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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of July 2018

Commission File Number: 001-11960

AstraZeneca PLC

1 Francis Crick Avenue

Cambridge Biomedical Campus

Cambridge CB2 0AA

United Kingdom

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

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

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

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

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

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AstraZeneca PLC

26 July 2018 07:00 BST

H1 2018 Results

Strong performances from new medicines and Emerging Markets underpin the return to growth in 2018

Over the first half, the strong sales growth from new medicines (+75%, +69% at CER(1)) and the continued strength of the Emerging Markets business (+14%, +10% at CER) were offset by the impact from the loss of Crestor exclusivity in Europe and Japan. In line with expectations, an improved performance is anticipated in the second half, notably Product Sales, where guidance is reiterated for a low single-digit percentage increase over the full year at CER. Important news flow from the pipeline is expected to continue beyond the rest of the year.

Financial Highlights

·                  Product Sales increased by 2% (down by 2% at CER) to $10,015m. New medicines(4) generated more than $1bn in additional sales at CER in the half

·                  The Reported Gross Margin declined by three percentage points to 78.6%, reflecting the favourable impact of manufacturing variances realised in H1 2017 and the agreement on Lynparza with MSD(5); the Core Gross Margin fell by three percentage points to 80.0%

·                  Productivity gains and cost discipline continued with prioritised and targeted investment in new medicines and additional investment in China

·             Total Reported Operating Expenses increased by 3% (down by 1% at CER) to $7,814m. Total Core Operating Expenses increased by 6% (2% at CER) to $6,877m.

·             Reported R&D costs declined by 6% (9% at CER) to $2,641m; Core R&D costs declined by 2% (5% at CER) to $2,558m, driven by efficiency savings. Reported SG&A costs increased by 8% (3% at CER) to $5,008m; Core SG&A costs increased by 11% (7% at CER) to $4,154m

·                  Externalisation Revenue declined by 53% (54% at CER) to $318m. Reported Other Operating Income & Expense increased by 29% (28% at CER) to $1,086m; Core Other Operating Income & Expense declined by 27% to $704m, with the difference between the Reported and Core performance reflecting a legal settlement. The Company continues to anticipate a significant level of externalisation activities in H2 2018

·                  An unchanged first interim dividend of $0.90 per share

·                  Restructuring costs reduced to $187m (H1 2017: $496m). Capital expenditure reduced to $486m (H1 2017: $549m). The Company continues to anticipate declines in restructuring costs and capital expenditure over the full year

·                  FY 2018 guidance reiterated and unchanged

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Pascal Soriot, Chief Executive Officer, commenting on the results said:

“The performance in the first half demonstrated that we remain firmly on track to return our company to Product Sales growth in 2018. Our new medicines performed strongly and have established themselves as major drivers of Product Sales, including Lynparza, Tagrisso and Imfinzi in Oncology, Brilinta and Farxiga in CVRM and Fasenra in Respiratory. Emerging Markets, led by China, delivered double-digit growth.

The pipeline also continued to deliver: in Oncology, strong results were achieved by Lynparza in first-line ovarian cancer and Imfinzi showed an overall-survival benefit for patients in earlier-stage lung cancer, while a number of approvals were granted, including for Lokelma in hyperkalaemia. AstraZeneca’s rich pipeline and sharp commercial focus make us confident that we have in place the right conditions for our return to growth this year.”

Commercial Highlights

New medicines generated more than $1bn in additional sales at CER in the half compared to H1 2017. Product Sales highlights were:

·                  Oncology: sales growth of 42% in the half (37% at CER) to $2,664m, including:

·             Lynparza sales of $269m, growth of 132% (124% at CER), driven by expanded use in the treatment of ovarian cancer and a new approval for the use in the treatment of breast cancer. A very strong start in Japan, following the medicine’s launch in Q2 2018

·             Tagrisso sales of $760m, growth of 89% (82% at CER) reflecting increased use in the treatment of 2nd-line EGFR(6) T790M-mutated(7) NSCLC(8) and the newly-approved use in the 1st-line EGFR-mutated (EGFRm) setting as a new standard of care (SoC)

·             Imfinzi sales of $184m (Q2 2018: $122m), reflecting ongoing launches for the treatment of unresectable, Stage III NSCLC, where the number of new-patient starts continued to grow

·                  New CVRM(9): 12% growth (9% at CER) to $1,874m, including:

·             Brilinta sales of $609m, growth of 23% (18% at CER) due to continued market penetration in acute coronary syndrome and high-risk periprocedural myocardial infarction (HR PMI)

