AstraZeneca PLC (AZN) 2009 Q4 法說會逐字稿

Good afternoon.

Welcome, ladies and gentlemen, to AstraZeneca's Annual Results Analyst Conference.

Before I hand over to the auditorium, I would like to read the Safe Harbor statement.

The Company intends to utilize the Safe Harbor provisions of the United States Private Securities 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 very nature, forward-looking statements involve risks and uncertainties 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.

(Operator Instructions).

We will now be joined to the auditorium ready for the start of the conference.

Thank you.

Okay.

Well, good afternoon, everyone, those of you here with us in London, we are glad you could make it, and those of you that are joining via the webcast welcome.

We are glad you are there.

As I think you may have seen from our press release, we have an awful lot to cover in today's program.

I'm going to start with a review of the highlights from 2009 and cover the headline financial results, including a review of our revenue performance by region and by key brand.

And then following that, Simon and I will provide some insights into our strategy and to our planning assumptions for 2010 and beyond as you saw in our press release looking at how we are approaching the coming five-year period, which, as you all know, is a challenging one for AstraZeneca and for our sector.

And finally, Anders Ekblom will come up and provide the end of year review of the pipeline, the performance of the R&D organization, and give you a sense of his priorities for the organization for the future.

Let me move on to 2009, which was a year of significant accomplishment for AstraZeneca.

There were some notable successes, which I will cover tempered as ever by some disappointments.

But I think it was on balance from my perspective a strong overall performance for our business in the year.

We achieved revenue growth of 7%, core earnings per share growth of 23% in constant currency terms.

And that is a strong performance, as you know.

And it is one that exceeded our own expectation as we entered the year 2009 12 months ago.

Central to this success was operational execution of our plans in what, as you all know, was a difficult economic climate.

But we had improved organizational flexibility, and I can assure you we have a highly committed workforce that helps to pull all of that through.

You know, some of our outperformance was due to the unexpected revenue upside that we received from the Toprol-XL situation in the United States, as well as from the sales of the pandemic H1N1 flu vaccine that we sold to the US government.

And while the revenue may have been unexpected, I cannot say enough about the performance of the people in the organization in making sure that we had Toprol-XL to put on the market to make sure we had H1N1 flu vaccine that we could actually create.

We were the first Company among them all to be able to deliver vaccine to the market, and we had people working 24/7 to accomplish that and to get Toprol-XL out there, much less the results you saw in all the rest of our business.

So I think they were extraordinary efforts from my perspective.

2009 was also a year in which AstraZeneca was at the forefront of science in our industry.

You all know one of the biggest landmark clinical trials in years is the Brilinta PLATO trial engaged academic and clinical communities across the globe.

I think we've made very good progress on the pipeline with four major regulatory filings for new products during the year.

Brilinta, as you know, was filed for acute coronary syndrome, Certriad for mixed dyslipidemia, Vimovo for pain and we announced the filing of the fixed dose combination of ONGLYZA with metformin for the treatment of diabetes.

When you combine that with the response to the complete response letter from the FDA for motavizumab, which we responded to in December, we actually have five opportunities for new products in 2010.

So that can be good news for us if we can get them all through the regulatory process.

Now that amount of R&D output is well above that is what required to deliver what we have said is our average of two new medicines the year, which is, in fact, why we expressed the target as an average.

Inevitably there are setbacks.

This year you know we withdrew the application for Zactima when we saw the overall survival benefit was not there compared to the modest benefit we had seen in progression free survival.

In the trials that preceded it, we knew that there might be some benefit, but in the end we chose to withdraw it.

We had two significant approvals during the year.

We launched ONGLYZA globally, so we were excited about that.

It is the first product out of the partnership with Bristol-Myers in the diabetes area and I think a nice opportunity for us, and we also launched Iressa in Europe.

So two products that we are now behind and investing in to make successful.

We had new external partnerships through the course of the year.

We actually had four late stage opportunities that we brought in.

Legal issues are a fact of life in our sector, as many of you know.

2009 was no exception.

The major positive development on this front was the appellate ruling that upheld the Seroquel patent in the United States, something that I think we said we felt very strongly about, and it was upheld by the court.

On the downside you may have read we reached an agreement in principle with the US Attorney's Office in Philadelphia to resolve investigations that were related to the Seroquel sales and marketing practices.

That particular investigation accounted for $524 million of the $636 million legal provision that you saw in adjustments to core earnings in '09.

In summary, a year of strong financial performance, as well as a year of progressing and advancing our broader strategic agenda.

Let me, though, turn to the headline financial results for the full year.

Growth rates again will all be in constant currency.

The revenue grew by 7%.

That was to $32.8 billion.

If we exclude the performance of Toprol-XL in the H1N1 vaccine, the US global revenue growth was 4%.

So that is up from where we were at the end of 2008.

Once again, we were able to achieve significantly greater profit growth than revenue growth.

That was a result of the disciplined resource allocation that we have and I think demonstrates the benefits of our formal restructuring programs as they continued to unfold.

Core operating profit also increased by 23% to $13.6 billion, and core earnings per share up to $6.32, which was in line with the guidance range that we gave out during the third quarter.

Now in bridging from core EPS to reported, adjusting items to core earnings were somewhat larger than last year with lower restructuring costs that were more than offset by the legal provisions that were taken.

The reported earnings-per-share number grew by 22%.

So that was good.

The board recommended a second interim dividend of $1.71.

That brings the dividend for the year to $2.30, which represented 12% growth.

Simon is going to say more about our dividend policy and the share buyback during his presentation.

We had a very strong cash performance in 2009, and as a result of that, we've completely eliminated net debt and we enter 2010 with net funds of over $0.5 billion.

If you take a look at revenue growth by region, on a constant currency basis, you can see that revenue -- we saw revenue growth in all of our regional business segments.

If you look at the revenue in the US, we are up 9% boosted by Toprol-XL and H1N1.

Revenue in the established markets outside the US grew by 4%, and as we expected, our emerging markets business grew by double digits by the end of the year.

So very good growth.

I'm pleased to note here on this slide -- I will leave it up for a second -- you can see that our growth rates continued to outpace the market growth rate in nearly all regions of the world.

This is IMS's data, the AstraZeneca there is in blue, and the orange are the market sales growth rates that you can see as you look across -- we have had very good performance as well.

Our key brands provided more than $2 billion in constant currency growth in 2009, growing by 12% in aggregate.

As we expected, Nexium sales were lower in the US on stable volume but lower prices, and that was broadly offset by growth in Nexium in the rest of the world.

Seroquel's double-digit growth provided more than $0.5 billion of constant currency growth.

Full-year sales reached $4.9 billion.

That growth was fueled by the growth of Seroquel XR.

It now accounts for 11% of the prescriptions -- the franchise prescriptions in the United States.

It accounts for 24% of the franchise sales in the rest of the world.

So with the new claims that have just been added to it, I think we expect that that is going to continue to be a significant performer.

Crestor had another very good year.

Sales were up 29% to $4.5 billion, and our growth was well above the statin market in all regions in the world.

We look forward to continued growth and further support, more of a boost when we get the JUPITER data included in the label.

Arimidex sales were also up in 2009, but I think you know we lose exclusivity on Arimidex later this year.

So that will have an impact on 2010, and Symbicort had another very good year.

Sales were up 23% to nearly $2.3 billion.

We grew market share by 6 percentage points in the US last year, which is also I think an excellent performance.

The press release is there.

I think it probably speaks to a a lot more detail, and certainly the fourth quarter gets covered there.

So I will not spend any time on that.

What we want to do is spend some time today on looking forward.

And before I do that, I thought I would just reflect on the fact that 2009 marked the 10th full year since the creation of AstraZeneca back in 1999.

And since our sector more than others is really a long cycle industry, I thought I would just briefly review our performance over the first 10 years that the Company was in business as AstraZeneca, and in doing so, I hope set some context for what we hope to accomplish as we go forward.

Back in 1999 the newly emerged AstraZeneca employed some 47,000 people in the Pharma division.

Healthcare revenue was about $15 billion, and only 6% of our revenue came from the emerging markets.

We had two blockbuster products, and as we look to our immediate future, we recognize that some 55% of our revenues came from products that were going to face loss of market exclusivity over the next five years.

We had a pipeline that had 41 new molecular entities that were in clinical development and a number of lifecycle management projects as well to support our growth products and franchises.

Annual R&D investment at that time was about $2.5 billion, and it was really exclusively focused on small molecule.

What happened next?

Well, as we expected, the patents did expire on products that were generating some $8 billion in revenue at the time, and subsequently they declined by about $7 billion.

But we also had a pretty strong base business fueled by franchises like Seroquel, Arimidex, Casodex, Atacand.

We made strategic investments to grow our emerging market businesses and revenues, and together the growth franchises, along with the emerging markets, generated $11 billion of new revenue in our base business and more than made up for the patent erosion.

The sales transformation was completed by more than $13 billion of revenue that we have derived since then coming from our investments in R&D.

Those were primarily Nexium, Crestor and Symbicort, bringing us to where we are today, which we reported sales of over $32 billion.

And the last 10 years were not just a revenue story.

We did begin the process of reshaping our operating model.

We took more control of the cost base of the business, but I would say, too, there is still more that needs to be done on this end.

The results of our efforts so far enabled us to leverage compound annual growth of 8% into mid-teens growth in operating profit and in earnings per share over the period.

And that financial performance drove strong shareholder return for AstraZeneca and put us amongst the best in the large-cap pharmaceutical sector for that 10-year period, and we outperformed the market indices as well.

So, as we turned the page on 2009, AstraZeneca is an organization of some 63,000 people strong.

We have revenues, as I just said, in excess of $32 billion.

Over the decade, we have built 10 blockbuster products, and our emerging markets business now accounts for 13% of our global revenues.

Our R&D investment in 2009 was $4.4 billion.

That is underpinned by capabilities in both small molecules and in biologics, and we have a pipeline that now includes 103 projects that are in clinical development and a program of, a robust program I would say, of lifecycle management projects to support our key product franchises.

Today, as 10 years ago, more than half of our revenue base faces loss of exclusivity over the five-year period, and I'm confident our management team will respond and adapt our plans accordingly.

I'm going to spend the next portion of my presentation laying out the strategy what we see as the key priorities for AstraZeneca over the next few years, and then Simon will follow up with some thoughts on how we see the business shape evolving from a financial planning perspective.

