On February 10, 2022 AstraZeneca reported on its strong growth trajectory in 2021, with industry-leading R&D productivity, five of our medicines crossing new blockbuster thresholds, and the acquisition and integration of Alexion (Press release, AstraZeneca, FEB 10, 2022, View Source [SID1234607947]). We also delivered on our promise of broad and equitable access to our COVID-19 vaccine with 2.5 billion doses released for supply around the world, and we made good progress on reducing our greenhouse gas emissions.
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Growth was well balanced across our strategic areas of focus, and we saw double-digit growth in all major regions, including Emerging Markets despite some headwinds in China. The positive news from our pipeline, including approvals for Evusheld and Tezspire, supports the outlook for 2022. This, along with the transformative acquisition of Alexion, means that we are confident in our long term growth and profitability. After a landmark year in 2021, we are increasing the dividend for our shareholders.
The differences between Reported and Core measures are primarily due to items related to the acquisition of Alexion, amortisation of intangibles, as well as impairments and restructuring charges, of which $1,030m in the year related to the Group Review detailed below. A full reconciliation between Reported EPS and Core EPS is provided in Tables 17 and 18 in the Financial performance section of this document. The differences between Actual Change and CER Change are due to foreign exchange movements between corresponding periods in 2021 vs 2020.
Key elements of Total Revenue performance in FY 2021
-An increase in Product Sales of 41% (38% at CER) to $36,541m-Among AstraZeneca’s thirteen7 blockbuster medicines in 2021, five medicines crossed new thresholds: Tagrisso ($5bn+), Farxiga ($3bn+), Lynparza ($2bn+), Calquence ($1bn+) and Fasenra ($1bn+)Following completion of the Alexion acquisition on 21 July 2021, Rare Disease medicines generated 8% of AstraZeneca’s FY 2021 Total Revenue, growing 8% (9% CER) on a pro-rata basis to $3,071m
-Growth of 19% (17% at CER) in Oncology to $13,663m, 13% (9% at CER) in CVRM8 to $8,034m, and 13% (9% at CER) in R&I9 to $6,049m-In the US, Total Revenue increased by 38% to $12,228m. In Europe, Total Revenue increased by 45% (40% at CER) to $8,050m including Vaxzevria10 revenue of $1,035m
-An increase in Emerging Markets revenue of 41% (36% at CER) to $12,281m, including Vaxzevria revenue of $2,304m.
In China, Total Revenue increased by 12% (4% CER) in the year to $6,011m. Pricing pressure associated with NRDL11 and VBP12 programmes led to a decline in growth in the second half of the year, and in Q4 2021 China Total Revenue was 4% lower (8% at CER) than in Q4 2020-Excluding vaccine revenue, Total Revenue in ex-China Emerging Markets increased by 19% in the year (21% at CER) to $3,977m and by 36% (38% at CER) in the quarter to $1,197m, driven by Oncology medicines and Farxiga Post Alexion Acquisition Group Review In conjunction with the acquisition of Alexion, the enlarged Group initiated a comprehensive review across the organisation, aimed at integrating systems, structure and processes, optimising the global footprint and prioritising resource allocations and investments.
These activities are expected to be substantially complete by the end of 2025, with a number of planned activities having commenced in late 2021. The identified activities, including those previously announced regarding the integration of Alexion, are anticipated to incur one-time restructuring costs of approximately $2.1bn, of which approximately $1.4bn are cash costs and $0.7bn are non-cash costs, and capital investments of approximately $0.2bn. The activities are anticipated to realise run-rate pre-tax benefits, before reinvestment, of approximately $1.2bn, including previously-announced Alexion synergies, by the end of 2025.
In line with established practice, restructuring costs will be excluded from our Core (non-GAAP) financial measures. Guidance The Company provides FY 2022 guidance at CER. The CER growth rates include the full-year contribution of Vaxzevria in both FY 2021 and FY 2022-Total Revenue from COVID-19 medicines is anticipated to decline by a low-to-mid twenties percentage, with an expected decline in sales of Vaxzevria being partially offset by growth in Evusheld sales. The majority of vaccine revenue in 2022 is expected to come from initial contracts. The Gross Profit Margin from the COVID-19 medicines is expected to be lower than the Company average-Core Operating Expenses are expected to increase by a low-to-mid teens percentage, driven in substantial part by the full year integration of Alexion expenses-Emerging Markets Total Revenue, including China, is expected to grow mid-single-digits in FY 2022.
China Total Revenue is expected to decline by a mid-single-digit percentage in FY 2022, primarily due to continued NRDL and VBP programme impacting various medicines. The Company remains confident in the longer term outlook for Emerging Markets, driven by a large market opportunity, broader patient access and an increased mix of new medicines-A Core Tax Rate between 18-22% AstraZeneca continues to recognise the heightened risks and uncertainties from the effects of COVID-19. Variations in performance between quarters can be expected to continue.
The Company is unable to provide guidance on a Reported basis because AstraZeneca cannot reliably forecast material elements of the Reported result, including any fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal-settlement provisions.
Please refer to the cautionary statements section regarding forward-looking statements at the end of this announcement. Currency impact If average foreign-exchange rates for January 2022 were seen over the full year, it is anticipated that there would be a low single-digit adverse impact on actual Total Revenue and Core EPS versus the financials at CER.
The Company’s foreign-exchange rate sensitivity analysis is shown in the Operating and financial review.