·             Farxiga sales of $639m, growth of 40% (36% at CER) as the medicine consolidated its blockbuster status

·             Bydureon sales of $294m, a decline of 2% (3% at CER). An encouraging BCise device launch was reflected in an increase in Q2 2018 sales of 6% (5% at CER) to $155m

·                  Respiratory: 6% growth (stable at CER) to $2,407m, including:

·             A Symbicort sales decline in the half of 6% (10% at CER) to $1,306m, as competitive class pressures in the US continued. Symbicort, however, delivered a significantly-improved sequential US performance in Q2 2018

·             Pulmicort sales growth of 12% in the half (6% at CER) to $633m. Q2 2018 growth of 27% (20% at CER) to $287m, reflecting the normalisation of supply in China

·             Fasenra sales of $86m (Q2 2018: $65m) further consolidating its leadership position among novel biologic asthma medicines

·                  Emerging Markets: the largest region by Product Sales, with growth of 14% (10% at CER) to $3,424m, including:

·             A China sales increase of 33% (24% at CER) to $1,893m. Underpinned by the launch of Tagrisso, Oncology sales in China grew by 57% (46% at CER) to $403m

·             An ex-China sales decline of 3% to $1,531m. A robust result, impacted by divested Product Sales and adverse performances in the Middle East, Africa and Russia

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Pipeline Highlights

The table below highlights significant developments in the late-stage pipeline since the prior results announcement:

Guidance

Guidance for FY 2018 is reiterated and unchanged. All measures in this section are at CER. Company guidance is on Product Sales and Core EPS only:

Variations in performance between quarters can be expected to continue. The Company is unable to provide guidance and indications on a Reported basis because the Company cannot reliably forecast material elements of the Reported result, including the fair-value adjustments arising on acquisition-related liabilities, intangible-asset impairment charges and legal-settlement provisions. Please refer to the section ‘Cautionary Statements Regarding Forward-Looking Statements’ at the end of this announcement.

Additional Commentary

Outside of guidance, the Company provides indications for FY 2018 vs. the prior year:

·                  The sum of Externalisation Revenue and Other Operating Income & Expense is anticipated to decline vs. the prior year. As part of its long-term growth strategy, the Company remains committed to focusing on appropriate cash-generating and value-accretive externalisation activities that reflect the ongoing productivity of the pipeline. It is also committed to the continued management of its portfolio through divestments and to increasing the focus, over time, on its three main therapy areas

·                  Core R&D costs in FY 2018 are anticipated to be in the range of a low single-digit percentage decline to stable. This expectation includes the favourable impact on development costs from the MSD collaboration

·                  The Company maintains its focus on reducing operational and infrastructure costs. Total Core SG&A costs are expected to increase by a low to mid single-digit percentage in FY 2018, reflecting targeted support for medicine launches, including Imfinzi in Oncology and Fasenra in Respiratory, as well as additional investment in China. The Company also anticipates declines in restructuring costs and capital expenditure in FY 2018 vs. the prior year

·                  A Core Tax Rate of 16-20% (FY 2017: 14%)

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Currency Impact

Based only on average exchange rates in the six months to 30 June 2018 and the Company’s published currency sensitivities, the Company anticipates a favourable low single-digit percentage impact from currency movements on Product Sales and Core EPS in FY 2018. Details on currency sensitivities are contained within the Operating and Financial Review.

Sustainability

AstraZeneca is committed to being a valued and trusted partner to its stakeholders over the long term. There is a distinct connection between maintaining a strong business and making a positive impact to a fairer, safer and healthier world. AstraZeneca is dedicated to pushing the boundaries of science to deliver sustainable health that transforms the lives of patients around the world.

AstraZeneca’s sustainability ambition is founded on making science accessible and operating in a way that recognises the interconnection between business growth, the needs of society and the limitations of the planet. The Company’s sustainability ambition is reinforced by its purpose and values, which are intrinsic to its business model, and ensures that the delivery of its strategy broadens access to medicines, minimises the environmental footprint of medicines and processes and ensures that all business activities are underpinned by the highest levels of ethics and transparency.

A full update on the Company’s year-to-date sustainability progress is shown in the Sustainability Update section of this announcement.

Notes

The following notes refer to pages 1-3:

(1)                       Constant exchange rates. These are non-GAAP financial measures because they remove the effects of currency movements from Reported results.

(2)                       Reported financial measures are the financial results presented in accordance with International Financial Reporting Standards.