And each year at the beginning of our business planning cycle we assessed the challenges and the opportunities that are presented by the markets where we compete.

We candidly assess our own strengths and weaknesses.

As an organization, we stress test our short and long-term planning assumptions to assure ourselves that whatever the past success has been, the strategic path that we are following is the right one for our business for the future.

We continue to believe that the most valued creating strategy for AstraZeneca is to be a focused, integrated, innovation-driven, global biopharmaceutical company that is prescription-based.

Focused in that we will continue to be selective about those areas of the industry that we choose to compete in.

Targeting the product categories where medical innovation or brand equity continues to command a premium.

Integrated in that we believe the best way to create value within this industry is to span the full value chain of discovery, development and commercialization.

Innovation-driven in that we believe our technology base will continue to deliver innovative products that patients will need and payers will value.

And global in that we believe our ability to meet the health needs of patients and healthcare systems in both the developed and emerging markets is a core capability of ours as we have demonstrated in the past.

So yes, the near-term challenges of patent expirations and the long-term pressure on prices are real and they continue, but so are the drivers of demand.

Unmet medical need, the aging of the developed world and the economic growth in the developing world.

With these powerful forces at work over the cycle, we believe that our industry is capable of growing at least in line with real global GDP.

Some IMS forecasts suggests that the range is 4% to 7% or even higher through 2013, but I'm just going to go with GDP at this point.

And within this industry, I think we believe the best performance will continue to earn attractive returns on invested capital.

I'm confident that AstraZeneca can be one of the better performers through the cycle.

We possess the innovative capacity to discover and develop meaningful medicines for patients.

We base small molecules for biologics.

We have the necessary global scale and reach in the marketplace, and our ability to commercialize products is among the best in the industry.

We are continuing to develop an industry-leading cost management capability, and we already have one of the most competitive supply chains in the sector.

I'm acutely aware that it is shareholder funds that we invest to bring innovation to patients, and we are going to manage this business and try to deliver shareholder value in the short term and in the long term.

Now the strategic priorities that will drive our actions in the years ahead are very much in keeping with our current agenda.

We are on an evolutionary journey here, not a revolutionary one, albeit our evolutionary journey is an accelerated one.

I believed and firmly believe that determined execution and delivery on these activities can deliver value over the cycle.

If there is one overarching theme to our plans, it is recognizing that the fundamental strategic imperative for AstraZeneca and for our industry is to improve the productivity of the research and development investment.

For AstraZeneca meeting this challenge will require our R&D organization to embrace more transformational change than we have ever had before.

We are going to further refine our disease area priorities, making a rigorous reallocation of capital to those areas that offer the greatest chance for technical and commercial success.

Our use of lean Six Sigma to drive out costs, waste and inefficiency across the business will continue, and within the R&D organization, there will be more focused on improving the efficiency of development activities.

This will continue to change from a highly fixed cost operating model to a more flexible one that allows us -- that gives us the capability to scale our R&D investment up or down quickly as scientific opportunities emerge or the situation changes.

To do this we will continue to make greater use of outsourcing and strategic partnerships with other organizations, and our drive for greater efficiencies will also call for consolidation of our research and development sites.

Simon will outline some of the financial dimensions of these changes in just a few minutes, but let me say this is not just about cost-cutting.

It is also about improving on the capabilities that our organization can deliver, and to bring about clarity to our R&D investment decision-making, we have formed a portfolio investment board, which is chaired by me.

Members of it will include Simon, Anders, Tony Zook, who is now the head of our global Commercial operation, and a few other members of our senior management and R&D group.

This group will be accountable for all R&D investments within the group and will be charged with delivering the pipeline, the products capable of generating attractive returns on our invested capital, and driving shareholder value.

Our commitment to scientific innovation is stronger than ever, and I believe that in order for AstraZeneca to be among the best performers in this industry we need to deliver on a consistent basis a flow of new products that meet the needs of patients and their caregivers at a value point that payers are willing to support.

I believe that this demands more external collaboration than we have had before.

It includes collaborating with payers.

We are setting out to build an industry-leading capability in payer partnering to ensure that the value proposition for AstraZeneca and the payer community is aligned in the development process, and it will also include more extensive collaboration with industry and academic partners to access the best science wherever it resides.

External project opportunities will compete, alongside in-house projects for funding from the portfolio investment board, as we seek to construct a pipeline that sensibly manages the risk and reward trade-offs that we can see across our entire portfolio.

Now on the commercial side, our plan will build on the organic investments we have made in the emerging markets.

In addition to commercializing the current and new product offerings that originated in-house from within AstraZeneca, we believe that we can continue to drive double-digit growth by selectively augmenting our emerging markets portfolios with branded generic products that are sourced from outside of AstraZeneca when we see the opportunity for them to create value under the umbrella of the AstraZeneca brand.

We will continue to re-shape our business, adapting our cost base to the realities of the marketplace today, and, as you all know, that is changing.

These structures will continue to impact on our people and the communities within which we operate.

Since 2007 12,600 people have left AstraZeneca as a result of our efforts to focus services where we really need them.

Over the same period, some 8000 people have joined the Company.

We have grown in important areas like biologics division, and, as I said, we are investing in emerging markets.

And we expect a further 10,400 people to be impacted by changes in the next five years.

Naturally, as we develop these programs to respond to productivity challenges, many of these changes are subject to the requisite consultations with works councils, with trade unions, with other employee representatives and has to be done in accordance with local labor laws.

These things are underway, but, as you know, they take some time to get done.

Effective strategy is about making the right choices about what you do.

Effective leadership ensures that how you do it is in line with the values of the Company, and justifiably high expectations of customers, payers, regulators, relevant stakeholders are significant.

And our team, my team will continue to embed a culture of accountabilities throughout this Company that will nurture a spirit of innovation in all functions, not just in research and development, so that we can drive efficiency and agility and we can reinforce a shareholder value orientation for all of our employees.

Now I'm going to turn the presentation over to Simon who will take you through some of the planning assumptions we are making that will guide our actions over the next few years, and he will be followed by Anders, and then we will move to a Q&A session.

So, Simon, over to you.

Thank you, David, and good afternoon to everyone.

Now David has outlined our strategic priorities.

I will flesh those out with a little bit more detail and also share with you the planning assumptions that we are making as we set out to deliver on those priorities.

In doing so, I'm going to look forward over a five-year horizon from 2010 through to 2014.

This period will be a challenging one for the industry and also for AstraZeneca as our revenue base transitions to a period of exclusivity losses and new product launches.

During this period we believe that it will be helpful for investors to understand the Company's high-level planning assumptions, the revenue evolution, the margins, the cash flow and business reinvestments that will guide our management of the business over the next five years.

I will start by outlining some of the general assumptions that we are making about the wider industry environment.

As David mentioned, we believe that over the long run the global biopharmaceutical market can grow at least in line with real global GDP growth.

In common with most external forecasters, we expect global GDP will continue to recover from the lows of 2008 and grow steadily through our planning horizon.

We recognized that downward pressure on revenue from government intervention in our marketplace, including various proposals that are being made as part of US healthcare reform remain a continuing feature of the challenging market environment.

However, the planning period we are assuming no further step changes in the evolution of these pressures.

More specifically for AstraZeneca, our planning assumptions for revenue, margins and cash flow do not assume any material M&A or disposals over the planning horizon.

They also assumed that we experienced no premature loss of market exclusivity to key AstraZeneca products over the period.

And finally, we assume that exchange rates for our principal currencies do not differ materially from those average rates that have prevailed during January 2010.

In growing our business, our first priority is to drive our key franchises, most notably Crestor, Seroquel XR and Symbicort.

We aim to continue to gain market share for our key brands that retain exclusivity.

We expect to successfully commercialize our recently launched products and the next wave of products from our internal and in-license pipeline.

And we will continue to drive our emerging markets business through organic growth of products from our current portfolio and pipeline, but also, as David mentioned, through selective additions of branded generics to further capitalize on our prior investments in commercial infrastructure.

We plan on sustaining our double-digit growth in our emerging markets.

At this pace emerging markets could grow to become more than a quarter of our total revenue by 2014.

Now our planning assumption is that revenue will be in the range of $28 billion to $34 billion per annum over the planning horizon through to 2014.

We do expect a significant portion of our current revenue base will come under pressure from the loss of market exclusivity on a number of key products.

Longside growth from key brands and from our emerging markets, achievements of revenues within the planning range will require a risk-adjusted contribution of around $4 billion to $6 billion by 2014 from recently launched products, the current pipeline or further in-licensing.

We aspire to performance near the top of the planning range by 2014 when we expect to have returned to a period of more consistent revenue growth.

We continue to make strong progress in reshaping our cost base both to improve efficiencies and to improve cost flexibility.

We have benchmarked our costs in every function of our business against best-in-class levels both within and outside the pharma industry, and we will use all of the tools available to bring these in line with best practice.

Now our clear objective in reshaping our business is to build a long-term sustainable successful business in a market environment facing continued pressure on price.

We will complete the formal restructuring of our supply chain and continue to drive our lean program, striving to maintain our gross margin above 80% through this period.

We will drive further efficiencies in sales and marketing spend through continuous improvements in sales force productivity, testing and exploring new approaches to meeting our customers' requirements for the information and services needed to make the best use of our products.

We are reducing G&A costs through continuous operation improvement and through consolidating and selectively outsourcing scale-intensive processes.

We are delivering significant savings through implementation of best practice in procurement and working capital management and will continue those efforts.

Over the next five years, our planning assumption is that we can maintain a core operating margin before R&D expense, which we see as the key measure of profitability in delivering our marketed products in the range of 48% to 54%.

This is higher than the 45% that we have averaged over the last decade but somewhat lower than the record 55% achieved in 2009.

So it looks to be a reasonable planning assumption.

In short, our business reshaping activities are not simply designed to mitigate short-term pressure on the top line; they are central to our view as to what is required to provide appropriate reward for committed investment in biopharmaceutical innovation in the long run.

We will continue to focus on cash generation across the business.

Achieving revenues in our core pre-R&D operating margins in line with our planning assumptions alongside tight management of our restructuring programs, working capital, tax and interest will generate strong cash flow over the planning period.

