Now, in terms of reshaping the business, our programs are on track to deliver the $2.1b in annual savings by 2010, growing to $2.5b by 2013. It is these efforts, as well as the everyday cost discipline that is becoming embedded in our culture, that is creating the leverage between sales growth and operating profit that's reflected in our strong financial performance.

I am also pleased to report continued progress on the pipeline. Anders' presentation will cover this in much more detail, but a few key accomplishments worth noting.

Since the first quarter results announcement, we've made three significant regulatory submissions. Certriad, the combination of Crestor and Abbott's Trilipix, was filed in the United States. Vimovo, formerly known as PN400, product of our collaboration with POZEN, was also a US filing. And Zactima was filed in the US and in Europe. And we have a fourth submission, Brilinta, which is scheduled for the fourth quarter.

We've also achieved some important product approvals since the first quarter. Namely, we've secured approval for Iressa in Europe, a truly personalized medicine for lung cancer. And our new oral treatment for Type 2 diabetes, ONGLYZA, which we are developing in collaboration with Bristol-Myers Squib, has received a positive recommendation for approval by the European CHMP. In the US, I know many of you are aware that today marks the PDUFA day, so we hope we'll receive further information on that filing very soon.

Anders will take you through the detail of the pipeline, but I think it's important to highlight here that more than 40% of the pipeline comes from in-licensing and acquisitions. This is the result of our determined efforts to access the very best science in our chosen therapy areas. And some 23%of the pipeline is biologics molecules. We believe that these two factors give balance to our pipeline and illustrate the potential of the biologics technology that we acquired with Medimmune.

In summary, I think we've made good progress on our strategic priorities as we sit here at the halfway mark for the year.

Before I hand it over to Simon Lowth, I would like to return to two other topics that affect our industry and are dominating the headlines at the moment. The first is US healthcare reform.

At our year-end results conference back on January 29, we were barely two weeks into a new Administration that had made healthcare reform a centerpiece of their election platform. Six months later, healthcare reform is front and center on the minds of the body politic in the United States. During this time, in my role as Chairman of our Trade Association, PHRMA, I have spent considerable time in Washington and working with the CEOs of the other major pharma companies, playing an active role in building workable solutions to the issue.

I am proud of the vision and leadership our industry has shown by stepping up and making an $80b commitment over 10 years towards making comprehensive healthcare reform a reality this year.

And the US is not alone in looking to expand the provision of healthcare to its population, by bringing more patients within reach of the modern medicines they need. In China, the government has approved a plan to invest $124b in the healthcare system over the next three years. And we expect healthcare reform to remain on the agenda in Europe for the foreseeable future.

In the short term, global healthcare reform may present a challenging headwind as we start planning for 2010 and beyond. But done in the right way, with the right incentives, it brings with it the opportunity for expanded markets, rewards for innovation and ultimately better healthcare for patients.

The other topic that's making headlines around the world is Novel Type A H1N1 Influenza. As the world braces itself for the impact of a global pandemic, it's worth reflecting that society's best hope for an effective vaccine, widely available and in sufficient quantity, depends upon a successful partnership between health agencies, this industry, governments and health providers. It's clear to me that none of us can do this on our own and that the industry has a key role to play.

Progress is being made in developing a vaccine for H1N1. This progress is built upon the solid foundations of prior investments in enabling science, innovative technology and significant capital investment and production capacity across the industry. These prior investments, vital today as we respond to a pandemic threat, can only be made if society continues to reward innovation over the long term.

Here at AstraZeneca, Medimmune scientists, on the back of years of investment in innovative live attenuated influenza vaccines, have successfully produced a master virus seed. Just last week, at a FDA Advisory Board, we reported that, based on vaccine yields of the first manufacturing lot, we may be able to produce up to 200m doses of bulk vaccine for the H1N1 virus.

Around 40m of these doses can be filled and finished in the nasal sprayer devices currently utilized, and we expect to have those available by March 2010. The number of finished filled doses is currently limited by the availability of sprayers. However, we are taking steps to increase the supply of sprayers, as well as work with the US government to define a regulatory path for an alternative delivery device. Volumes of this size mean that we can play a significant role in controlling the spread of the virus over the long term.

But I should point out that we only have regulatory clearance to offer the product in the United States at present. We are actively engaging with other governments and regulators to establish how we might expedite approvals in other countries. And we are also in discussion with the World Health Organization about how best to contribute to their efforts in the least developed countries. Simon will discuss how pandemic vaccine expectations feature in our revised financial guidance for the full year.

So, needless to say, it's been a busy first half of the year. Both H1N1 flu and the continuing prospect of health reform will continue to be priorities in the second half of this year. I am very confident that the planning and engagement that's been our focus around these issues to date will stand us in good stead in the coming months.

I think I'll stop here and turn it over to Simon, who will take you through the second quarter financial results. Simon, over to you.

Thank you, David, and good afternoon to everyone.

David summarized the first half financials, so I will focus on six topics. First, the headline numbers for the second quarter. Then, I'll cover the key brand sales highlights for the quarter. Third, I'll take you through the second quarter earnings performance, with an emphasis on the key drivers of operating profit and margin. Fourthly, I'll provide a brief update on our productivity and synergy programs. I'll briefly touch on cash performance and our steadily improving net debt position. And finally, I'll explain the upward revisions to our targets for the full year.

Turning first to the headline numbers for the second quarter, we achieved sales of just under $8b. That's a 9% increase in constant currency terms. You will also have seen that the adverse impact of currency movements on the top line reduced the reported sales growth rate to zero.

Core operating profit for the quarter was up 37% constant currency, to $3.6b, chiefly as a result of the increased sales, the continued efficiencies in all our operating cost lines and the increase in other operating income, which for this quarter was the Nordic OTC disposal gain. You'll also note that the 5% negative impact from currency on the core operating profit line was somewhat lower than the 9% hit to the top line, as the currency effects on our cost lines helped mitigate the revenue impact.

Core earnings per share in the quarter were $1.64, compared with $1.25 last year, a 37% increase at constant currency. Making the bridge from core EPS to reported EPS in the quarter, we do have the usual adjusting items - restructuring and Medimmune and Merck related amortization. An additional driver this quarter of the difference between the core and reported basis is the $0.30 per share legal provisions. Provisions totaling $430m have been taken in the second quarter with respect to various Federal and State investigations and civil litigation matters, relating to drug marketing and pricing practices where we can now make a reasonable estimate of the losses expected. Net of these adjusting factors, reported EPS increased by 10% at constant currency, $1.18.

I'll now call out some of the key brand highlights for the quarter, beginning with Nexium. In all instances, the growth rates will be in constant currency terms.

Nexium sales in the second quarter were up 1% to just over $1.2b. Sales in the US were down 4% to $724m. Dispensed retail tablet volume increased by around 0.5%. That is lower than the 3% growth we recorded in Q1, but it's a result of the adjustment that IMS has put through with their June prescription data. We are still the only major PPI brand to grow volume in the quarter.

Average realized prices were down 3%, but this includes some unfavorable adjustments to managed care rebate accruals in the prior period. The underlying price variance is probably closer to 7%. We continue to expect price declines in the high single digits for the full year.

There are two market events that may influence volume performance in the latter part of 2009 and into 2010 - generic entrance for Prevacid, as well as OTC Lansoprazole.