(3)                       Core financial measures. These are non-GAAP financial measures because, unlike Reported performance, they cannot be derived directly from the information in the Group Financial Statements. See the Operating and Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

(4)                       Lynparza, Tagrisso, Imfinzi, Calquence, Brilinta, Farxiga, Lokelma, Bevespi and Fasenra.

(5)                       Merck & Co., Inc., Kenilworth, NJ, US, known as MSD outside the US and Canada.

(6)                       Epidermal growth factor receptor.

(7)                       Substitution of threonine (T) with methionine (M) at position 790 of exon 20 mutation.

(8)                       Non-small cell lung cancer.

(9)                       New Cardiovascular, Renal and Metabolism, incorporating Brilinta, Diabetes medicines and Lokelma.

(10)                  Cardiovascular outcomes trial.

(11)                  Progression-free survival.

(12)                  Overall survival.

(13)                  Committee for Medicinal Products for Human Use, the European Medicines Agency’s (EMA) committee with responsibility for human medicines.

(14)      Chronic obstructive pulmonary disease.

The performance shown in this announcement covers the six-month period to 30 June 2018 (the half or H1 2018) and the three-month period to 30 June 2018 (the second quarter or Q2 2018) compared to the six-month period to 30 June 2017 (H1 2017) and the three-month period to 30 June 2017 (Q2 2017) respectively, unless stated otherwise. All commentary in the Operating and Financial Review relates to the half, unless stated otherwise.

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Pipeline - Forthcoming Major News Flow

Innovation is critical to addressing unmet patient needs and is at the heart of the Company’s growth strategy. The focus on research and development is designed to yield strong results from the pipeline.

(15)  Regarding ‘regulatory submission’, the Company will generally communicate based on regulatory submission acceptance in the US and the EU and regulatory submission in Japan.

(16)  Coronary artery disease.

(17)  Chronic lymphocytic leukaemia.

(18)  Coronary artery disease.

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Conference Call

A live presentation, conference call and webcast for investors and analysts, hosted by management, will begin at 12:30pm UK time today. Details can be accessed via astrazeneca.com.

Reporting Calendar

The Company intends to publish its year-to-date and third-quarter financial results on 8 November 2018.

About AstraZeneca

AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three therapy areas - Oncology, CVRM and Respiratory. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.

For more information, please visit astrazeneca.com and follow us on Twitter @AstraZeneca.

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Table Of Contents And List Of Tables

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Operating And Financial Review

All narrative on growth and results in this section is based on actual exchange rates, unless stated otherwise. Financial figures are in US$ millions ($m). The performance shown in this announcement covers the six-month period to 30 June 2018 (the half or H1 2018) and the three-month period to 30 June 2018 (the second quarter or Q2 2018) compared to the six-month period to 30 June 2017 (H1 2017) and the three-month period to 30 June 2017 (Q2 2017) respectively, unless stated otherwise. All commentary in the Operating and Financial Review relates to the half, unless stated otherwise.

Core financial measures, EBITDA, Net Debt, Initial Externalisation Revenue and Ongoing Externalisation Revenue are non-GAAP financial measures because they cannot be derived directly from the Group Condensed Consolidated Financial Statements. Management believes that these non-GAAP financial measures, when provided in combination with Reported results, will provide investors and analysts with helpful supplementary information to better understand the financial performance and position of the Company on a comparable basis from period to period. These non-GAAP financial measures are not a substitute for, or superior to, financial measures prepared in accordance with GAAP. Core financial measures are adjusted to exclude certain significant items, such as:

·                  Amortisation and impairment of intangible assets, including impairment reversals but excluding any charges relating to IT assets

·                  Charges and provisions related to global restructuring programmes, which includes charges that relate to the impact of global restructuring programmes on capitalised IT assets

·                  Other specified items, principally comprising acquisition-related costs, which include fair-value adjustments and the imputed finance charge relating to contingent consideration on business combinations, legal settlements and foreign-exchange gains and losses on certain non-structural intra-group loans

Details on the nature of Core financial measures are provided on page 68 of the Annual Report and Form 20-F Information 2017. Reference should be made to the reconciliation of Core to Reported financial information and the Reconciliation of Reported to Core Financial Measures table included in the Financial Performance section of this announcement.

EBITDA is defined as Reported Profit Before Tax after adding back Net Finance Expense, results from Joint Ventures and Associates and charges for depreciation, amortisation and impairment. Reference should be made to the Reconciliation of Reported Profit Before Tax to EBITDA included in the Financial Performance section of this announcement.