Now subject to investment opportunities and prospective returns, our aim is to reinvest approximately 40% to 50% of our pre-R&D, post-tax cash flows to drive future growth and value.

And our investment priorities are firstly internal and external discovery and development investments to build our pipeline of innovative medicines, and then tangible assets and information technology to drive productivity improvement and to support growth.

After reinvestment in the business, the residual cash flow will be available for any other business needs that may arise, repayment of debt as it becomes due, and distribution to shareholders.

The cash generation profile and the reinvestment rate is broadly consistent with our track record since the merger.

Over the last decade, the Company has generated about $87 billion of pre-R&D, post-tax cash flow, and we have reinvested about 45% of this cash flow in internal and in licensed R&D and investment.

This reinvestment drove the strong sales and the profit growth over the period.

The Company also invested about $17 billion in material acquisitions, notably MedImmune to transform our biologics capability and funding the first stage of the Merck exit arrangement.

And this reinvestment was achieved while distributing $34 billion to shareholders in dividends and periodic share repurchases.

Our third strategic priority is to deliver value from our investment in innovation for that internal R&D or in-license technology and projects.

Now, as David described, our goal is to launch on average two new medicines per year.

The objectives of our R&D trade programs are to further strengthen our innovative capabilities and to improve significantly the R&D efficiency with which we deliver our output goals.

These plans include disease area reprioritization, reorganization and process improvement and development by consolidation, continued focus on externalization and other efficiency gains.

As a result, we plan to achieve material efficiency savings in R&D.

Now these savings will partially mitigate the increase in investment that would be required as a result of the maturation of the current pipeline with projects progressed to the later and more resource consuming phases of development.

As a result of these actions, we plan to fully deliver the existing portfolio to lower cost and would otherwise be expected.

When fully realized, the annual savings by 2014 will be in the region of $1 billion per annum.

Of this, we estimate that approximately half is cost reduction, the other half cost avoidance.

Based on preliminary estimates, approximately 3500 physicians may be affected by this program.

However, this is a dynamic process, including positions which will be retained whilst being relocated to another site, the investment in new skills and capabilities, and further expansion of our biologics activity.

The net reduction in positions may be around 1800.

The cost of this restructuring is estimated to be around $1 billion, of which approximately 60% will be cash costs.

Of course, these are preliminary estimates.

They are subject to the requisite consultation process which is underway.

I will now review our progress on all of our restructuring efforts, explaining how this new program in R&D fits into the overall picture.

In the period 2007 to the end of 2009, our cumulative restructuring activities have incurred $2.5 billion in restructuring costs, impacted 12,600 positions and have achieved $1.6 billion in annualized benefits as of the end of 2009.

We will grow to $2.3 billion by the end of 2010.

Some of these savings in dollars and in headcount have enabled us to accommodate our investment in other areas to drive future growth.

The gross number of 12,600 positions affected has resulted in a net reduction of some 4,600 after the planned expansions in biologics and our emerging markets.

Now the next phase of restructuring, three components.

Firstly, the completion of activities remaining from the first phase of restructuring, some additional initiatives in supply chain and in SG&A, and the new program in R&D that I've just outlined.

We would expect to incur about $2 billion in further restructuring costs in the period 2010 to 2014.

In terms of phasing, I would expect around 60% to be charged in 2010 with most of the remainder in 2011.

Another 10,400 positions are expected to be affected on a gross basis, fewer on a net basis depending on how much we choose to reinvest in high return opportunities.

This phase of restructuring when fully implemented is expected to generate annual benefits of around $1.9 billion by the end of 2014, half to be realized by 2011 with most of the remainder realized by the end of 2013.

Now over the last few minutes, I have shared with you the planning assumptions that will guide our management of the business over the next five years on a course that will be rewarding for our patients and our shareholders.

Before I hand over to Anders, I would like to narrow my focus for the big picture and provide some thoughts on our 2010 financial guidance that we provided in this morning's earnings release.

Over the course of last year, we have tried to be transparent about those elements of 2009's revenue performance, chiefly Toprol-XL and the pandemic vaccines that were unanticipated and unlikely to be durable.

This will provide a headwind as we enter 2010.

This year we will also bear the full annualized effect of the loss of exclusivity for Casodex and for Pulmicort Respules in the US now that Teva has launched its generic product.

Arimidex will lose exclusivity in the second half of the year, and add in the uncertainty around potential impact of any US healthcare reform measures that may be enacted, 2010 will be a challenging year.

As a result, for 2010 we anticipate up to a mid-single-digit decline in revenue on a constant currency basis.

Core pre-R&D operating margins will be lower than the 55% level achieved in 2009, but it should be near the top end of our midterm planning range of 48% to 54% of revenue.

We also noted that consensus expectations for next finance expense are considerably lower than our assumptions.

With yields on cash still very low, we expect net finance expense of around $550 million per year.

As we noted in the press release, we expect the tax rate 2010 to be around 29%.

Our target for core earnings per share is set based on the average exchange rates for our principal currencies that prevailed during January 2010, and on this basis we anticipate core earnings-per-share in the range of $5.75 to $6.15.

Of course, this target will take no account of the likelihood that actual exchange rates for 2010 may differ materially from the January 2010 average rates upon which our guidance is based.

As we did last year at our quarterly results announcements, we will endeavor to be as transparent as we can in terms of how actual rates are affecting our performance.

An updated currency sensitivity estimator has been provided to assist you in modeling your own currency assumptions.

I will conclude with a few comments about today's announcements on the dividend, including the newly adopted corrected dividend policy and the share buyback.

With today's announcement of a second interim dividend of $1.71, this brings the total dividend for the year to $2.30, a 12% increase compared to last year.

Today we also announced a revision to our dividend policy going forward in recognition of the group's strong balance sheet, sustainable significant cash flow and the board's confidence in the strategic direction and the long-term prospects for the business, the board has adopted a progressive dividend policy, intending to maintain or grow the dividend each year.

The board recognizes that some earnings fluctuations is to be expected as the Company's revenue base transitions through its period of exclusivity losses and new product launches.

The board's view is that the annual dividend will not just reflect the financial performance of a single year taken in isolation, but reflect its view of the earnings prospects for the group over the entirety of the investment cycle.

As a result, dividend cover may vary during the period but with a target of an average dividend cover of two times a payout ratio of 50% based on reported earnings before restructuring costs.

In setting the distribution policy and the overall financial strategy, the board's aim is to continue to strike a balance between the interests of the business, our financial creditors and our shareholders.

After providing for business investment, meeting our debt service obligations, and funding the progressive dividend policy, the board will keep under review the opportunity to return cash in excess of these requirements to shareholders through periodic share repurchases.

In addition to the increase in the dividend, today the Company announced that it will undertake up to $1 billion in share repurchases in 2010.

So I will now hand over to Anders Ekblom, our Vice President of Development, for an update on our strategy for building a value-creating pipeline.

Anders?

Thank you, Simon.

Good afternoon, everyone.

Over the next few minutes, I will address three topics.

First, I will talk about the 2009 R&D performance.

I will review the latest snapshot of the R&D pipeline, and in doing so, I will give you some flavor on the potential pipeline diversity over the few next coming years.

Actually changing from what I said, I will first start sharing my thoughts on our R&D strategy, outlining some of the key changes I propose to make and why we would like to do them.

As David and Simon have mentioned, the industry is operating in a challenging environment.

Healthcare decision-makers are applying every increasing scrutiny to medicine, and the cost-benefit equation is being redefined.

Additionally safety and efficacy were the key clinical hurdles we had to past, but increasingly health economics is becoming a major driving force in the success or failure of new therapies.

At the same time, breakthroughs in science are throwing up more new drug targets than ever before, and globalization is bringing millions more patients into the market for our medicine.

And, in addition, aging populations throughout the world mean an increased demand for our medicines.

2009 was a year in which the R&D organization at AstraZeneca made good progress on its priorities.

We made six significant regulatory filings, we shared landmark data for Crestor and Brilinta, and we gained approval of ONGLYZA with our partners at BMS.

Over the recent years, we have driven change in structure, productivity and cost effectiveness.

In 2009 is evidence of that bearing fruit.

But if I take a quick look at our recent history, it is clear that we have been through a period where we delivered two few transitions from Phase 2 to Phase 3 and consequently fewer products than we expected to the market.

We also need to bring our medicine through R&D more quickly in order to reduce costs in order to help our investments deliver an acceptable return for the shareholders.

The focus on speed of development is also more important than ever given the need to maximize the time we have to sell our medicines under the current patent protection.

There has been a lot of good work done, but I believe we can do more at AstraZeneca.

We have critically evaluated what we need to do to increase the rate of success in bringing new products to market and to tackle the rising cost of R&D.

We believe we have a strong foundation in many of the classical scientific disciplines required for successful drug development after areas where we can improve and add.

Simon explains some of the financial and people implications of the proposed changes to our R&D organization, and I will now go into a bit more detail.

Improving our capabilities in certain areas, focusing on disease areas where we believe we have the highest chance of success and the new proposed operating model, together with reducing R&D's global footprint, will collectively give our people the best opportunity to deliver medicines that are valued by patients, doctors, payers and shareholders alike.

So let me now touch on the capabilities we need to strengthen.

First, R&D is intrinsically a people business, and a core part of our plan is investing in enhancing the capability of our people.

Let me give you two examples.

First, we will build our capabilities in first line healthcare.

By identifying those patients who will benefit most from the medicines, we can increase the magnitude or treatment affecting in our trials and deliver to our patients.

An example of this would be Iressa, our targeted monotherapy that proved to be superior to conventional chemotherapy in first-line treatment of DFR positive non-small cell lung cancer patients.

This was achieved because we were able to identify the patients who would benefit from Iressa.

These days we demand that every project in our pipeline prepares the biomarker strategy outline in ways to identify the most appropriate patient for the drug.

Another example is improving our predictive science capability, which is our ability to predict the efficacy and safety, which would allow us to make early decisions about R&D investments and improve the probability of success for bringing the products to the market.

Both of these approaches will help improve probability of success in clinical development and help us target our investments more efficiently.

We need to see that all of these capabilities shown on this slide are core elements of the way we operate.

They need to become as natural and intuitive to us as the classical scientific disciplines that we master today.

In addition, continuous improvement using leaner Six Sigma approaches will drive further productivity improvements across R&D, as well business process outsourcing, strategic partnerships with other organizations and so forth.