In the rest of world markets, Nexium sales were up 8% to $522m. Sales in Western Europe were up 6%, despite the drag from German reference pricing. There was double-digit growth in Canada and Australia. And sales in emerging markets were up 8%, including a 31% increase in China.

Turning to Seroquel, second quarter sales were up 18% to $1.2b. In the US, Seroquel sales were up 22% to $893m. Total prescriptions for the Seroquel franchise increased by 3.5% in the quarter, with all of the growth attributable to the Seroquel XR formulation. The launch of XR has driven our dynamic share in bipolar disorder, which is the focus of all our promotional efforts now, by nearly 4 percent points -- 4 share points since the beginning of the year.

As we've completely transitioned our commercial efforts to be 100% behind XR and the bipolar indications rather than Seroquel IR, we have seen the IR formulation lose some ground, while Seroquel XR accelerates and grows faster than the market. The overall franchise is growing, but not quite at the market rate for anti-psychotics. Total franchise share is off about 30 basis points in the quarter.

As Seroquel XR continues to grow in acceptance, we will look to return the franchise to market growth rates and ultimately to grow total franchise share again over time. Our ability to deliver this return to total franchise growth would, of course, be strengthened by the additional of an approval in major depressive disorders. Our response to the CRL following the FDA Advisory Committee has now been submitted, and we look for an FDA action around the end of this year.

Seroquel sales in the rest of the world were $356m. That's up 11%, despite the 70% decline in Canada due to generic competition. Bipolar indications in the Seroquel XR formulation are driving this growth. Sales in Western Europe were up 22% and sales in emerging markets were up 28%.

Crestor sales were up 33% in the quarter, exceeding $1b in quarterly sales for the first time. Sales in the US were up 32% to $547m. Crestor total prescriptions increased by 25%. That's nearly four times the statin market growth rate of 6.5%, and it's keeping pace with the 26% growth for generic simvastatin. Crestor's share of total prescriptions in the US continued to increase, reaching 10.8% in June. Crestor's dynamic share - that's new and switched patients - is now over 15%, ahead of Lipitor and now second only to simvastatin.

Crestor sales in the rest of the world were up 35% to $582m. As in the US, we are growing share at a pace that is three to four times the statin market in both our established and emerging markets. There was good growth in Western Europe, Canada, in Australia and in Japan. Looking forward, regulatory filings for a label change to reflect the JUPITER data are now under review in the US and in Europe.

The last product I want to cover is Symbicort. Symbicort sales in the second quarter were up 24% to $551m. Sales in the US nearly doubled, to $111m. Symbicort accounted for most of the 7% growth in prescriptions for fixed combination products in the quarter, paced by continued penetration of the asthma market as well as the launch of the COPD indication. Symbicort's share of new prescriptions for fixed combination products increased to 13.9% in June, up more than a full percentage point in the quarter. Market share of patients new to fixed combination therapy is now 22.9% (sic - see presentation).

In the rest of the world, Symbicort sales increased by 15% to $440m. Sales growth is being fueled by Symbicort SMART, which has now been approved in 96 markets. Sales in Western Europe were up 15%. Sales in emerging markets were up 19%.

I'll now turn to the second quarter P&L and the drivers of the growth in core operating profit. I'll focus here on core margins and profit. The press release does, of course, contain the statutory numbers and a detailed reconciliation to the core measures. As with sales, when I refer to growth rates, they will all be on a constant currency basis.

Core gross margin, at 82.7% of sales, was a 70-basis-point improvement over 2008 in constant currency terms. Principal contributors were lower Merck payments as a percent of sales, efficiency gains and favorable product mix, partially offset by higher royalty payments.

Core R&D expenditures were 3% lower in the quarter. We continue to drive productivity and efficiencies in R&D. It allows us to absorb increased activity related to progressing the pipeline and our investments in biologics. There are also lower costs associated with the large Crestor JUPITER and Brilinta PLATO trials this year compared to last year. As we previously flagged, we took a $44m intangible impairment for the MAP unit dose budesonide in the quarter.

Core SG&A expense was 8% lower than the second quarter last year. We continue to invest to grow our emerging markets business, but this was more than offset by delivery of efficiencies in our underlying SG&A costs and a reduction in certain legal expenses compared to last year. I still expect the combination of R&D and SG&A to come in broadly flat, in constant currency terms, for the full year.

Core other income for the first quarter was $349m, $141m higher than 2008, chiefly as a result of the Nordic OTC disposal, where we booked a $220m gain. You'll recall that we have guided for core other income of around $900m for the full year and that still looks to be about right. But when modeling our second half results, do keep in mind that we've already realized more than two-thirds of that, and this is one of several reasons why you can't simply double our first half results and expect us to do that for the full year.

Core operating margin for the quarter was 45.3% of sales, compared to 34.4% in the second quarter of 2008. 200 basis points of the improvement were related to currency. Operating margin therefore improved by 890 basis points on a constant currency basis. This comprised a 150-basis-point increase from other operating income, with the balance of 740 basis points coming from operating leverage against the strong 9% increase in sales.

As I said earlier, we are looking at R&D and SG&A combined at flat in constant currency terms, so this second quarter operating margin is unlikely to be sustainable for the full year.

Turning to our productivity program, we've taken restructuring charges of $190m in the second quarter, bringing the year-to-date total to $262m. The program is on track for both costs incurred and benefits being realized. Based on our latest view of the phasing, we are likely to incur another $450m or so in restructuring charges in the second half of this year.

Let me now turn to cash flow. Cash generated from operations increased by $1b in the first half of 2009, driven by strong underlying operational performance and improved working capital management, partially offset by some higher tax payments.

Of the $5.3b of operating free cash flow, we've invested about $0.5b in capital and intangible assets, to drive future business growth and productivity. And we distributed $2.1b to shareholders through payment of the final 2008 dividend. The residual cash flow has reduced our net debt to $4.2b. This has now decreased by more than $6b compared to June 2008 and by $3b since the beginning of 2009. There were no share repurchases in the first half and none are planned for the rest of 2009, in keeping with the Board's policy for the year.

Finally, I'll explain the drivers of the increase in our full year guidance. As David mentioned in his opening remarks, our planning assumptions, made in the context of some pretty dire economic conditions at the end of last year, led us to a cautious revenue outlook for 2009. Whilst market conditions are difficult, the impact has been less than we had thought.

We've also delivered strong operational performance in the market versus our competitors, both in regional and key brand sales performance, and in continuing to drive productivity and efficiencies across the entire Company. And we've benefited from some one-off items that have lifted our first half performance, chiefly the Toprol XL benefit and some delays to anticipated generic entries, including Casodex in the US.

Our increased full year EPS guidance reflects this strong first half performance. It also allows for some continued out-performance versus our original expectations in the second half, including our best view on Toprol for the second half. We also have to take a view on another one-off factor, that's the potential revenue from the H1N1 pandemic vaccine. We already have US government orders for $151m, and most of this revenue should be recognized on further contracts in the second half of this year. Our guidance range is also based on the potential for new government vaccine orders up to our near-term finish and fill capacity of around 40m doses.

When doing your own modeling, do bear in mind that normal seasonal FluMist is a below-average margin product for us. Pandemic vaccine, considering it's at government contract pricing, is lower still.

Our guidance range does not account for any potential upside beyond the 40m doses of finish and fill capacity. As David mentioned, we do have theoretical bulk capacity of some 200m doses, should additional nasal sprayers be obtained or an alternative delivery strategy be agreed.