Net Debt is defined as interest-bearing loans and borrowings net of cash and cash equivalents, other investments and net derivative financial instruments. Reference should be made to the Reconciliation of Interest-Bearing Loans and Borrowings to Net Debt included in the Cash Flow and Balance Sheet section of this announcement.

Ongoing Externalisation Revenue is defined as Externalisation Revenue excluding Initial Externalisation Revenue (which is defined as Externalisation Revenue that is recognised at the date of completion of an agreement or transaction, in respect of upfront consideration). Ongoing Externalisation Revenue comprises, among other items, royalties, milestone revenue and profit-sharing income. Reference should be made to the Breakdown of Externalisation Revenue table in this Operating and Financial Review.

The Company strongly encourages investors and analysts not to rely on any single financial measure, but to review AstraZeneca’s financial statements, including the notes thereto, and other available Company reports, carefully and in their entirety.

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Table 1: Total Revenue

Table 2: Product Sales

Table 3: Breakdown Of Externalisation Revenue

Ongoing Externalisation Revenue of $216m represented 68% of total Externalisation Revenue in the half (H1 2017: $228m, 34%). The Company anticipates that Ongoing Externalisation Revenue will grow as a proportion of Externalisation Revenue over time. A breakdown of Externalisation Revenue is shown below:

(19)  Due to rounding, the sum of therapy area percentages may not agree to the total.

(20)  Due to rounding, the sum of category percentages may not agree to totals.

(21)  May include, inter alia, option income and profit-sharing income.

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Table 4: Initial Externalisation Revenue

A breakdown of Initial Externalisation Revenue in the half is shown below:

Table 5: Ongoing Externalisation Revenue

A breakdown of Ongoing Externalisation Revenue in the half is shown below:

Table 6: Externalised And Divested Medicines

Several AstraZeneca medicines were externalised or divested after H1 2017, thus adversely impacting the Product Sales performance:

(22)  H1 2018 Product Sales here comprise sales made to partners under manufacturing and supply agreements.

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Table 7: Ongoing Externalisation Revenue Agreements

Examples of transactions that include Ongoing Externalisation Revenue are shown below:

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Product Sales

The performance of new and legacy medicines is shown below, with a geographical split shown in Notes 6 & 7.

Table 8: Therapy Area And Medicine Performance

(23)  Due to rounding, the sum of individual medicine percentages may not agree to totals.

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Specialty-care medicines comprise all Oncology medicines and Fasenra. At 27% of total Product Sales, specialty-care-medicine sales grew by 46% in the half (41% at CER) to $2,750m. In H1 2017, speciality-care medicines comprised 19% of total Product Sales.

Product Sales Summary

ONCOLOGY

Product Sales of $2,664m; an increase of 42% (37% at CER). Oncology Product Sales represented 27% of total Product Sales, up from 19% in H1 2017.

Lynparza

By the end of the half, Lynparza was approved in over 50 countries for the treatment of ovarian cancer. Launches in breast cancer took place in the US and Japan during the period and the indication was under regulatory review in Europe. Product Sales of Lynparza amounted to $269m, an increase of 132% (124% at CER). The strong performance was geographically spread; it was, however, particularly noticeable in the US.

US sales grew by 198% to $149m, with continued sequential quarter on quarter growth of 26% to $83m in Q2 2018; the performance in the half reflected continued growth in both the ovarian and breast indications, as well as the H2 2017 launch of Lynparza tablets and regulatory approval as a 2nd-line treatment for ovarian cancer, regardless of BRCA(24) status. In the half, the Company announced the approval of Lynparza in the US as a treatment for patients with germline BRCA-mutated (BRCAm) breast cancer. At the end of the half, Lynparza remained the leading medicine in the poly ADP ribose polymerase (PARP)-inhibitor class in the US, as measured by total prescription volumes.

Sales in Europe increased by 50% (36% at CER) to $87m, this was driven by encouraging levels of reimbursement, a number of successful launches, higher BRCA-testing rates and an increased level of penetration across all countries. On 8 May 2018, the Company announced that the EMA had approved Lynparza tablets (300mg twice daily) as a 2nd-line treatment for patients with ovarian cancer, regardless of BRCA status.

Japan sales of $10m in the half followed the initial launch in April 2018 in ovarian cancer; Lynparza was approved as a treatment for BRCAm, metastatic breast cancer on 2 July 2018, a targeted chemotherapy-sparing option.