Using these levers, we will continue to drive the change from an operating model with a high fixed cost base to a more flexible cost model where we can scale investments up and down pending other opportunities.

The final area I believe we can improve upon is the rigorous management of the portfolio to ensure that our resources are invested in only those projects with the best prospects.

Consequently, as part of our strategic review, we have also come back to the thorough assessment of the disease areas we operate in.

We reviewed each of the disease areas to assess whether that was the best potential for discover of the medicine, the level of unmet needs, ability to undertake efficient clinical development, competitive intensity, degree of pressure pricing pressures and any other unanticipated market access challenges.

Following this review, we remain focused on our current therapy areas.

So thus, it does not represent a change in our current therapy area focus, but it will require a change in emphasis between disease areas leading to improved prioritization within and across them.

We have been working the prioritized area will allow us to refocus our resources into those areas where we believe we can deliver the most important new medicines.

We will continue to look at new therapeutic areas via externalization, ensuring that we optimize our own assets and look at in-licensing opportunities where we believe we can find further value.

This thorough review of R&D lead us to recognize that we also need to redefine our operating model to give our people the best opportunity to deliver the medicines we need to deliver.

There are three elements to this operating model.

First, the formation of eight innovation-focused innovative medicine units that will call for [IMEDs] for simplicity going forward, which brings together discovery and early development with one single aim: to deliver valuable medicines ready for late stage development in the disease area of focus.

This integration will ensure a clear line of sight and accountability to deliver opportunities for late stage development.

Each will be responsible for sourcing innovation from inside and outside their walls and demonstrating that innovation can deliver valuable medicines to patients prior to progression in delayed development.

Some of these IMEDs will be focused on small molecules, and some will be focused on biologics.

They will be funded based on performance and opportunity.

Investment will be reviewed on a rolling business case basis by the newly formed senior level governance group that David described earlier.

I would propose that will help drive a healthy attention between internal research spend and external opportunities, ensuring that investment in one is traded off against investments into the other with the goal of delivering potential new medicines against agreed targets.

This is an important change.

Late stage developments will be undertaken by one single global medicine's development organization.

Global medicine's development will provide us AstraZeneca with a global and highly efficient development platform capable of conducting trials in the highest quality for both small molecule and biologics and will provide a competitive advantage in attracting external partnerships.

And finally, all the R&D investments will be overseen by the new senior-level governance group David described.

It will, I believe, bring greater clarity to our R&D investments and decision-making and will be accountable for all major R&D investments across the group.

This new model will allow us to more rigorously manage our portfolio and ensure that our resources are invested in only those projects with the best prospects.

The push toward greater efficiency also drives us to consolidate our R&D activities on a smaller footprint globally.

This proposal will potentially lead to closure of some of the R&D sites, which I recognize will be impactful for many of our people, and we need to ensure that changes are handled with sensitivity.

We are now entering into a period of consultation with employees, trade unions and other relevant stakeholders.

Before changes are finalized, I am unable to provide you with more detail today.

The impact of these proposed changes will be a gross physician impact of 3500 predominantly but not only within R&D and a net reduction of about 1800 physicians.

They have been on a journey of improving time, cost and quality in R&D.

Now this is our next step in this evolution.

We truly believe that we will emerge from these changes as a stronger and more productive company with greater innovation in our labs and better ability to get the innovation to market quickly and cost efficiently to meet demands.

Because that is automatically what we are here to do in AstraZeneca.

And through 2010 clearly looks like a year a change from an organizational perspective, it is also a big year from a product perspective.

So let me now take you through some of the highlights of 2009 and illustrate what our current R&D portfolio looks like and give you a flavor of 2010.

2009 was a productive year for AstraZeneca.

We had six key approvals in the last 12 months.

We launched ONGLYZA in the US and Europe, Canada, Brazil and Mexico.

ONGLYZA is now approved in 36 countries with submissions to 50 countries.

Partnerships like this one with BMS is important for our business going forward.

As David already mentioned, we were the first company in the US to supply H1N1 swine flu vaccine, and this is a good example of the skilled biologics capabilities we have at MedImmune.

In December Seroquel XR was approved in the US as a joint therapy in major depressive disorders in adults.

We also received a new complete response letter for its use as acute and maintenance monotherapy in MDD, and we are currently evaluating this PRL.

Following delivery of the IPASS trial, Iressa was launched in Europe for patients with locally and advanced metastatic non-small cell lung cancer with activating mutations (inaudible).

We also successfully gained approval for Symbicort COPD indication in the US and in China, and we are now in China listed on the national reimbursement drug lists.

Symbicort was also approved for the use of treatment of asthma in Japan, and we launched earlier this month.

The development plan for COPD in Japan has been agreed with the regulators, the PMDA and will progress shortly.

One of the most exciting events during 2009 was the presentation of the positive Phase 3 PLATO results for Brilinta, our antiplatelet drug for acute coronary syndrome.

Cardiovascular disease accounts for more than one in four deaths worldwide, and while ACS treatment has improved with therapies such as Plavix, there is still a huge medical need to fill.

We believe Brilinta can help address that need based on the results of the real world PLATO study in patients with ACS and which demonstrated significant reductions in cardiovascular events compared to Plavix.

We submitted regulatory filings in Europe and US during the fourth quarter last year, and in the US it will undergo standard review with PDUFA date of September 16.

In Europe we will use the trade name BRILI.

Turning to Crestor, in April 2009 we filed an sNDA in the US to update the Crestor label to include the data from the JUPITER trial.

On the 15th of December, we had a successful FDA advisory committee meeting, which culminated in supporting both for a positive benefit risk based on JUPITER.

We are now engaged in final labeling discussion with the FDA, and we hope to conclude those discussions in the near future.

The next three products are fixed dose combinations for therapies that are clinically proven in their field.

It has been there are 29 million adults in the US alone, who despite their current lipid lowering therapy, do not reach their target as recommended by guidelines.

Some of these patients have LDL predominant disease, and other patients we believe benefit the best from Crestor.

Approximately 2 million have mixed dyslipidemia with abnormalities in LDL, HDL and triglycerides.

These patients are the target population for Certriad, which is an investigational product containing the active ingredients of Crestor and Abbott's fenofibric acid, TRILIPIX.

We believe this product has significant potential in the lipid lowering market.

(inaudible) our combination of entry-coated naproxen and immediate release esomeprazole for the relief of arthritis pain.

Approximately half of the 150 million patients suffering from osteoarthritis worldwide are at risk of developing NSAID-associated ulcers, and this is the opportunity for Vimovo.

During the second half of last year, we reported the positive Phase 3 results of Vimovo, showing a greater than 70% reduction in endoscopically concerned gastric ulcers when Vimovo was used compared to naproxen alone.

Importantly, this benefit was maintained even in the presence of low-dose aspirin, which is an important point that many of these patients are elderly and may have cardiovascular comorbidity requiring aspirin therapy.

Based on these results, the US NDA was submitted in June 2009 and the MAA in October.

Our ONGLYZA metformin once daily combination has been tried in the US, and we anticipate filing in Europe later this year.

Fixed dose combinations of DPP-4 inhibitors with other antidiabetic agents are increasingly used in the management of diabetes, and we believe that this addition will help us drive the continued uptake of ONGLYZA.

Finally, we showed that in advanced breast cancer 500 mg dose of Faslodex increased the time patients live without evidence of disease progression versus the currently proved dose of 250 mg.

The data has been submitted both in US and Europe and from the datas of our first filing of Faslodex in Japan.

We are delighted that the CHMP have issued a positive opinion on Faslodex 500 mg dose change, and we anticipate final approval by the European Commission towards the end of March.

In addition to this pipeline progress, we have added five new projects to our late stage pipeline, namely Olaparib for advanced breast cancer, Ceftaroline for pneumonia and complicated skin and skin structure infections; NKTR-118 for opioid-induced constipation, and TC-5214 for the treatment of major depressive disorders.

Our anti-infective portfolio has also been strengthened by the acquisition of Novexel towards the end of last year.

I believe they demonstrate our commitment to access the best new medicines from either internal R&D or external sources.

What they all have in common is the potential to bring real benefits in areas of significant unmet need and will, therefore, drive future value creation for our investors.

Given that some of this is new to you, let me spend a couple of minutes on each of them.

Firstly, we have Olaparib, our novel PARP inhibitor, which appears to provide considerably anti-tumor effects in patients with mutations in the BRCA gene and has also the potential to enhance the effects of chemotherapy.

The slide shows the results from our Phase 2 study in advanced breast cancer patients who have the mutation in the BRCA gene, and I'm pleased to announce that the first Phase 3 trial with Olaparib in patients with BRCA-mutated breast cancer will commence towards the middle of this year.

The study will involve about 300 patients, and we are currently undergoing regulatory consultation to ensure that our development and diagnostics strategies meet the requirements of the regulators.

The study will commence as soon as these are complete.

Assuming a May 2010 start, we would anticipate regulatory filing for this indication from late 2012.

We also anticipate additional Olaparib data to guide further Phase 3 investments during the year.

TC-5214 is an exciting new approach for the treatment of major depressive disorders or MDD.

MDD is a common disease.

Research has shown that the majority of patients who are treated with first-line SSRIs do not achieve adequate control from their initial therapy.

The Phase 2B trial in patients had inadequate response to initial therapy showed that TC-5214 improved the (inaudible) depression score of patients by 6 points more than placebo when added as an adjunct to their current therapy.

Secondary efficacy endpoints were also significantly improved by TC-5214.

We and our partners at Targacept are currently finalizing the global Phase 3 program, which we anticipate starting mid-2010, and we anticipate filing for an NDA in 2012.

We will also explore its potential as the monotherapy in a Phase 2 study in MDD.

In September we entered into worldwide license agreement for NKTR-118 and -119 with Nektar Therapeutics.

NKTR-118 is an oral peripherally acting opioid antagonist and an investigation for the treatment of opioid-induced constipation.

It is estimated that 40% to 90% of patients who take opioids for pain management will develop complications.

Less than half of those patients find effective relief from treatments available.

Phase 2 studies demonstrated that oral NKTR-118 increased the frequency of bowel movements in patients with opioid-induced constipation, while importantly preserving the opioid-mediated analgesia.

We anticipate initial regulatory filings in 2013.