So, for our revised guidance for the full year, we now estimate sales growth will be around mid single digits at constant currency, and I'd estimate about half of that is due to what we've described as the one-off effects. The other elements of our guidance are broadly the same. It's largely the revenue upside that leads us to our new target range for core EPS, which is now between $5.70 and $6.

Just to be perfectly clear, there is no currency component to this upgrade. Actual currencies for the first half have been broadly neutral compared to our currency assumption for guidance, namely, the January 2009 average rate. Of course, we are taking no view of the future movements of the currency. Going forward, this guidance takes no account of the likelihood that average exchange rates for the remainder of the year may differ materially from the January 2009 average rate. As usual, I'd point you to our currency sensitivity chart to help you flex your own estimates on the currency impact to sales and earnings.

I think I'll wrap up my formal remarks here and turn things over to Anders Ekblom, who will provide a pipeline update. Anders.

Thank you, Simon. I am very pleased to provide you with my first R&D half-year review, especially in this exciting period of late-stage delivery for our R&D organization.

There has been a tremendous degree of change within the industry generally, and with our R&D efforts specifically in AstraZeneca. We have seen our pipeline grow, mature and significantly expand into biologics. We now have an organization that is more focused, cost conscious and productive. We have seen a transformational change in our science and technology base, as well as our partnering approach. This degree of change will become normal, as we continue to be passionate about science, while at the same time ensuring we get an attractive return on the investment we make in R&D.

During the first half of 2009, we've continued to strengthen the pipeline and have seen strong evidence for its growing maturity. Key accomplishments have been the approval and launch of Iressa in Europe, while ONGLYZA's registration is progressing strongly with a positive FDA Advisory Committee in the US and a CHMP approval recommendation in Europe.

We had three other NCE submissions, with Certriad, Vimovo and Zactima, and have made significant progress in our lifecycle management activities, for which the delivery of the Crestor JUPITER sNDA and MAA was a particular highlight. Brilinta has been another key accomplishment, as the PLATO study achieved its primary endpoints.

In addition to the progress our projects are making, our productivity initiatives also continue to provide benefits. We are faster and leaner than ever before, and are striving to continuously improve as we move forward managing our cost base.

Let me turn now to our late-stage portfolio, which I will cover over the next few minutes in some depth. As you can see from this chart, we are steadily transitioning our Phase III projects into the registration phase of their lifecycle. We filed four projects last year, two of which were biologics. We are also on track to deliver four this year, as well as the projects due to be filed during 2010 and 2011. Of course, the ultimate result is not the filing, but it's launching these medicines and making them available to patients. We are working very hard within R&D, as well as with the regulators and our marketing colleagues, to do just that.

As I mentioned already, we have launched Iressa in Europe, and hopefully next in line is our most mature Phase III project, our joint development with BMS of ONGLYZA, the DPP4 inhibitor for the treatment of Type 2 diabetes. There remains a very high unmet need in diabetes, with significant morbidity and mortality. It currently affects 246m people worldwide and is set to increase to 380m patients by 2025. 50% of treated patients do not reach glycemic control, and therefore it's clear that additional therapies like the growing DPP4 class are required.

Our discussions with the regulatory authorities are progressing well. In Europe, we received a positive CHMP opinion, which is currently awaiting a decision by the European Parliament. In the US, as David mentioned earlier, the PDUFA date is today. Discussions with the FDA are progressing well and we remain confident in the comprehensiveness of the regulatory submission we made.

I am sure you also appreciate that there is little more that I can add at this point, other than to say that we are hoping to have positive news very soon. As you know, we intend to conduct a cardiovascular event study and planning is at an advanced stage, so it can be initiated post-approval.

Another key filing is Certriad, our investigational medicine developed with Abbott for the treatment of mixed dyslipidemia. It contains the active ingredients of our statin Crestor and Trilipix, the fenofibric acid. Certriad provides efficacy benefits by controlling the three primary lipid targets - LDL-C, HDL-C and triglycerides.

As you can see from this chart, it targets a distinct patient population currently uncontrolled by existing treatment alternatives. In the US, there are currently 46m patients on medication, 29m of which remain uncontrolled. A significant segment of these patients could potentially benefit from Certriad. We are now submitting an NDA one quarter ahead of our previously communicated timeline.

The next key filing delivered during the first half of 2009 is Vimovo. The NDA was filed with the FDA on June 30 and, pending US regulatory approval, Vimovo is the proposed trade name for PN400. It is a fixed dose combination of enteric-coated naproxen and immediate release esomeprazole in a sequential release formulation that we have developed with POZEN for the relief of signs and symptoms of osteoarthritis, rheumatoid arthritis and ankylosing spondylitis in patients at risk of developing NSAID-associated gastric ulcers.

There are currently 140m osteoarthritis patients worldwide. Up to 30% of these patients switch or augment their therapy in a year, either because they do not get the pain relief they seek or because of side effects. And up to 50% of OA patients taking NSAIDs are at risk of developing NSAID-associated gastric ulcers, representing a large unmet need for this patient population. The two pivotal registration studies, 301 and 302, demonstrated that the incidence of gastric ulcers was significantly lower in patients taking Vimovo compared with enteric-coated naproxen for six months.

Abstracts have been submitted to congresses, including ACR and ACG. From a regulatory point of view, POZEN submitted an NDA to the FDA on June 30, and we are on track to submit an MAA during the fourth quarter this year.

Turning now to oncology. Zactima is the first oral targeted therapy to show evidence of clinical benefits when adding to chemotherapy in the Phase III studies in second line non-small-cell lung cancer. We recently filed submissions in the US and Europe for the use of Zactima 100 milligram in combination with chemotherapy for this patient group. Results from ZEPHYR, the 300 milligram monotherapy study in EGFR failures in advanced non-small-cell lung cancer, and ZETA, the 300 milligram monotherapy in advanced medullary thyroid cancer, will be presented during the first half of 2010.

This concludes the update on our recent approvals and submissions, and I would now like to provide you with the status of our other Phase III projects, starting with Brilinta.

This is our investigational oral anti-platelet treatment for acute coronary syndrome, ACS. It is estimated that one in three ACS patients will die, have a recurrent heart attack or be readmitted to hospital within six months of their first cardiovascular event. This points to a continuing need for a more effective, safe ACS treatment option.

Earlier this year, we announced that PLATO, our large 18,000 patient trial, demonstrated that Brilinta achieved a statistically significant primary efficacy endpoint versus clopidogrel. The primary efficacy measure was timed to first occurrence of any event from the composite of myocardial infarction, stroke and CV death. The overall safety profile of Brilinta was in line with the safety data observed in the Phase II study. Given the size of the study, further analysis of the database, secondary variables and subgroups is ongoing.

I understand there is considerable interest in the PLATO results but, as you would expect, details will have to wait until we present the results at the European Society of Cardiology Annual Meeting on August 30. We also aim to submit the data to peer-reviewed medical journals. The submission to regulatory authorities remains on schedule for the fourth quarter of 2009.

Our Recentin program is progressing well and we are on track to deliver the colorectal cancer and recurrent glioblastoma submissions in the second half of 2010. In colorectal cancer, HORIZON II and III studies have now fully recruited, while in recurrent glioblastoma recruitment of the Phase III REGAL program is on schedule. A broad single search program continues to reinforce activity of this molecule, with efficacy signals seen in a range of tumors. Posters were presented at ASCO on the findings earlier this year.