In July 2017, AstraZeneca and MSD announced a global strategic oncology collaboration to co-develop Lynparza and the potential medicine selumetinib for multiple cancer types as monotherapies and in combinations. The integration of development and commercial activities is progressing well, with both companies promoting Lynparza.

(24)  A BRCA mutation is a mutation in either of the BRCA1 and BRCA2 genes, which are tumour-suppressor genes.

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Lung Cancer

Tagrisso

By the end of the half, Tagrisso was approved in a number of markets, including Brazil, the US, the EU, Russia, Australia, Canada and Egypt, for the treatment of 1st-line EGFRm NSCLC; a number of additional regulatory reviews were also underway. In the 2nd-line setting, Tagrisso has now been approved and launched in more than 75 countries, including in the US, Europe, Japan and China, for patients with EGFR T790M-mutated NSCLC.

Product Sales of $760m represented growth of 89% (82% at CER), partly driven by increased testing rates and the aforementioned US approval in the 1st-line setting. Continued growth was also delivered in the 2nd-line indication in other countries.

Sales in the US grew by 89% to $341m, with sequential growth in the second quarter of 32% to $194m, reflecting a rapid uptake in the 1st-line setting that followed the April 2018 approval of Tagrisso as a 1st-line treatment of patients with metastatic EGFRm NSCLC. Tagrisso achieved market leadership in new patient starts for the 1st-line treatment of patients with EGFRm NSCLC in the US.

Within Emerging Markets, Tagrisso sales grew by 298% (280% at CER) to $159m, with notable growth in China where the medicine was approved in March 2017 as a 2nd-line treatment for patients with EGFR T790M-mutated NSCLC. Asia-Pacific has a relatively high prevalence of patients with an EGFR mutation at 30-40% compared to 10-15% in western markets.

In Europe, sales of $139m represented growth of 83% (63% at CER), driven by positive reimbursement decisions, further growth in testing rates and strong levels of demand. Sequentially, sales were stable as increased volumes were offset by adjustments to access agreements, some with retrospective effect, as the medicine reached more patients in each country. Following EU regulatory approval on 8 June 2018 for the initial treatment of patients with EGFRm NSCLC, Tagrisso launched in select EU countries, including in France and Germany and reimbursement negotiations are underway elsewhere.

Sales of Tagrisso in Japan increased by 15% (11% at CER) to $118m (Q2 2018: $69m), reflecting focused activities to maximise testing and utilisation rates in the 2nd-line indication. A regulatory decision on Tagrisso as a 1st-line treatment for EGFRm NSCLC is expected in Japan in the second half of the year.

Imfinzi

Imfinzi is currently approved for the treatment of patients with unresectable, Stage III NSCLC whose disease has not progressed following concurrent platinum-based chemotherapy and radiation therapy (CRT) and for the 2nd-line treatment of patients with locally-advanced or metastatic urothelial carcinoma (bladder cancer).

In unresectable, Stage III NSCLC, Imfinzi is approved in the US, Japan, Canada, Switzerland, India and Brazil. Other regulatory reviews are ongoing, and an EU regulatory decision is anticipated in the second half of the year.

Global Product Sales amounted to $184m (Q2 2018: $122m) with unresectable, Stage III NSCLC representing the majority of Imfinzi sales. The US represented the vast majority of the global sales; with $5m in sales recorded in other markets following approvals and launches. The number of new and continuing US patient infusions in the unresectable, Stage III NSCLC indication remained strong; additional regulatory approvals are anticipated in H2 2018.

Iressa

Product Sales of $275m; an increase of 5% (down by 1% at CER). Emerging Markets sales increased by 15% (8% at CER) to $148m. China sales increased by 27% (17% at CER) to $95m; Iressa was included on the National Reimbursement Drug List (NRDL) in 2017. Sales in the US declined by 18% to $14m and increased in Europe by 13% (2% at CER) to $61m.

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Other Oncology Medicines

Calquence

Product Sales of $20m; Calquence was approved and launched in the US on 31 October 2017. The medicine delivered a promising performance in the half, with demand predominantly based on the use in relapsed/refractory (R/R) mantle cell lymphoma (MCL).

Legacy: Faslodex

Product Sales of $501m; an increase of 8% (5% at CER) that reflected volume growth.

Emerging Markets sales grew by 31% (30% at CER) to $71m. China sales grew by 100% (82% at CER) to $22m. US sales increased by 7% to $259m, mainly reflecting a continued strong uptake of the combination with the CDK4/6 class, a medicine approved for the treatment of hormone-receptor-positive breast cancer.