During the latter half of the year, we in-licensed Ceftaroline from Forest for countries outside US, Canada and Japan.

This is a next generation cephalosporin which has broad spectrum coverage, including some resistant pathogens such as MRSA and multi-drug-resistant streptococcus pneumonia.

We have seen impressive Phase 3 data in both community-acquired pneumonia and complicated skin infections, and we are currently discussing with regulatory agencies to make initial filings in Europe into the third quarter this year.

Our presence in the anti-infective arena was further strengthened in December with the acquisition of the French biotech company, Novexel.

This deal gives us access to Phase 2B fl-lactamase inhibitor, which we believe has excellent coverage against the spectrum of B fl-lactamase present.

It allows us to maximize the potential of Ceftaroline, strengthen the collaboration with Forest, and gives us actually the potential to breathe new life into previously leading antibiotics like Ceftaroline through which the systems have emerged.

As you can see on this slide, the combination of these agents of this promising scope to treat infections caused by a wide range of pathogens, including some that are increasingly hard to treat, and we hope these agents will have the confidence to get the right treatment to patients the first time.

Despite the number of therapies for patients with Type 2 diabetes in recent years, there remains a significant need for more efficacious and complementary therapies to help improve glycemic control, address important comorbidities such as obesity and decrease the complications of those.

Dapagliflozin is an exciting new therapy in a new class of potential antidiabetic agents that works by promoting glucose excretion through the kidney thereby improving glycemic control.

Interestingly its mechanism of action is completely independent of insulin and its effects and as such could potentially be a utility at any stage of the disease in combination with any of the current available therapeutic options in diabetes.

Initial data from the first two Phase 3 studies showed HbA1c lowering consistent with other oral antidiabetic agents.

It was accompanied by a beneficial effect on weight and blood pressure.

We believe that this combination of effect is unique and differentiating from current therapies available in diabetes.

With regard to safety and tolerability of ROW, we have reassuring profile including rates of hypoglycemia similar to placebo.

We have seen an increase in signs and symptoms suggest that they were genital and urinary tract infections, and these events were generally mild to moderate in severity, managed according to use of clinical practice, and rarely lead to treatment discontinuation.

Not all these events are proving infections, and the numbers reported to date are likely to include some events associated with the mechanism of Dapagliflozin rather than necessary in the infected course.

This is obviously something we are going to investigate further, and we are waiting for all the Phase 3 data to come in during the year.

All [Tiralta] Phase 3A studies have now completed their treatments, and there's more new data to come during 2010 prior to making initial regulatory submissions in the latter part of this year.

We continue to plan for global submissions in the fourth quarter.

In December 2008 the FDA revised their guideline for the development of registration of new treatments and Type 2 diabetes including specific analysis to rule out unacceptable cardiovascular reach.

The timeline from the NDA staff is contingent upon accumulation of sufficient events within the development program to comply with these FDA guideline requirements.

As a reminder, Recentin is an active molecule position in the commercially attractive anti-angiogenic market.

We have two Phase 3 trial starting with Recentin in combination with chemotherapy in first-line colorectal cancer, one against placebo and the other head-to-head versus the market leader, Avastin.

Avastin head-to-head study is designed to test for both superiority and non-inferiority of the primary endpoints.

Delivering superiority to Avastin would be a major breakthrough for patients in this disease, but it is also obviously high risk.

However, we also believe that non-inferiority scenario could be a valuable commercial outcome, depending on the full data package.

All the regulatory challenges will be increased.

Data is expected from both the studies, as well our glioblastoma Phase 3 studies, REGAL, in the first half of 2010 with possible data leading to submission in the second half of 2010.

So putting these changes into context of our overall pipeline, we can see significant growth in the overall size of the last five years.

We now have a size and distribution that we expect to maintain for the next coming years.

We have reviewed the pipeline and taken the decision to remove 20 clinical projects that we do not still have sufficient probability of delivering an acceptable return on investments.

Good examples will be the discontinuation of the two first-class compounds: AZD9056, a P2X7 receptor antagonist and AZD5672, a CCR5 receptor antagonist.

Both failed to meet the efficacy hurdles we had set for them.

Today the portfolio has 146 projects for which 103 are in clinical development.

Of those projects in Phase 1 and beyond, 19% are biologics, 55% are first-in-class, and 31% are sourced from external sources.

However, R&D is about investing in the right business cases to move projects through development, and that is the underlying reasons for the plants I have already outlined to you in our proposed operating model.

It is not only about numbers obviously.

I believe that 2009 is good evidence of the progress we have made with our late-stage pipeline, and this chart emphasizes this further.

We chose the potential first major filings with each new product, and thus, it does not include filings by country and does not include projects where we have already made the first major filing.

We hope to file Recentin for both colorectal cancer and glioblastoma during the year.

I have already mentioned to you that we plan to make initial submissions for Dapagliflozin and Ceftaroline later this year.

We also see the potential for us to make an additional 13 significant filings over the following four-year period to the end of 2014.

You will notice that these are a mix of in-house and external opportunities and span all the therapy areas of interest to us.

One of those with potential for filing in early 2011 is Zibotentan.

Zibotentan is our oral, once daily Endothelin A receptor antagonist that we are developing in both metastatic and non-metastatic castrate-resistant prostate cancers, which fits well with our Casodex and Zoladex experience.

Treatment for advanced prostate cancer typically involves hormone manipulation with agents and ultimately chemotherapy.

Zibotentan potentially offers a new treatment for patients who have become resistant to their hormonal castration treatment, and we anticipate seeing the first Phase 3 data in the fourth quarter this year.

As you can see, we have the potential to bring a number of new medicines to the market in the coming years, and we will continue to look for additional opportunities to supplement the pipeline.

So to summarize, 2009 has been a busy year with delivery of a number of new medicines and submissions of another six regulatory filings.

We have bolstered the late stage pipeline with four exciting new opportunities, and we see the potential for significant number of new medicines over the coming years.

We have realized that we need to do more to ensure to create value for our shareholders, and I'm confident that the strategic proposal I have outlined to you today will give us the best opportunity to accomplish that.

Our plans amount to complete rewiring of R&D to form one coherent value-driven research and development platform that I believe has the potential to put us in a good position to meet our R&D target to deliver on average two new drugs per year.

With that, I would like to give it back to David.

Thank you, Simon.

Okay.

Time to move on to Q&A.

(Operator Instructions).

I just want also wanted to remind everybody we have a few other members of our management team here: Bruno Angelici, who has run the rest of world business outside of North America, Tony Zook is here who runs North America and has taken on more, and Jeff Pott is here, our General Counsel, as well as a few other folks.

So hopefully we can answer your questions, but that's probably where we ought to start.

So, Alex?

Alexandra Hauber, JPMorgan.

Three questions.

Firstly, thank you very much, first of all, for giving us 2010 to 2014 outlook.

That is quite helpful.

But I still have a few questions on that.

Firstly, just to get the R&D spend roughly by product, you should give some sort of guidance.

Firstly, on the CapEx directionally, this is down this year.

Is it going to be -- should we assume that is roughly flattish, or is it in that period where you will have to make further investments in something like the biologics because at some point you should get biological products?

So just the direction of the CapEx spend.

And also, given that you are doing these cuts in the R&D organization, should we assume that the external part of the R&D is going up?

And the second question is on the revenue guidance.

You say you aspire to the top end of the $28 to $34 billion, but aspiration is obviously not a commitment.

So I was wondering what needs to happen so you to get to that $34 billion?

Is it that some of the probability -- you said the pipeline and forecast that probability adjusted, is it that these probability adjustments need to go away, those risk adjustments need to go away, or are those things such as growth rates in the emerging markets?

What is the bigger variable here, or do you have something else?

And then the third question is on the pipeline and those filing timelines you gave us.

There was still no MedImmune biological on those two filing timelines in this 2010 to 2014 window.

So would you suggest to me that there were delays from where we were originally expecting things to be at least in December 2007.

So have there been any delays, and when should we expect the first MedImmune biological to come to the market?

And another product, which was not on the list for the filings, was 837.

Can you comment on where we are on that one?

Thank you.

Good.

Well, Simon, do you want to maybe make a couple of points about the R&D spend guidance and CapEx, and is the external R&D spending going up in the context of our overall guidance?

Thanks for the questions.

We have framed our planning assumption over the five-year period.

That is reinvesting 40% to 50% of our cash flow back into the business to drive future growth in value.

Exactly where we sit within that range will depend a lot upon the nature of the opportunities that we see.

But I think that the track record over the last couple of years shows that we were very actively pursuing externalization and then licensing opportunities, and I think you will continue to see that as a very important part of our strategy as we go forward.

So one part of your question, do we expect externalization to continue to be an important part of R&D and potentially nudging up -- I'm sorry?

Does it become a logical portion of that 45% which you're going to -- assuming (inaudible) right now, is that going to grow?

It will depend very much on the opportunities that we see, and I think the pace of externalization that we have delivered in the past 12 months we would like to see those sorts of opportunities as we go forward.

In terms of CapEx, we've spent over the last couple of years somewhere roundabout the $1 billion, $1.2 billion sort of level, and I expect that to be a number reasonably around that range going forward and expect maybe a change in the level of capital investment in the business.

The mix may change a little bit actually from tangible assets to include information technology, which is a very important part of driving productivity in the business.

So I think that is the two specific questions on the other components of the reinvestment.

On revenue we are obviously confident of our ability to deliver within our planning assumptions, the range that we provided, and we absolutely started the top end of that by the end of the period.

There were three critical drivers of that.

One is that we sustain our record in growing the market share of brands where we have got exclusivity.

And I think you can see we've got a very good track record of doing that.

You saw that from the growth in brands like XR, Crestor, Symbicort that we reported in '09.

Secondly, getting to that top end, we will need to see continued growth in double-digits in our emerging markets.

We have been growing in the early to mid-teens over recent years.

We think we are very well positioned in those markets.

We have made very substantial investments in terms of our infrastructure, commercial infrastructure, and we saw that in the fourth quarter of '09, and we believe that that will continue to bear fruit.

We have been positioned amongst the fastest growing in all of our emerging markets in recent years, and we don't see any reduction in that momentum.

And then thirdly, I think you saw we have now got a portfolio of almost a dozen projects that are in either just launched in the case of ONGLYZA in our late stage and taking a reasonable risk adjusted view of those.