Earlier I talked about ONGLYZA. The other compound in our joint development alliance with BMS is dapagliflozin, a potential first-in-class SGLT2 inhibitor for the treatment of patients with Type 2 diabetes. The Phase III program is progressing well, with 11 studies ongoing, eight of which are fully recruited, two having completed their initial six-month treatment period.

We presented further Phase IIb data at ADA earlier this year, showing that in a 12-week study dapagliflozin improved glycemic control in Type 2 diabetes patients who were inadequately controlled despite high doses of insulin and common oral anti-diabetic medicine. Six-month results from two Phase III studies will be presented at the EASD and IDF congresses in October this year. We are on track to make our first submission during the second half of 2010.

The next compound I would like to update you on is ZD4054. This is the potential first-in-class Endothelin A antagonist in hormone-resistant prostate cancer patients with metastatic and non-metastatic disease. We are making significant progress with our Phase III ENTHUSE program and the launch indication M1 study has fully recruited, and the follow-up indication studies M1 combination and M0 are actively recruiting.

Moving on to the biologics side of our business, and the final Phase III project presented today, Motavizumab. We continue to work on the complete response letter for Motavizumab and are expecting to submit our response to the FDA in the second half of the year. Medimmune has completed a second season study in congestive heart disease, and we'll include the CHD data as part of the complete response letter response to FDA. Our rest of world partner for Synagis, Motavizumab is Abbott International, and they plan to wait until we have incorporated the CHD data into the file before submitting in Europe.

Our seasonal live attenuated influenza vaccine continues to make progress as well, with several regulatory filings now completed. The review of our MAA file late last year continues as expected. Our application in Hong Kong was submitted in the first half of 2009, while AstraZeneca Canada submitted a new drug submission for FluMist to Health Canada on July 20. Finally, on the pandemic side, David has already covered the significant progress we're making on producing a candidate for a Novel Influenza A H1N1 vaccine.

Continuing with the lifecycle management update, another key accomplishment is the progress that has been made with Iressa. Building on the success in Asia, Iressa is developing into a significant brand for AstraZeneca. It is the first and only targeted therapy to show superior efficacy, to doublet chemotherapy in first line treatment of advanced non-small-cell lung cancer.

Data shown on this chart from the Pan-Asian IPASS study shows superior progression free survival for Iressa compared to doublet chemotherapy in EGFR mutation positive patients. EGFR mutation status was a strong predictive by market, producing -- sorry, providing a truly personalized healthcare approach. European approval was achieved across all lines of therapy for EGFR mutation positive non-small-cell lung cancer patients, based on the INTEREST and IPASS studies, as well as the full data review.

Moving on to Crestor, now. I will outline our lifecycle management activities that will fully maximize this product's potential, mainly JUPITER, SATURN and PLUTO.

Starting with JUPITER, we followed up our presentation of the initial results at AHA at the end of last year with a presentation of equally impressive results on stroke and VTE from the trial during the first half of this year. As a reminder of the profound impact Rosuvastatin 20 milligram demonstrated in this trial, the graph percentage shows the primary endpoint data with a 44% relative risk reduction. No other statin has demonstrated this magnitude of risk reduction in a placebo-controlled trial. The JUPITER sNDA and MAA in the US and Europe and other major markets are under active review.

SATURN is a follow-up to our successful ASTEROID IVUS trial, where regressional coronary atherosclerosis was demonstrated for the first time in a major clinical trial with a statin. SATURN is a head-to-head IVUS trial comparing Crestor and atorvastatin, and it's on track to deliver results in 2011.

In April, we submitted PLUTO in both the US as well as Europe, seeking a paediatric indication. Based on the PLUTO submission, we can now announce that we have successfully fulfilled our US pediatric exclusivity requirements for Crestor. And we were informed earlier this month that, as a result, we have been granted an additional six months of market exclusivity in the US.

Our Seroquel immediate release bipolar and XR bipolar, MDD and GAD lifecycle management program is moving forward. In the US, the FDA issued complete response letters for both MDD and GAD sNDAs, requiring additional information. We have prioritized the resubmission of MDD over GAD. We have issued a response and we expect a decision during the fourth quarter of this year. For GAD, we are in ongoing discussions with the FDA.

In Europe, we have referred our application for XR, for patients with MDD, to the CHMP and expect an opinion during the last quarter of this year. For the European GAD application, we expect a readout from the mutual recognition procedure also by the fourth quarter. In other markets, Seroquel XR for MDD has been approved in Canada and Australia. Finally, our bipolar suite of indications is progressing to plan across all key markets.

Lifecycle management also continues strongly for Symbicort. In the US, we have received approval and launched a COPD indication. Our pediatrics sNDA received a complete response letter in April. We're working on our response, which we will provide to the FDA during the second half of this year, and it is likely to require a new clinical study.

In Japan, although we initially had a delay due to the backlog of reviews at the regulatory agency, we now expect to receive an approval of the asthma indication during the fourth quarter this year. At the same time, we are making progress on the COPD and asthma Symbicort SMART programs in Japan.

In other markets, we launched Symbicort SMART in China during the first quarter and are on track to launch a COPD indication in China, Australia and Canada during the second half of '09.

Finally, Faslodex. This is a product whose lifecycle management activities have not featured in our R&D update for some time. Following a positive outcome in the Faslodex CONFIRM Phase III trial, which compares the efficacy of the currently licensed 250-milligram with the 500-milligram dose, we're exploring with a number of health authorities the possibility of a label change in order to bring the benefit of the higher dose to patients. We plan to present the results of this study at the San Antonio Breast Cancer Conference in December.

I would now like to provide you with an overview of our pipeline. On the next few slides, I will focus on the clinical component of our pipeline.

Back in January 2009, we had 98 projects in clinical development. And in a portfolio of this size, there will inevitably be a significant number of projects that fail or are stopped for a number of different reasons. In the first half of this year, we had nine withdrawals overall. However, these were more than matched by projects that have progressed to the next step or to regulatory filing.

The green boxes represent the 11 projects that progressed to the next phase, while the five amber ones are those that have been filed with the registration authorities. As late-stage projects are launched, we can expect them to come off the lifecycle management section of this table. And, of course, we have continued to introduce new molecules, shown here in red. Across the clinical portfolio, we had 12 new projects added since January.

Looking at the pipeline overall, we are seeing strong evidence of its maturity. We are delivering the late-stage projects, while at the same time discovering early stage productivity has been maintained at the steady state levels we require in order to meet our overall target. We now have a balanced portfolio, representative of the investment we have made in alliances and biologics over the last years.

So, in conclusion, I believe that we are at an exciting period of late-stage delivery. We're moving key Phase III projects into the registration stage of their lifecycle, while our lifecycle management activities are maximizing the potential of marketed products such as Crestor and Iressa.

All in all, at this half-year point, we are confident that we will meet the targets we set ourselves for this year. We have already delivered three out of the four submissions we expected for 2009, and a fourth, Brilinta, is on track for the fourth quarter.

We've delivered a lot but, as ever, there is still a lot more to do. As a scientist and a clinician, I'm passionate about continuously improving the science and innovation that underpins our portfolio. At the same time, as a business leader, I will ensure that we manage the cost base within R&D in the most efficient way possible.