Europe sales declined by 11% (21% at CER) to $118m, reflecting the impact of generic entrants in certain countries. In June 2017, a label extension, based upon the FALCON trial in the 1st-line setting was approved in Japan, where sales grew by 56% (50% at CER) to $50m, despite the impact of the biennial price cut implemented on 1 April 2018.

Legacy: Zoladex

Product Sales of $376m; an increase of 4% (down by 1% at CER).

Emerging Markets sales increased by 20% (17% at CER) to $202m. Sales in Europe increased by 1% (down by 9% at CER) to $68m. In the Established Rest Of World (ROW) region, sales declined by 10% (13% at CER) to $103m, driven by the effects of increased competition. On 31 March 2017, the Company completed an agreement with TerSera for the sale of the commercial rights to Zoladex in the US and Canada.

CVRM

New CVRM sales grew by 12% (9% at CER) to $1,874m, reflecting strong performances from Brilinta and Farxiga, after each attained blockbuster-sales status in FY 2017. Total CVRM sales, which includes Crestor and other legacy medicines, declined by 8% (11% at CER) to $3,268m, comprising 33% of total Product Sales.

Brilinta

Product Sales of $609m; an increase of 23% (18% at CER).

Emerging Markets sales of Brilinta grew by 22% (17% at CER) to $148m, partly reflecting the benefits of inclusion on the NRDL in China in 2017.

US sales of Brilinta, at $259m, represented an increase of 20%. The performance, reflecting volume growth, was driven primarily by an increase in the number of patients initiated on Brilinta in the hospital and an increase in volume of 90-day prescriptions. Furthermore, Brilinta continued to deliver increasing levels of market share in the half. US sales growth in Q2 2018 slowed to 13%, with sales of $144m reflecting the impact of affordability programmes.

Sales of Brilique in Europe increased by 27% (14% at CER) to $172m, reflecting indication leadership across a number of markets; sales were also bolstered by the inclusion within HR PMI guidelines by the European Society of Cardiology in 2017. Improvements were delivered across the major markets; Brilique gained further reimbursement in key countries in its HR PMI indication with the 60mg dose.

Farxiga

Product Sales of $639m; an increase of 40% (36% at CER). Farxiga consolidated its global leadership position within the sodium-glucose co-transporter 2 (SGLT2) inhibitor class.

Emerging Markets sales increased by 57% (59% at CER) to $157m, reflecting ongoing launches and improved levels of patient access. In March 2017, Forxiga became the first SGLT2-inhibitor medicine to be approved in China, with encouraging levels of access and performance.

US sales increased by 29% to $266m. The performance in H1 2017 was adversely impacted by the Company’s level of participation in affordability programmes; subsequent changes to the Company’s approach to these

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programmes, however, helped to deliver a much-improved performance in H1 2018. Despite slowing growth in the US, the SGLT2 class continued to be scientifically underpinned by growing evidence around cardiovascular benefits, including data from the CVD-REAL series of studies (first published in May 2017), showing a statistically significant reduced rate of hospitalisation for heart failure and death from any cause compared to other type-2 diabetes medicines.

Sales in Europe increased by 45% (28% at CER) to $152m. In Japan, sales grew by 40% (35% to CER) to $28m. Ono Pharmaceutical Co., Ltd is a partner and records in-market sales.

Onglyza

Product Sales of $255m, a decline of 16% (19% at CER). The performance reflected adverse pressures on the dipeptidyl peptidase-4 (DPP-4) class and an acceleration of ongoing diabetes-market dynamics, where patients are moving to medicines and classes of medicines with documented CV benefits. Given the significant future potential of Farxiga, the Company continues to prioritise commercial support for Farxiga.

Sales in Emerging Markets increased by 29% (24% at CER) to $81m. After the addition onto the NRDL in China in 2017, sales grew there by 136% (121% at CER) to $33m, driving the Emerging Market sales growth. Sales in Europe declined by 10% (17% at CER) to $47m, reflecting the broader trend of a shift away from the DPP-4 class.

Bydureon

Product Sales of $294m; a decline of 2% (3% at CER). An encouraging BCise device launch in the US was reflected in an increase in Q2 2018 sales of 6% (5% at CER) to $155m.

Sales in the US declined by 4% to $234m, reflecting pricing headwinds that offset an encouraging performance from the aforementioned BCise launch. Favourable sales volumes were driven by continued growth in the glucagon-like peptide-1 class, at the expense of insulin, for more-advanced forms of type-2 diabetes. Bydureon sales in Europe increased by 2% (down by 10% at CER) to $43m; a regulatory decision on the device in the EU, however, is anticipated in the second half of the year.