We actually can see those delivering the $4 billion to $6 billion by 2014, and those are the key components that get us to the top end.

On MEDI we are going to look at some data actually on a project in the next couple of months to decide whether it goes into Phase 3, in which case it probably would hit in the period.

We just have not seen the data yet on 545 in Lupus, and we have also got our flu vaccines registered -- well, filings now going on globally.

We filed in Asia and in Europe, so we are hoping to get those approved over the course of the next year.

Tony and Peter are here.

Are there any others -- and motavizumab is also under review at the FDA now.

We have done the response to the CRL.

So there are a few things coming along, and there are a number of projects in Phase 1.

And, as Andrew said, I think in early Phase 2 19% of that portfolio is in biologics.

Andrew Baum, Morgan Stanley.

Just two questions.

If I understand, you have set a particular course within R&D inside the organization, and yet when I look from the outside you do not have a Head of R&D as a pharma, as far as I am aware.

You do not have a Head of Discovery.

And you have taken your R&D headcount or you will do take it down by about 15% over the next four years.

So my question is, how do you reconfigure, how do you see the structure of R&D going forward in terms of the management structure?

And are we looking at an internal solution to this or an external, and if it is an external solution, then does the dynamic and the fact that you have already set the course create any potential difficulties in attracting the correct candidates?

The second question is on the $4 billion to $6 billion that you identified as being potential revenue target.

Perhaps you would care to maybe break it up for us into how much comes from yet to be identified in-licensing opportunities, how much from emerging markets?

I know it is a tough question, but maybe some indication of the magnitude of the various components would be helpful.

Alright.

Well, let me cover the R&D situation.

We did have a resignation of the Head of Discovery back in November, and we have taken that opportunity to benchmark our internal candidates against external candidates as to think about what is the best way to go forward, and that process is well underway.

It does fit to some degree with the approach we have taken with the restructuring of R&D because we have the management teams very involved.

The focus is on integrating the discovery and early development groups into these innovative medicine units that Anders has talked about.

And I think, as we talk to people about the opportunity, we are making it very clear that we have got some things underway to make sure they understand they were to join us from outside what they -- what we have already -- what we have done so far, if you will, to do that.

I have not sensed yet that that has not been -- affected attractiveness.

I think the attraction is whether or not somebody wants to come in and take a look at that segment of our business and see if they want to run it.

So I have not sensed that we've lost any ground as a result of that.

And we felt that because we had already undertaken to start to make the changes in R&D, that in talking with the management team there and amongst ourselves as the leadership, we felt like we had a pretty good handle on what was going on and could go forward.

So I think we are ultimately going to have a slightly different integration approach from the innovative medicine unit level, and that will affect the leadership of that group.

And that is going to happen relatively soon I hope.

In terms of the $4 billion to $6 billion, the quantum is a view across both recent launches in the pipeline and potential further additions to that pipeline.

I set out the 12 projects which feature most prominently in that in my presentation.

When we look at each of those projects, taking a very hard look at their regulatory technical, commercial success, we think that the basis of that is very much in line with what the industry has achieved in those particular areas.

And that brings together to the $4 billion to $6 billion.

It is fair to say that most of that in the planning period is going to be in our Western markets, which is typically where we launch first, rather than stronger contributions from the emerging markets.

But I would not unpick the $4 million to $6 million more specifically in that at this stage.

(inaudible), Exane BNP Paribas.

Thanks for the long-term guidance.

Apparently the consensus stands around $28 billion in sales around 2014, and you have a pretty detailed view of where consensus is sitting by product.

Are there any products where there will be a material difference between your view of what they will be in 2014 and our consensus view?

Could you help us with this, please?

And secondly, more on 2010 could you share with us what is your scenario for Nexium and Symbicort in Europe?

Simon, do you want to take the 2014 guidance question, and then maybe I will ask, offer Bruno to comment on Symbicort and Nexium in Europe.

I think the consensus of $28 billion, I think that is something that we had seen from the collections we have done.

Looking across the portfolio, we feel that particularly in the emerging markets and the businesses outside the more closely followed markets such as the US and one of the major European markets, we think that our potential to drive strong growth may be underestimated, and that is across the portfolio.

It is like a geographic variant as opposed to a specific product variant.

We also see across the brands where we have got exclusivity we feel that the track record we have got in growing share with strongly differentiated brands across the portfolio may be somewhat underestimated.

And, in addition to that, we obviously have a high degree of confidence in the delivery of the pipeline that we just described.

And with the breadth of projects that we have to drive revenue growth, the overall portfolio effect of that may be underestimated.

Do you want to comment on --?

Again, on Nexium we lose our data exclusivity in March this year.

So then we -- you can assume that during the course of the year there will be general accounting.

That is our assumption.

In the case of Symbicort, we lose the data exclusivity for the substances in the fourth quarter of this year.

And our assumption is that the generics will come in during -- within the next 12 months but not earlier than that.

You should know that the asthma market and fixed combinations were device-driven, and in our case we had the Turbuhaler device, and to that we have patent expiry until 2017.

We think -- we know when the exclusivity goes.

You cannot say exactly when generic transfers, but the assumption for Nexium is 2010 and for Symbicort is during 2011, late 2011.

We will take one more here, and then I will go to Tim Anderson who is on the first line.

Why don't I just go back there?

Mark Purcell, Barclays Capital.

The first question, health care reforms outside the US.

What are you factoring in there in terms of your guidance?

Secondly, on Crestor can you discuss the net pricing at the moment for Crestor and your outlook for that going forward in the next few years?

Three, you seem to be confident in the patent protecting Seroquel XR in the United States.

I just wondered if you could comment on that.

And then lastly, the PARP inhibitor, I just wondered how ambitious your Phase 3 programs could be.

There could be clearly a much wider use of that product than you currently have focused on.

Okay.

I will let you get to the PARP inhibitor in a minute, and you guys can handle maybe the Crestor pricing, Tony or Mark.

You know, outside the US each year we take our best guess at what we think the government interventions will be.

A couple of years we have been on, a couple of years we -- you know one year we underestimated, one year we overestimated.

So we have a rounded accommodation, and I cannot put a number out there for you.

But given the economics circumstances, we will definitely continue to get an increased pressure in those markets, especially in Europe, and I think it's more evolutionary than revolutionary has been our experience.

It is kind of incremental change.

And regarding the XR patent in the US, I mean we have a patent.

It has been challenged.

We believe that we've got a good position with our patent, and we are going to continue to defend our intellectual property there very vigorously.

So we feel strongly about that one.

Do you want to do the PARP inhibitor, and then I will ask the guys for net pricing on Crestor.

Yes, I mean, as you saw, the PARP inhibitor, it is quite unique and interesting sales.

Because, as I tried to say, there are two opportunities.

One going down the BRCA route, which is very specific for the repair mechanism, but also it can be used in conjunction with chemo.

And it is that latter part where we believe we are going to expand more.

And, as I said, we are going to go through this during the year.

So I would expect an expansion of the program going into different opportunities.

And, of course, you have the triple-negative BRCA where we have the competitor compound going down.

So I would anticipate the program to expand into various indications both bracket-specific, as well as with chemo.

And Tony, on Crestor pricing?

Relative to Crestor, I would tell you that going into 2010 our access rates have actually improved.

They were pretty high to begin with, and now they have improved further.

Relative to net price, there has not been any significant change in the net price.

In fact, it has been relatively stable the last few years.

This year we consider it to be stable if not up slightly in base.

Go to Tim Anderson on the phone.

A couple of questions on guidance.

If you were to end up hitting the top end of your revenue range for 2014 and operating income margin range, it implies that revenues would be about $1 billion higher than they were in '09 and operating income would similarly be about $1 billion higher, which is not really with anyone models.

And if that is achievable, then your stock is massively undervalued at current prices, in which case it would seem like you should be taking every last cent you have to do share backs, but I don't really see that happening.

And I'm wondering how I read into this in terms of the confidence -- your confidence in your new guidance.

The second question is, in that guidance you talked about returning to more consistent revenue growth downstream at 2014.

In that timeframe, my model has Crestor absolutely dominating the P&L and being much bigger than any other product.

But if my information is right, that drug goes off patent in the US in 2016, and I'm wondering how that is congruent with saying that you will have more stable revenue growth?

Okay.

Simon, do you want to take the guidance issue and the share buyback and our position on where we are?

Certainly.

The guidance range that we provided does, indeed, paint a scenario where we are at the top end of our revenue range and sustaining the sorts of operating margins that we provided in our guidance.

And, as we've laid out, have a high degree of confidence in our ability to deliver within those planning assumptions.

If we turn to the buyback program, we are very pleased with the very strong cash generation of the business in 2009.

We have entered 2010 with net funds of $0.5 billion, and on the back of that, that is a function of the very strong focus we have put on cash as a business over the recent past.

We are pleased to review the share repurchase program, which you recall we ceased back in October 2008.

We have also announced today we will see $1 billion of share repurchases during the course of 2010 and also that the board will keep under review the opportunities for further cash distributions as we go forward.

And we will, as I said, keep that very firmly under review.

And as for Crestor in 2016 and what the line will look like, Tim, appreciate it.

We have gone out to 2014 with our best guess on a revenue corridor.

We are not going to go out to 2016 at this point.

So I understand your question, but 2014 is as far as we are going to go right now.

I have two questions.

The first question is on Crestor and essentially the court case which I believe will now start in late February.

Are you planning for that to be relatively short trial given that the judge presiding on that case is due to retire towards the end of July?

Or is there any -- can you paint a picture, is there any precedent where maybe the judge will just hand down to someone else before the trial starts?

What is your planning around that situation?

And secondly, if I'm not mistaken and it could be just a coincidence, you chose to report core EPS because you thought that will be a more representative number to give to the market to represent the business performance.

If I look at core EPS and reported EPS, actual growth 24% on both counts and CER growth 23%.

Is it about time to drop that or --?

I am going to let you come back to that.

Jeff is here.

Jeff, do you want to make a comment about where we are on the Crestor case and your view on Judge Farnan's announcement.

Yes, the trial date is set for February 22 and with the Judge Farnan.

We expect the trial to go off on February 2010 in front of Judge Farnan, and we expect Judge Farnan to issue a ruling before he retires.

On guidance -- I mean core EPS --

Core EPS (multiple speakers) an important metric through which we manage the business.