Now, I'd like to hand you back to David.

Great, Anders. Thank you. Thank you, Simon, also for your comments. We'll now move on to the Q&A session. Just a reminder, callers can ask questions by pressing star one on your telephone, or emailing through the webcast, which should be pretty obvious. So we will start with Tim Anderson. Tim, you're on.

Great. Thank you. Pfizer has given long-term guidance to 2012. Sanofi yesterday gave guidance to 2013. I'm wondering when we can expect Astra to give long-term guidance. With the various big patent expirations you face, I think investors have some apprehension about what the future may hold. And I'm wondering if we might be able to get numbers from you guys at some point extending out that far.

And, I guess related to the longer-term outlook, can you point us to the one or two Phase II compounds in your pipeline that you're most excited about?

All right. Good. Well, thanks, Tim. Our practice has always been to stick with guidance that we've given, and we do that on an annual basis. And we saw that some others are starting to give longer-term guidance, but I think our view on that is we will, at this point, stick with it. We don't have any particular plans to give longer-term guidance. But we're constantly looking at the horizon, to try to see what else we can be indicating that makes good sense for investors to know. Simon, do you want to add anything?

And then, on the Phase II compounds, we generally don't highlight any particular programs from the Phase II part of our product updates. So I think the focus is really on updating on the Phase III programs and then sum up the Phase IIb data when it becomes available, but it probably has more to do with the science than not. So we're -- I'm not going to pick anything out from that.

Thanks.

Thanks, Tim. We'll go to Gbola Amusa now, at UBS. Gbola.

Thanks. Good afternoon. A couple of questions. First, on Brilinta and the safety profile being in line with Phase II, I wonder if you could answer whether, given that you had similar to lower major bleeding, especially around (inaudible) and the loading dose, are you able to confirm that that's the case? And if not, could you at least talk about how the bleeding definition differs from Phase II to Phase III and how that might impact interpretation?

And then, secondly, for Crestor and Certriad, how much of Crestor's sales are currently in the Certriad target (technical difficulty)?

All right, good. Well, I will ask Anders maybe to make a comment about the Phase II program from Brilinta, since the Phase III data is not available so we haven't made any particular comparisons on it. Anders, do you want to comment on where we were from the safety perspective with the data that's been put in the public domain?

Thanks, David. I think, as I said earlier on in my presentation, the guidance we've given around the safety data, considering that this is a very large file, analysis is ongoing, is that what we have seen is that it's in line with the Phase II data shown. And I would like to avoid going into any details you're asking for. I think the general guidance being given is around the bleeds, the ventricular pauses and dilution in uric acid. We are sort of on par with what you've seen in Phase II, so I think that's a reasonable assumption right now.

On to your second question, then, Gbola, on the Certriad, yes, it's -- they're distinct separate segments. I think the slide that we used talked about some 46m people in the treated dyslipidemia population, but a large number of them are uncontrolled. I think we estimate that to be just under 30m people. And then, within that, there's a target group of people that's less than half, but probably a pretty significant population of people for that reason.

You can calculate [8m] of potential in that market, but the question -- does Crestor generally get used on patients already? And so how much cannibalization might there be or is it completely clean?

Well, our view of the market is that there's minimal overlap. There's much more complexity in the mix. Dyslipidemia patient is something where obviously Crestor gets used some. But I think our view is there's a distinct segment here, and that's what we're going to pursue with Certriad.

Just lastly, are there rough guidelines on JUPITER, Crestor JUPITER, coming at AHA in November? Is that your expectation?

I'm not familiar with the timing of the guidelines, so I don't have any sense of that. But no, Gbola, I don't think right now -- I don't think we're aware of it right now. But thank you.

I'm going to go -- just we have an email question in from Kristofer Liljeberg-Svensson from Carnegie. Actually, there are a couple of questions here. Let me just read them and then I'll ask Simon to comment. There are three questions.

In the new guidance, what's your assumptions for Toprol XL in the US for the remainder of the year?

US Seroquel sales also seem high, when adjusting for the price increases. Is that explained by the stocking effects in the quarter?

And then, how much of the $2.1b savings have you achieved so far?

So, Simon, can I ask you to come in on those three?

Sure. Let me take them in reverse order. In the restructuring, we said at the -- in January, with our full year results for '08, we said that we'd delivered two-thirds of the $1,400m benefits to the P&L in 2008 and that the remaining $1,500m of the benefit stream would be delivered as $1,100m in '09 and '10, and then a remaining $400m by 2013. And of the $1,100m additional benefit in '09 and '10, we said they'd be evenly phased over '09 and '10. So that's a reminder of the guidance we've provided, and we're absolutely on track with that during the course of this year. So that's the $2.1b savings.

If we turn to your question, Kristofer, about US Seroquel sales, no, there hasn't been an appreciable stocking effect for the quarter. We're growing volumes in the franchise globally. There's also a positive mix component to the growth, in both geographic and dosage range. And we've also had some increases in realized prices, both through list price increases and some benefit of the prior adjustments of managed market accruals. But it's not a stocking issue; it's volume, price and a bit of mix.

And your third question, assumptions for Toprol XL in the US, the situation, as you know, with Toprol is that two of the generics were withdrawn from the market. We were able to, as David mentioned, very rapidly ramp up our production in order to meet patient needs. There's therefore the branded product and an authorized generic on the market, and that's been providing the growth in the first part of the year.

Clearly, in the remainder of the year, there's the possibility for one or both of the generics to return to the market, and indeed potential for a further approval. Our -- we don't have a point estimate. Our range allowed for a range of scenarios and -- but included within the range is a scenario where there will be additional competition before the end of the year.

Hopefully, that covers the three questions. David.

Good. Thank you. Thanks for those. Back to the telephones. Kevin Scotcher, you're on.

Hi. Thanks very much. I've got two quick questions. Firstly, the Crestor patent trial date in the US, it was February. Q1 didn't have the date in. The Q2 announcement doesn't have a date in. But your June presentation had the February date. Is it February for the trial or do we not have a date right now?

And my second question related to Seroquel XR in MDD, the answer to the FDA's complete response letter. Is it fair for us to assume -- given the Advisory Committee was talking about changing indication to adjunctive use in MDD, is it fair for us to assume that the indication is the same as the original indication, or perhaps have you changed the indication that you're asking for in your resubmission?

Okay. Well, let me just start with the Crestor patent quickly to say, yes, right now it's our understanding that the trial is currently scheduled for February 2010, and that is why we put it out there.

Regarding the review of the CRL and our submission of the CRL for MDD, we don't get into specifics around regulatory discussion on these things. The Advisory Committee came out with a position and we're in the process of discussing that with the agency. So I think that's as far as I can go with it right now, Kevin.

Thank you.

All right. Let me go to Marcel Brand at Cheuvreux. Marcel.

Yes. Thanks for taking my question. Sorry for coming back to that Seroquel question. Seroquel, we've seen a shift, obviously, to a lower dose use bipolar disease and that has ensured that, in spite of price increases, the value per prescription has remained stable for the last two years. Still, there is here now a 15% deviation in terms of value per prescription, compared to the last eight quarters. You say there is no stocking effect. Is there then maybe a one-time sale or is there anything that is not captured through the IMS channels here?