Legacy: Crestor

Product Sales of $727m; a decline of 39% (42% at CER).

Sales in China grew by 33% (23% at CER) to $238m, a result of underlying demand. Market growth in statin usage, AstraZeneca’s commercial strength in China and the Company’s successful strategy of broader coverage in China also continued to favourably impact sales.

US sales declined by 41% to $90m, reflecting the ongoing impact of multiple Crestor generic medicines. In Europe, sales declined by 69% (72% at CER) to $111m, reflecting the impact of the entry of generic Crestor medicines in various countries in 2017. AstraZeneca expects these impacts to begin to recede in the second half of 2018.

In Japan, where Shionogi Co. Ltd is a partner, sales declined by 71% (72% at CER) to $76m, reflecting the impact of the entry of multiple Crestor competitors in the market in the second half of 2017. AstraZeneca expects this impact to recede in the second half of 2018. The decline also reflected actions by the Japanese government to focus further on incentives to increase the adoption of generic medicines.

RESPIRATORY

Product Sales of $2,407m; increased by 6% (stable at CER) in the half, following a challenging performance in the first quarter. Respiratory Product Sales represented 24% of total Product Sales, a one percentage point increase vs. H1 2017.

Symbicort

Product Sales of $1,306m; a decline of 6% (10% at CER). Symbicort continued to lead the global market by volume within the inhaled corticosteroid (ICS)/Long-Acting Beta Agonist (LABA) class.

Emerging Markets sales grew by 13% (10% at CER) to $241m, partly reflecting growth in China of 34% (24% at CER) to $119m. In contrast, US sales declined by 21% to $439m, reflecting continued pricing pressure and the timing of government buying, partly mitigated by market-share gains. The performance was in line with expectations, with challenging pricing pressure expected to continue.

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In Europe, sales increased by 3% (down by 8% at CER) to $411m; the performance reflected the level of competition from other branded and Symbicort-analogue medicines. Symbicort, however, continued to retain its class-leadership position and stabilise its volume market share in the class, with some markets achieving volume growth. In Japan, where Astellas Pharma Co. Ltd assists as a promotional partner, sales were stable (down by 3% at CER) to $100m, despite the impact of the biennial price cut implemented on 1 April 2018.

Pulmicort

Product Sales of $633m; an increase of 12% (6% at CER).

Emerging Markets represented 76% of global sales and increased by 22% (15% at CER) to $482m. In China, sales grew by 25% (16% at CER) to $401m, despite a temporary supply constraint in the first quarter. The growth in the half reflected higher demand, strong underlying volume growth and AstraZeneca’s delivery of over 15,000 nebulisation centres in China.

Sales in the US and Europe declined by 24% to $59m and increased by 4% (down by 6% at CER) to $50m, respectively, a consequence of the medicine’s legacy status there.

Fasenra

Product Sales of $86m (Q2 2018: $65m).

In November 2017, the Company was granted approval for Fasenra in the US as a treatment for patients with severe, eosinophilic asthma; the approval was followed immediately by the launch of the medicine. US sales amounted to $67m. New-to-brand prescription data showed that Fasenra, a novel biologic medicine, tracked ahead of prior biologic-medicine launches in its class in asthma, despite being third to market. Initial feedback from physicians and patients has been particularly encouraging, citing a rapid onset of action and convenience of dosing.

In Europe and Japan, AstraZeneca was granted regulatory approval in January 2018 on a similar basis to that in the US. In Europe, a number of launches were executed in the half, including in Germany, Denmark and Sweden.

Sales in Japan amounted to $11m in the half, following its launch in the second quarter.

Daliresp/Daxas

Product Sales of $83m; a decline of 10% (12% at CER). US sales, representing 81% of global sales, declined by 15% to $67m, driven by a reduced level of adoption of the medicine. It is the only oral, selective, long-acting inhibitor of phosphodiesterase-4, an inflammatory enzyme associated with COPD. Sales in Europe increased by 56% (44% at CER) to $14m.

Tudorza/Eklira

Product Sales of $73m; an increase of 3% (down by 3% at CER).

Sales in the US were stable at $29m. On 17 March 2017, AstraZeneca announced that it had entered a strategic collaboration with Circassia Pharmaceuticals plc (Circassia) for the development and commercialisation of Tudorza in the US. Circassia began its promotion of Tudorza in the US in May 2017, where AstraZeneca books Product Sales.