It looks quite closely at the cash operating performance of the business.

It excludes restructuring and the last even impact of restructuring.

It removes the impact of the MedImmune and Merck acquisition and the intangibles associated with that, and obviously in the course of this year, there was a legal cost that went through.

We think that the management purposes core is a very important measure to drive the business.

Clearly reported also a metric we do look at.

I think the fact that they happen to be in line this year coincidence rather than a fact that will cause us to change where we focused the business and where we provide guidance.

Citi.

Two questions, one on restructuring.

Simon, how much of the $1.9 billion would you expect to make it to EBIT, and how much of that roughly do you expect to reinvest in order to drive the top line?

And secondly, how do you motivate the organization when you're going to take 15% of the workforce that is actually not going to be there, how do you get that done quickly and efficiently so some sort of a timeline when you will be able to say we now know who is not going to be here and who is going to be doing something else?

Well, I will start with that one.

We have been -- had a restructuring program underway for the last couple of years, and I think the key from my perspective is to have strong leadership who can deliver the messages to people about why we are doing what we are doing and how we are going to go about doing it.

And it has also been my experience that the more quickly we are able to do it, to identify where we are going to make these changes and who is impacted, the better off we are.

So people understand who is in and who is not going to be there.

And so we will work very quickly.

We will meet with our top 115 leaders almost immediately following this meeting to have our leadership discussion about what we need to do in the business.

But starting today actually honors people in the discovery management team who are currently being led by [Krista Coler] temporarily for the few months while we have the opening, are already meeting with people to start talking about what is going on.

So you're absolutely right.

It has an impact.

We have seen it over the last couple of years, but we try to get people focused on making sure we know which projects we are trying to move forward, what the timelines are, what the resources required are and try to hold people accountable.

And I think we saw actually in the R&D organization this year some very good progress and milestones and accomplishments in hitting or exceeding some targets.

When we look pre-Phase 2B at just some of the things that have happened, it is the best year we have had in 10 for progressions, milestones, improvements in efficiency, etc.

So I think when we can be clear with people and when we can focus them on the work that needs to be done, a lot more does happen, but I don't underestimate the impact this has on the organization, as I said before.

We really don't take it lightly, but, as we look on balance at what we need to do to move our business forward, we need to take some of these decisions not so much for today but for a few years from now when we recognize that we just are going to be in a much different environment.

Do you want to take the --?

Sure, Kevin.

The extent to which we reinvest a portion of the 1.9 back into the business will depend obviously on the opportunities that we see as we go forward.

Having said that, there are two areas where we will be making some reinvestments, and one is in the area of R&D.

So we explained that we are taking out about -- 3500 positions are being impacted, although the net will be close to 1800.

And that is a reinvestment in capabilities and also in biologics.

We will continue to make investments in our emerging markets, and you saw that to some extent an early investment in that regard in the fourth quarter.

So there will be some reinvestment.

If I compare it to the first wave, I suspect it will be less reinvestment proportionally than you saw in the first wave.

There is an e-mail question.

Do you want to take that one, Simon?

It was a question about the average risk adjustment factor for the risk-adjusted revenues of $4 billion to $6 billion that you have in the $28 billion to $34 billion.

Yes.

I mean I think I will not give one single number on risk adjustment.

I think what I would guide you to is to look at the opportunities that we have.

It is very clear which have been launched, where we have got filings, which phase of development they are in, and the risk adjustment factors are very much consistent with what you would find for equivalent therapeutic areas across our sector.

So I would direct you to look at that.

We will take one more on the floor here, and then we will take a phone call.

Michael Leacock, RBS.

Just one question, if you don't mind.

In terms of your strategic initiatives, can I just clarify that you mean when you say, including branded generics, that solely refers to the emerging markets business.

And then within that business, if that is correct, what skills do you currently have in that area, and what will your competitive advantage be to maybe to use that as a driver of growth?

Okay.

Well, yes, that is focused -- it is a market-driven or regionally-driven strategy.

It is not something that applies across all markets just because of the reimbursement systems and the recognition of where branded generics fit.

Where they do, it is similar to the personal selling model that we currently have in place.

I mean it is promoting a product that is branded under the AstraZeneca umbrella, which is why I said we will -- where it makes sense for us to do it and it fits under our brand, we will do it.

The core capabilities have more to do with marketing and selling.

There are some differences to be fair.

Bruno has led a significant amount of work in this area to point out some of the differences in terms of how we make decisions on products to move more quickly when they are not responding, etc.

than we would normally do with our branded products.

But generally I think we are moving forward.

We have got this going already in India.

We have hired a couple of hundred people.

We've got I think some 10 or 20, maybe 30 products out already.

So quite a bit has happened.

Let me take [Boa's]* call and then I will come back to you, okay?

On the telephone.

Are you still there?

Going, going -- okay, back to you.

Sachin Jain, Merrill Lynch.

A few questions, please.

Firstly, as you reviewed your dividend policy share buybacks, just remind us of what you view as an optimal balance sheet structure given that your forecast is leaving you in a healthy net cash position?

Secondly, a very specific product question.

On the third-quarter call, when you talked about a potential Brilinta aspirin relationship, I was wondering if you can update us on any additional findings from that?

And then finally, you have stratified your therapeutic categories with attractiveness in R&D.

I am just wondering if you can give us some color on what your view is, the most attractive in what you are doing and what you view as the least attractive?

Alright.

Good.

Maybe you want to take Brilinta and the most attractive, least attractive discussion in terms of our investment?

And then, Simon, I will go back to you on the balance sheet structure and the dividend policy.

I will clarify it.

Most and least attractive, was the disease area specific projects, or what were you hinting at?

Therapeutic areas.

Therapeutic areas.

Okay.

Fine.

If I take Brilinta first, as I've said, we filed late last year, and we now have a PDUFA date in place, and it is a big file with fantastic data coming forward.

We also talked about last time that there could be different reasons for these so-called North American cohorts.

It could be a play of chance.

You could be in an association with aspirin or it could be something else.

We are exploring this with the executive committee, and we are preparing for publishing those results.

I do not want to go into any details now because that would jeopardize potential publications.

But you'll just have to bear with us a bit longer.

With respect to the therapeutic areas, we still find all of them attractive.

So what I tried to say we are saying that we are still with the therapeutic areas, but within them we make a consolidation on the disease areas within them.

We have to make a distinction between CA and DA.

But the therapy areas are still good to us, but within them we would see a pruning of about 25% of the disease or disease areas we are in now would not be there, and we would focus on the remaining 75% and build on the strength.

Do you want to comment on which are most or least attractive?

You may not want to, I don't know.

I would say I think they are all of interest.

I do not want to pick anyone out.

I love them all.

I mean you can see we have been pushing hard into infection.

Still fantastic to make a change with the target set opportunity in MDD, which is a horrible disease.

Recentin in glioblastoma.

I think we are where we should be.

I do not want to pick one or the other.

I would rather say you are in or you out, and these ones are in.

There are other tiers where we are not, so that is where the heart is right now.

Okay --

Capital structure.

I'm sorry, yes, capital structure.

I think we currently clearly have a very strong capital position as we go into 2010 with net funds of $0.5 billion, and we do expect the group to continue to generate significant cash flow through our planning period.

And we described the strategy and assumptions around reinvestments of that to drive the business going forward.

And clearly that which is not invested in the business is available over time for meeting our debt repayment commitments but also providing distribution to our shareholders both through a progressive dividend policy and share repurchases.

I think it is too early in this planning period to predict the optimal capital structure for the end of the period.

I think we have laid out very clearly the cash generation strategy and the focus on a progressive dividend policy and distribution to shareholders.

Three questions, please.

(technical difficulty)-- your working capital last year, bringing in over $1 billion.

Can you tell us what the opportunities will be over the next few years?

I guess you have got a growing business in emerging markets.

If that grows more strongly, what will that do in terms of both the normal ratios in the P&L and in terms of working capital?

Can you also tell us a little bit more, you mentioned a collaboration -- more increased collaboration with payers.

Is this going to take us down to sort of pay for performance route?

Have you actually got any examples of things that you have done there, examples going forward?

I'm particularly interested, I guess, in how you defend Crestor post-Lipitor patent expiry if there's anything you can put in place there, Crestor being so important?

One tiny little accounting question.

I see in your cash flow that you have got a disposal of intangible assets with $270 million-odd of income.

Was there any profit associated with that, and if so, where would we find it in the P&L?

It is always easy to take costs out.

It is important to take out profits, I guess.

And the final thing, if I can push my luck, how would you differentiate your PARP inhibitor from the [BIPAR] one?

Is there anything that is significantly different about your compound to theirs?

Okay.

Why don't I just take the payer question?

I will let Simon comment on working capital in the emerging markets and some of the impacts on that, and I will let Anders comment on the PARP inhibitor.

I mean I think our view on the payer situation is, when we take a look at the level of sophistication of payers, if you take a look in the US and you pick up some of the companies like Medco or UnitedHealthcare who have these tremendous technology platforms that allow them to go in and look very differently at product utilization, at some elements of what should or should not be on formularies from their perspective, and we see this in a few other countries around the world about a capability that is developing; we recognize that we need to be in discussions with organizations like that and leadership like that at the front end in the Phase 1/Phase 2 category when we are looking at what are the differentials that we believe will matter to people who make the decisions about creating access through being a payer.

And while we have done some of this in the past and it has been part of what we do, I think as we re-evaluated our strategy last year and decided to make these changes in the R&D strategy, the second element of our strategy was to recognize how important it was to create more access to this.

So there are some examples of things that have worked.

I will let Tony comment maybe on just differentiation between the Crestor and generic of torvastatin as as an example in just a minute.

But do you want to do the PARP inhibitor, and I don't know what comments you want to make.

It is hard to compare.

I think as you say, David, it is hard to compare right now.

I think we have to look upon it from two points of view.

First, you have the target-specific, will there be any differences, and then you have the compound-specific.

And I think, as you can see now, we are obviously going down slightly different routes, testing differential aspects of the target versus the diseases.

And I think we have to wait until more data comes forward.

The compound-specific is just too early to say.

Let's see when data comes in.

We are as interested as you are.

Tony, do you want to make any comments either about generic torva or just other examples of a payer that you think matter?

Well, I think you hit the high ones, David, as far as involving payers much earlier in the portfolio process.