Then, on the $430m charge, can you talk a bit more about the nature of that charge, which products are affected? And also, can you comment on the lack of tax deductibility, or at least partial lack of tax deductibility?

And the last question is on FluMist. Did you get any indications from the FDA as to approvability? It seems that a Live Attenuated Vaccine has, at least so far, been considered by regulators at least a bit more complex in terms of approval from a safety viewpoint than the Attenuated Vaccines -- sorry. Attenuated Vaccines have been considered a bit more of a problem from the safety viewpoint than your competitors' vaccines. And my question is does the FDA maybe apply similar standards to them as the conjugated vaccines?

Last question. Sorry, I forgot that. The 9% headwind on the currency side, it is more than in Q1. I'm wondering why that is because, based on the currency moves, you would have expected a little bit less of a headwind this quarter. Thanks.

All right. Four questions. Let me just make a quick comment around the charges. The only thing we really will say about the charge is what we've put in the press release, that we're taking the provision with respect to the Federal and State investigations and some civil litigation regarding our marketing practices. We're not going to take it any further than that.

I'm not sure whether we have a comment on tax deductibility. Simon, is there much to say?

No, the provision covers, as David said, a variety of investigation and legal matters. We've taken a prudent perspective from a tax -- in not allowing any tax deductibility. Clearly, we'll be able to assess that position as the situations develop.

Okay. And then, on the Seroquel, I didn't say it, but obviously we believe that the opportunity in the major depressive disorder area, because Seroquel did show a differentiated profile, is something that we think can give us some additional support in the marketplace, depending on how the label comes out and when it happens. But as we said, we're in the process of trying to work through that.

As it relates to the value per prescription and maybe some of the either channel changes or potentially lower doses, Simon, do you want to comment on that?

I think the -- just to confirm, we haven't seen a significant stocking effect. I think I covered the main reasons in my response to the first question, which was we've seen some volume growth; we've seen some mix benefits as we look across the franchise globally. In addition to that, we have seen some increases in realized prices. And that does include - and I touched briefly on this - some adjustments in the managed market accruals. So we accrue for expected estimated rebates, discounts and so forth for a number of our channels. We then true them up on a retrospective basis, and if there's -- and in this particular case we've had some benefit from the true-up process in this quarter.

But -- so I think hopefully that gives you what we can say on the Seroquel pricing.

Can you say how much, maybe?

The main impacts come from volume and list price improvements.

Do you want to comment on the currency headwind that he asked about? And then I'll come back to FluMist.

Sure. We provide a currency sensitivity model at the beginning of the year. We show what we expect to be the impact on both sales and earnings for different movements in currency, and that's obviously based upon our view of the year ahead and [there will be] the estimate based on that view. If there are changes on a quarter-by-quarter basis to the relative mix of sales, the estimate could be slightly out on any one quarter, and I think in Q2 you saw that effect both on the sales lines and on the earnings line. But we continue to see that as a useful tool for you for the full year.

And then, on FluMist, I would just remind everyone that our seasonal FluMist vaccine is approved in the United States only and the H1 -- and our seasonal vaccine now has actually been -- we're shipping. The government has gone ahead and authorized us to do that, so our seasonal vaccine is out. I mentioned we've had what looks like a pretty productive working through our technology in developing the seed, and therefore the government did contract with us to purchase some of the product.

So it's approved. We have clinical tests we do. We do that every year for the seasonal vaccines. It tends to be in adults and children oriented towards safety. Obviously, the agency retains the right to figure out what else they want to do, but right now they have contracted to buy vaccine and expect to take delivery of it, so.

Excuse me. The H1N1, isn't that a different situation, because this is obviously not a normal human virus and you want to come in with an attenuated vaccine there? Is there some concern for -- in terms of a very widespread vaccination campaign?

Well, I think our belief is that we've demonstrated the safety and efficacy of our seasonal vaccine and the H1N1 is going to be developed through the same technology and brought to the market that way. So we obviously will be looking at all of that in our clinical trial, in the clinical work that we're going to do in the next couple of months.

So you're not aware of any concerns from the FDA?

Well, no, we're not aware of anything. They have pandemic contracts that they've awarded and we've been part of it. So I think obviously this is not a business-as-usual type of situation for anyone. Right? I think we view this as a pretty significant public health challenge, first and foremost. So I think it's probably not business as usual. I think we -- we're working alongside the government, authorities, the World Health Organization, to try to make sure that as much product can be made available as possible. And I think the expectations are these products will have a similar profile to the existing vaccines.

Okay. There's an email question and then we'll got to Sachin Jain at Merrill Lynch, but let me do the question over the web.

Can you comment on the pricing developments of Toprol XL during Q2 and whether this is sustainable, also differentiation between Seroquel IR and XR pricing, please?

I think our expectations around Toprol XL pricing in the marketplace are dependent upon the number of generic products that are there. So, sustainability is around the number of products that are in the market and as other generics potentially come back onto the market that could change.

Pricing between IR and XR, they were comparably priced at the time they were introduced. I believe just recent pricing activity, there is a bit of differentiation now, but I don't think it's driving a significant valuation change in terms of overall sales.

All right. I'm going to go to Sachin Jain now at Merrill Lynch.

Hi. Thanks. Three questions, if I could. Firstly, on the guidance, you mentioned that around half the sales upgrade is one-offs. Is it fair to assume that you're getting higher than average margins on those one-offs? I'm just trying to take into account your comments on FluMist and therefore that the one-offs are more than half of the EPS upgrade.

Secondly, just back to longer-term discussions. I wondered - I accept that you can't provide longer-term guidance - whether you could provide some color on some of the discussion points that other companies have had on some pressures to long-term margins, notably healthcare reform, changing emerging markets mix, patent pressure and obviously increasing in-licensing. On your pipeline, you mentioned 40% in-licensed.

And then, just one R&D question on Certriad. Just how important is a positive outcome from the ACCORD study, to you being able to access that untapped patient pool? And what challenges would you face if that study was negative, with two negative mortality (inaudible) studies? Thanks.

Okay. Well, I'll let Anders maybe make some comments about Certriad and the ACCORD study, if he's got that information available. And Simon can comment on guidance and the impact of the one-offs from a margin perspective.

You asked about just some color on the pressures going forward, healthcare reform, emerging markets, etc. I'd go back to the point I reinforced, I think, in my opening comments around the things that we're focused on, obviously. And you asked about licensing and bringing in external opportunities. Obviously, improving research and development productivity from our perspective and strengthening our pipeline is our highest priority, and we do that internally and externally.

And I think we're more discriminating in the types of products that we develop now and bring to the market, because I think the market going forward is going to be more discriminating about the products that it's willing to pay for. They really need to bring a differentiated value to patients in the market, but I believe that there will continue to be recognition of that differentiated value proposition for products. And it's not just an economic proposition. There's a quality of life proposition associated with that. So I think it's a balanced view of which products make a difference, especially given the genericization of markets, and we see this happening, so.

On the healthcare reform side of things, and certainly the US it's still very difficult to call, as you probably all of you see. There are a number of bills that have been introduced. There are negotiations and debates going on right now, just within the House and within the Senate. They haven't even tried to reconcile that yet.

So I think our view is we need to follow and see, but we're supportive, both as a company and in leading the PHRMA organization. I can tell you the leadership of this industry, the CEOs, are behind the idea that healthcare reform is a good thing for the future in the US. And we see some reform happening in other places. I mentioned China. I think it's a good example.