I think it is important for us.

We also have had some examples where we have been working with them hand in glove to look at some real-world data applications of our product, and I think that has brought some learnings to us.

Relative to Crestor into the future, I would remind everyone that it's a very heavy generic market even today, and I believe the future for Crestor is very much dependent on what is driving its success today.

And that is maintaining the very high ground relative to efficacy for that patient with multiple risk factors.

We maintain and compete in that space then we win.

In fact, we have seen Crestor be the only branded product to grow share today in this kind of generic environment.

It is also the number one switch to brand from generics.

So I would believe that moving forward the key to Crestor's success is reinforcing that very strong positioning with the high risk population, and therefore, JUPITER becomes a critical piece of that puzzle moving forward.

Okay, good.

Simon, over to you on working cap and then on the disposal versus profits question.

Sure.

The disposal (technical difficulty) disposal and typically we would be taking profit on disposals through other income.

And you will see that that was an important contributor to other income this year on working capital.

Thank you.

We are pleased with the performance we are making in driving and shortening the cash conversion cycle in the business.

On the specific areas of further opportunity and I will touch on emerging markets, we think there is further opportunity to bring down inventory in our business, and that it is about making the investment in information to link our supply chain globally and also the lean program we are driving.

So inventory is the big area of focus for us, and we see further opportunity.

In payables there is a close link between our working capital program and our procurement program and getting the right balance between the terms that we agree with suppliers and the discounts that we get, the payment terms relative to discounts.

And I think that one of the big areas of opportunity for us having really brought a focus on working capital as we are in a position to have those discussions with suppliers, and that is an ongoing process.

In terms of the receivables, the emerging markets -- the receivables business again I think we have continued to deliver against the targets we've set for ourselves, and if you adjust the geographic mix, we continue to improve our collection record.

You're right, though, that the receivables will be a function of the business makes, although the slower paying markets are actually typically not in the emerging markets.

So we don't expect growth in our emerging markets to have material impact on our receivables.

More generally on the emerging markets business, if we look across that portfolio, we see that as not only an opportunity for very strong growth, but also it is profitable business for us, and we are very pleased with the margin contribution that it brings.

It is not as profitable as the more mature Western markets whether it be North America or one or two of our more profitable developed markets.

Typically then if you index some of the portfolio, the most profitable are at about 100.

You know, our emerging markets as a portfolio averaging around about sort of the 70 level, but we are seeing that on an upward trend.

And it is highly variable between the two markets but on a network trend, and that is a function of the fact that we are driving strong growth.

We may be investing to drive that growth, but we still have got quite a lot of continued operational leverage in those markets.

So it is fast-growing markets, but it is also a profitable business for us as well.

Geoff Holchrist, Jefferies.

Three questions, please.

Just in terms of your guidance, you specifically stated you do not anticipate any material M&A.

So, therefore, it just implies you have a significant cash pile building up.

Is it safe to assume the most likely use of that are more material buybacks in the future, or perhaps do we see it as a kind of backstop for acquisitions should the pipeline attrition be worse than you expect?

Secondly, I just wondered if you can just comment quickly on the RSV market in the US or whether you still see that as a sort of growth in the future?

And just lastly, you have commented on your ability to execute strong brand growth.

When do you think that we will see more evidence of that with ONGLYZA, particularly in the US?

Okay.

Good.

I will go to Tony in a minute on the RSV and on the performance of ONGLYZA just to give a sense from his perspective what we have seen so far.

On the guidance and around no material M&A, I think we're just trying to put some planning assumptions around to allow you to see the way we look at things.

I have been very clear in my comments that I think collaboration is a much more appropriate road for AstraZeneca to go down than consolidation.

And so we are looking at opportunities to acquire products, to acquire technologies or to enter into licensing agreements that allow us to add the value, the expertise, the knowledge that we bring to someone else's products that we think we can get more value from them than they might be able to get alone.

So that is essentially the first call for cash in our business, which is to put it aside to make sure we are positioned to invest in our business where it is appropriate to do that.

We obviously have creditors through the debt that we do have.

We have got dividend payments.

We have a number of calls for cash through CapEx, etc.

So the balance is where we run our business.

And, as Simon said earlier, when we have access capital, we are going to return it to our shareholders.

So it's not really a backstop for attrition.

I think with the word you used it is really something that we used from a planning perspective to make sure we are positioned to take opportunities to bring in late stage products.

And you have seen us do that, I guess, four or five times over the course of the last six months.

So that is the approach we have taken.

Tony, would you like to comment about RSV in the US?

Is that a source of growth and maybe outside the US where we did see growth, and what are the issues we are dealing with there, as well as ONGLYZA?

Sure, David.

The question is RSV, an area of attractiveness for us.

The answer is clearly yes.

In addition to where we are today with Synagis, we look forward to having a new entrant with motavizumab.

We have seen strong growth outside the US with Synagis, and we equally look forward to the opportunity to bring motavizumab there as well.

Relative to the current performance, we have been challenged in the last days of this year.

But we believe there is a strong education effort that we still need to drive into the marketplace with Synagis because some shortfalls with the COID guidelines that came in.

But nonetheless, we still look at this as a very good opportunity for us globally, as well as locally in the US.

On ONGLYZA I would say, David, that we are off to a solid start.

We have seen significant uptake in the DPP-4 new to patient class.

The most recent data has been very encouraging as well.

We now are approaching 13% of new DPP-4 patients for therapy, which I think is a very good signal for us.

We have also seen an increase in the number of trialists that are coming on board with ONGLYZA, and we also know that the rate of access continues to increase for ONGLYZA going into this year.

So we feel very, very good about where we stand today, and I will leave it to Bruno or [Camilla] if you want to make any comments on rest of world ONGLYZA?

Yes, it is early days.

We can see good trials, as Tony said, trialists.

We have launched basically in Germany and the UK.

So it is very early days, but we are off to a very solid start outside the US as well.

So we will see -- we believe that the DPP-4 class will expand, and we will have help to expand the class.

So far off to a good start, but it is early days.

Okay.

I would just say on the RSV we are very disappointed in the COID guidelines, just to be very clear.

They are in direct conflict with our label, and it puts us in a tough position in the marketplace.

Some payers have adopted and some have chosen not to because they believe that the label is what should be -- they should be guided by.

So we are continuing to monitor and try to influence the situation.

I will take one more question because we are going to run out of time here in a minute, and then we will stay around afterwards for a few.

Sir?

[Nick Tennent], [Miraba].

Just thinking about Recentin and the HORIZON trials, to the best of my knowledge, no targeted agent has shown a survival benefit, overall survival benefit when used on top of an oxaliplatin-based chemotherapy regime in first-line colorectal cancer.

So if HORIZON II was to follow that trend, should we say and miss survival benefits in the HORIZON II, does that nullify the HORIZON III trial?

In other words, if you do not show a benefit -- a survival benefit, over FOLFOX alone, then how will you interpret a benefit or a non-effect on top of Avastin in a FOLFOX or on a FOLFOX regime?

I think you're starting to depict the trials before we even have the data in.

But hypothetically I mean from our perspective it is a package of two trials going forward.

One is setting the baseline for Avastin -- sorry for Recentin per se, and the other one is compared to Avastin.

And I think we have to see the results coming in in the first half of this year.

Thank you.

And a second question would be, I don't know whether you might be able to make a comment on the Merck payments and potential exercise of the first option in 2010 and what the cost of that might be?

The option is on AstraZeneca to exercise the next stage in the exit, and it is a process that is underway that we will need to get completed during the course of February, and we will be able to update the market, therefore, at the first quarter.

Alright.

Good.

Let me just make a couple of closing comments.

Obviously we have reviewed 2009 performance.

We have tried to give you some additional color on 2010 guidance as part of all this.

And, as we have said, as our revenue base transitions over the next few years with the loss of exclusivity up against new product launches, we thought it would be helpful to provide these longer-term planning assumptions to give you a sense of where we see things going.

As I said in my comments, I believe our strategy is very clear.

We are an innovation-based global biopharmaceutical company.

We believe there is significant value to be created, and it is the business that we know best.

I think we are positioned well because we have the global footprint that I talked about.

We have got very strong commercial capabilities.

We have got a highly competitive supply chain, which has delivered a lot of value to us.

We have got a disciplined culture that we believe will reshape and help us adapt our cost base and the way we operate our business going forward so that we can be more competitive in the future.

And we have got a core capability in the sciences both in small molecules, as well as biologics, in the research and development area that we believe can bring products forward that will make a difference for patients and improve human health.

We recognize that the choice of strategy like this brings risk with it.

We have got a profile for risk and reward though, and it is a profile we believe if we manage it prudently and patiently, it can create long-term value for society, and at the same time, like-minded shareholders will recognize that we believe that society still needs, wants and will be willing to pay for medicines that are truly differentiated when we can apply scientific innovation to unmet medical need.

And in order to bring that to reality, we need to -- we recognize that there is significant stewardship we have of our shareholders funds, and that is why we undertake everything we do with the mindset of return on investment.

Our leadership team will challenge the employees of AstraZeneca to make sure they align their activities around these value drivers, reducing the cost of inputs, driving productivity in our business through the development process or the supply chain or through making our marketed products more profitable.

Everyone at AstraZeneca has to be charged with that kind of responsibility to make sure that our investments in R&D especially, but throughout our business, return more than the cost of capital, while we continue to deliver meaningful medicines that really make a difference to help the patients throughout the world.

That is what we are here to do.

Before I thank you all for joining us, I just want to make one other point, which is Bruno Angelici, who is here with us, has announced that he is leaving AstraZeneca.

He finished up his role as the leader of our rest of world business, which he took over in 2001.

He has been with AstraZeneca for over 20 years.

He has led our emerging market strategy.

He has led, I think, our successes in Europe, as well as some of that restructuring.

He has been a tremendous advocate for AstraZeneca and supporter of me and a member of my management team.

So I just wanted to let you all know we will miss Bruno.

He is here if you want to come down and get your last shot at him before he does not come back to these anymore.

And to let you all know Tony Zook has taken the responsibility for our global Commercial organization.

So that will include all of Bruno's responsibilities, as well as our Global Marketing Group as well.

So that is one of our management changes.

We are excited about it.

We will miss Bruno, and we wish him well as he moves on to his next career.

Thank you very much for your time and attention today.