And you asked about the emerging markets and I'd go back to the points I made, strengthening the pipeline, growing our business, which is all about making sure that we're positioned well in markets where there's opportunity for growth. And, as I said, I don't think we expect emerging markets to have straight-line growth, but we're continuing to invest where it's appropriate to do that because they're continuing to invest in healthcare. And that's going to bring some value opportunities for companies who have products and differentiated products.

And then, on the reshape the business, that third point I think I made earlier. I think you can see, from our expense management and the impact of our restructuring, we're able to leverage that to improve our margin to some degree. I think it will vary from time to time, but it's the operational performance that we're absolutely committed to.

Over to Anders, maybe to comment on Certriad and ACCORD.

Yes. Thanks, David. As you know, Certriad is a good combination between two very efficacious treatments. I think if you take that, then, versus the ACCORD trial, which is pretty complicated, looking both in glycemic control, hypertension and lipids, I think that what you could expect from ACCORD is to provide a good rationale from an outcomes perspective for looking on a statin and a fibrate in combination. But I don't think it's critical or crucial for the success of Certriad, but it may add to our knowledge base in this field.

Okay. Good. And Simon, over to you, maybe, just to give a sense around the guidance and was it impacted by one-offs and what -- are the margins for the one-offs impacting significantly.

The short answer is no. We said that half of the increase in our sales expectations to one-off items. You'll note that we've kept the other elements of our guidance unchanged, including the gross margin level. Some of the one-off items, such as the stock roll effect, is at a higher gross margin, but the flu, as I mentioned, is somewhat lower gross margin. So, overall, we're seeing that outlook for the year unchanged on the other margin and cost lines, as I said.

Thank you, Simon. We'll take a call from Jeff Holford, and then I want to come back to a point I think we made earlier which maybe we can clarify. But, Jeff, why don't we take your call.

Thank you. Just a couple of quick points on Brilinta, which hopefully you can answer. Firstly, can you just confirm that there was no imbalance in the rate of cancers in that study between the 6140 and the placebo arm, and just also whether or not, within the design of the study, the patients were continued on treatment after the official end of the study, and why that decision was taken?

Okay. Well, certainly I can go over to Anders. I think we've been pretty clear we can't talk about the comparative data between the Phase II and Phase III, or even what's going on. Do you want to make any comment about that, Anders?

No. I agree with that, David. I think we've been pretty clear that analysis is ongoing and we will come back in Barcelona, August 30, with more details around the questions asked for.

It just strikes me that I perhaps should go back to the bleeding definition. I'm not sure I responded to that in a good way, or rather I missed it out in my response. I just want to comment upon that question, the comparison between the definitions used by others and what we used for PLATO. And I believe it's well covered in the PLATO design papers, which actually were published in the American Heart Journal.

And I think it's worth understanding, when you start comparing our data with Prasugrel and Plavix, that those differences in the bleeding scale may have an impact, so you have to be pretty clear about that. But I would recommend that you go back to the design paper and build it from there.

And anything about the patients' continuation beyond the end of the PLATO study? Jeff, do you want to just clarify what the question is? Did patients stay on the drug?

Yes, were patients given the option of extending their treatment, if that was required, or were they switched onto an alternative therapy at the end of the official study?

They exited the study.

No, I don't think they were continued. If that's different, our IR guys will get back to you.

Thank you.

Yes, thanks. I'll go to Dani Saurymper at Goldman Sachs.

Thanks a lot. I just wanted to come back to a couple of questions, one on Seroquel, just to try and understand on it. But can you just explain, of the 22% increase, and 3.5% was TRx, what was the proportion of the remainder that was therefore price that you've taken on the franchise and mix?

Secondarily, just a point of clarification, if I may, on Dapagliflozin in terms of the filing timeline. Is this -- the first half '10, is that Europe or US or both? I just wanted to make sure we were clear on the CV guidelines and whether you had enough patients to address that.

And then, just lastly, on the guidance, I guess I just wanted to think about how we go through into 2010, if I may. But obviously, I guess you're highlighting half of the boost to your guidance this year is from essentially one-off items. Do you think you can do better than flat on '09, in terms of 2010? I'm just trying to get a sense for where the cost items -- the cost growth looks for '10 and what implications that might have versus '09 and the lack of one-offs.

Okay. Well, I'll see if we can get some specifics between the price, volume and mix around Seroquel, beyond what we've already said. But I can tell you -- you're going to have to wait for January for our 2010 guidance. So I think at this point we'll work through the second half of the year.

You can see, given that there are a number of moving parts that are affecting it, from good operating performance on the top line, exclusive of the generic products, that the success we've had with products where the generics haven't been on the market or came late, coupled with just our overall operating performance, it's had a positive effect. But I think our point is there's going to be some variability around that and we try to look at it on an annual basis.

Your question about Dapa, in the first half of 2010, I will ask Anders to comment on that as well, and then ask Simon to comment on guidance.

With respect to Dapa, David, the information in the pipeline actually says very clearly we're going to file both the MDA and MAA second half 2010. According to the CV guidelines, during the program we received a letter from FDA, which is very corresponding with what you can see on the now published guidelines, and we're of course building that into the program as we go forward.

Okay. Good. And back to Seroquel, obviously there's some mix -- I'm not going to get into the specifics, but obviously there's been some pricing impact, along with the change between patients being on the -- the increase in use of the XR versus the IR. And I think we're just going to see some difference here for a while and I think part of that is to do with stocking as much as anything relative to the product. But our whole promotional emphasis now is on the XR and we're looking forward to getting the MDD, but I'm not going to get into any more detail behind the pricing there.

The price component, then, what (technical difficulty)?

I don't have that as well. Jonathan will get back to you with that one, Dani. I just don't know what it is in the quarter. Okay?

All right. I'm going to go to Lars Hevreng at Enskilda. Lars.

Yes, thank you. Regarding price, what was the price component of sales growth for the Group in the quarter? Many companies in the sector are talking about price effects of 3% and more than that. I'd just like to know your figure there.

Also, the other question on Nexium. What's your assumption for the remainder of the year, particularly in the US? You've been a bit cautious in terms of intensified competition.

And then, lastly, on emerging markets. You now have a guidance with double-digit growth in constant exchange. What has been your assumption earlier? Is that a more positive one or is it simply unchanged? Thank you.

Well, I'll ask Simon maybe to comment on pricing components in the quarter as well as Nexium.

I think, with emerging markets, will we see some variation from quarter to quarter, obviously it's a bit slower in some of the markets right now, yet we see China continuing to grow in the high 20s. I think emerging markets are a strategic issue for us. We're positioned well there. We're not trying to guide market by market. We lump them together and just try to give a sense of where we think it'll be. And we don't put a specific number around it. What we always said was that, in the aggregate, we expected mid-single-digit sales performance across the Group, so we don't guide by region.

Simon, over to you.

Okay. Let me do -- you had three questions on pricing, one with the overall price impact on the growth for the half. Outside of the US, we're not seeing price increases. It's net price decreases of various levels. We're able to achieve some net price increases on selected brands in the US. We focused on one of those a fair bit on this call, which is Seroquel. I might just come back to that in a moment.

So, short answer to your first question is no net price increases outside of the US, selected net price increases on a few brands in the US. The strong sales performance reflects very strong sales and marketing execution around the world in our key brands, and where we find in most of our market and brands we're building share against the competition. So that's the first point.

Secondly, let me just touch on Seroquel, just to be absolutely clear here. The growth in the US on Seroquel of 22%, 3% or 4% of that was on volume. The remainder was on a blend of net price increases, mix and, as I mentioned, the manage market accrual adjustment. Vast majority of that is net price increase. The other two components of that are probably between a third and a half or so or that change.

The final one was on Nexium. And our guidance for Nexium net pricing for the year has remained the same through the course of the year, at high single digit, and we've reaffirmed that guidance for this quarter.

Thank you.

Okay. Thanks. I'll go to Kevin Wilson at Citi. Kevin.

Thank you, David. Going back to the emerging markets, looking at the basket of countries that you report as emerging, rest of world, what is the growth in this quarter of those markets? So are you lose -- did you lose or gain share?

And I'm just reflecting, I think other people may have reflected it in their questions too, that the rates you've reported as underlying growth in that basket of countries over the last five quarters have -- four of those quarters have been mid to high teens, in the range of 15% to 20%. We've dropped to 8%. I just wondered whether there's a particular feature going on here or is it really that volatile or is it, for example, a Crestor effect?

Second question. Simon, could you just give us an update where you are with working capital improvements, particularly inventories, and your cash cycle?

And thirdly, just a point of clarification, and forgive me for not knowing the answer to this. Did Seroquel XR get approved for monotherapy in MDD in Canada and Australia?

Okay. We'll come back to the third one in a minute. On emerging markets -- and then I'll let Simon pick up on that. When we look at the emerging markets at a regional level, so our data through the first three or four months of the year, we had the fastest-growing business in Latin America. I think we were third in Central and Eastern Europe, Middle East Africa. And we were second or third in Asia Pacific in overall growth and the growth rates were in the double-digit range. So, on a relative basis, we're outperforming the market.

To your question, I don't think we're going to get into specific growth rates at a market-by-market level. In the second quarter there was clearly some slowing down of it compared to the first. On the other hand, I think when we look at the business and talk to our people there, well, it'll be different than were it was last year. I think we still see a pretty significant opportunity.

Simon, do you want to pick up on that?

No, I think the headline is that we continue to see double-digit growth for the year. We've recorded good growth in the first quarter for our emerging markets, about 15%.

We've had a couple of issues or couple of factors that have lead to a slightly lower growth rate for this quarter. We pulled one out, mentioned it, in our release, which is in Mexico, which has been an important market, strong market, for us in our emerging markets. We've had some impact from the swine flu there. We've also been making some changes to our distributor arrangements, which led to some changes in the stocking cycle. And indeed, we've actually been making some changes in distributor arrangements in a number of our emerging markets. We pulled out Mexico, but we are moving to some different arrangements in a number of emerging markets. So that's the first factor, some changes due to distribution arrangements in the course of this year.

We also had some favorable -- the favorable prior-year comparator. We had a strong second quarter last time, with some particular movements up in one or two markets. So I think the key to focus on is we continue to see double-digit growth for our emerging markets. We remain pleased with our performance there. And I think David singled out China as being the market that continued to show strong growth. And if I look at the other markets around the business, we continue to see strong growth in Brazil, Russia, Turkey, all performing very strongly for us.

Capital.

Working capital. We are very focused as a company on not only delivering productivity improvement to what we deem to be best external practice on all elements of our cost base, but also converting our sales and profit through to cash. We're working hard on working capital management across the cash cycle.

And I think the area you pulled out, Kevin, of inventory, is definitely an area where we see we've made improvements. We are accelerating the inventory turn and we think we've got more that we can go for. And that's a combination of the work we're doing on rationalizing the asset base, it's work we're doing in lean improvements in each of our manufacturing plants, and it's also an investment we're making in putting end-to-end supply chain systems in place so we can really look at the total supply chain from end to end and optimize the inventory position. It's very much work in process. We've got more that we can go for.

But, Anders, do you have the answer to the question about monotherapy for MDD for XR in Canada, Australia?

Yes, partially. We can confirm Canada. We just have to come back to you on Australia. We're not crystal clear right now.

All right. Kevin, we'll come back to you on that one.

Thanks, David. Did I understand you to say that you're not losing market share in those emerging markets?

No, we're gaining share relative to the markets. We're growing faster than the markets overall, in our overall brand.

All right. One more question. I've got it at 2.30. Steve Scala, let's do a quick one and we'll wrap up.

Thank you. Actually, I have three questions but they're all brief. First, would AstraZeneca file Brilinta if the net clinical benefit were inferior to Prasugrel? I would think that if the net clinical benefit were inferior the commercial potential might be too small to justify a filing.

Secondly, how does AstraZeneca's PARP inhibitor for triple negative breast cancer differ from Sanofi's PARP that is moving to Phase III?

And then, thirdly, assuming ONGLYZA is approved today, can you provide any color on the timing of launch? Would it be August or September? And the magnitude of the launch, is this going to be a massive launch whereby virtually every relevant US doctor knows the message, or a more narrow launch? Thank you.

Okay. Well, let me start with your third question on ONGLYZA. Our plans for ONGLYZA are to go to market as quickly as we can, but we've got to make sure everybody's up to speed, the label's up to date, that we have promotional materials. We're got a significant primary care commitment plan for our overall organization, in conjunction with the Bristol-Myers organization. So I don't know how to scale the magnitude, other than to say to you we've got a very effect sales force that reaches a large number of primary care physicians who prescribe anti-diabetics and we expect to be talking to them about this one.

I will have to look to Anders. I don't know whether there's a differentiation he's aware of with the PARP inhibitor -- any differentiation. And will you comment on the Brilinta Prasugrel, Anders?

Yes. Thanks, David. I think that around filing we -- of course, we file when we find that we have good opportunities to deliver valuable medicines to patients, and that's going to be the driver for whatever we do. And I believe what you've seen on Brilinta meeting its primary efficacy endpoint, etc., says we may have something for you there, so stay tuned.

Around the PARP inhibitor, I would say that it's still early days. I believe that we have a leading -- or we have the leading oral PARP inhibitor. I think it's an extremely interesting class. As you know, we showed some results at ASCO recently and it was also featuring in some of the newspapers. So I think people are recognizing the class and the opportunities.

As far as I know, with only oral monotherapy opportunity right now, we're exploring it aggressively within breast and ovarian. And I think we have a leading position here. It's very hard to go into details versus the Sanofi in-licensed compound. So I would rather say interesting class, we made the acquisition with Kudos to get a leading edge here and we're exploring that right now.

Thanks, Steve. Thank you, Anders. And I'd like to thank everybody.

Just to remind you, we've had a very good strong first half financial performance, as I said, with good operating performance. We see that at the brand level, as well at the regional level, on the top line. We did get some help from some one-offs and we will always take it when we can and make sure that we distribute it properly. And you saw our cost discipline is helping us to leverage our growth, expand our margin.

On the R&D side, we had some regulatory submissions, three in the first half and another one planned for the fourth quarter. So I think we are making good progress on the pipeline. And as a result of what we've done in the first half and our view of the second half, we've raised our core earnings per share target for the full year. So, as you can see, we're committed to driving our business forward as quickly and efficiently as we can and making sure we bring good products to the market.

With that, I'll thank you all for your participation on the call today, and a good day to everyone.