Sales in Europe were stable (down by 11% at CER) to $38m, impacted by the decline of the overall long-acting muscarinic antagonist (LAMA) monotherapy class.

Duaklir

Product Sales of $50m; an increase of 43% (29% at CER). Duaklir, the Company’s first inhaled dual bronchodilator medicine, is now available for patients in over 25 countries, with almost all sales emanating from Europe. The global LAMA/LABA class continued to grow, albeit below expectations.

Bevespi

Product Sales of $13m; launched in the US in Q1 2017. Prescriptions in the period tracked in line with other LAMA/LABA launches. The overall class in the US, however, continued to grow more slowly than previously anticipated. Bevespi was the first medicine launched using the Company’s proprietary co-suspension technology.

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OTHER

Product Sales of $1,676m; a decline of 19% (22% at CER). Other Product Sales represented 17% of total Product Sales, down from 21% in H1 2017.

Nexium

Product Sales of $890m; a decline of 16% (19% at CER). Emerging Markets sales were stable (down by 3% at CER) to $343m. Sales in the US declined by 45% to $187m in the half. Sales in Europe increased by 2% (down by 9% at CER) at $122m. In Japan, where Daiichi Sankyo Company, Limited is a partner, sales declined by 2% (6% at CER) to $205m, reflecting the biennial price cut implemented on 1 April 2018.

Synagis

Product Sales of $250m; a decline of 17%. US sales declined by 25% to $125m and continued to be impacted by the prevailing guidelines from the American Academy of Pediatrics Committee on Infectious Diseases. Product Sales to AbbVie Inc., responsible for the commercialisation of Synagis in over 80 countries outside the US, declined by 6% to $125m.

Seroquel XR

Product Sales of $129m; a decline of 20% (23% at CER). Sales of Seroquel XR in the US, where several competitors launched generic Seroquel XR medicines from November 2016, declined by 36% to $49m. Sales of Seroquel XR in Europe declined by 23% (30% at CER) to $33m, also reflecting the impact of generic-medicine competition. On 8 May 2018, the Company announced that it had entered into an agreement with Luye Pharma Group, Ltd. (Luye Pharma) for the sale and licence of the rights to Seroquel and Seroquel XR in the UK, China and other markets.

Regional Product Sales

Table 9: Regional Product Sales

Emerging Markets

Product Sales of $3,424m; an increase of 14% (10% at CER). Q2 2018 sales of $1,659m represented an increase of 15% (12% at CER).

(25)  Due to rounding, the sum of region or country percentages may not agree to totals.

(26)  Emerging Markets comprises all remaining Rest of World markets, including Brazil, China, India, Mexico, Russia and Turkey.

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China sales grew by 33% (24% at CER) to $1,893m in the half, comprising 55% of total Emerging Markets sales. In Q2 2018, China sales increased by 37% (26% at CER) to $868m. Onglyza and Iressa were included on the NRDL in China in 2017, as were Brilinta, Faslodex and Seroquel XR; the benefits of these inclusions were felt in the half. The performance of new medicines was also encouraging, with Tagrisso as the main contributor.

Emerging Markets sales excluding China, however, declined by 3% to $1,531m, partly driven by the aforementioned impact from externalisation activities, as well as the decline in Middle East & Africa sales of 14% to $499m. Russia sales declined by 42% (41% at CER) to $67m.

US

Product Sales of $3,102m; an increase of 3%. Q2 2018 sales increased by 6% to $1,615m.

The performance reflected the success of new medicines, including Lynparza, Tagrisso, Imfinzi and Fasenra. Oncology sales in the US grew by 91% to $964m and sales of Fasenra in the US amounted to $67m in the half (Q2 2018: $48m). Strong sales of Farxiga and Brilinta contrasted with the impact of continued competitive intensity on sales of Symbicort, which declined by 21% to $439m. Symbicort delivered an improved performance in the second quarter, with sales in the US down by 14% to $256m.

Europe

Product Sales of $2,154m; a decline of 5% (14% at CER), reflecting the impacts of the entry of generic Crestor medicines in various markets in 2017. AstraZeneca expects these impacts to begin to recede in the second half of 2018.

The new medicines delivered an encouraging performance in the half. Oncology sales in Europe grew by 21% (9% at CER) to $505m, partly driven by Tagrisso sales growth of 83% (63% at CER) to $139m; Tagrisso was approved for the treatment of patients in the 1st-line EGFRm setting on 8 June 2018. Lynparza sales of $87m represented growth of 50% (36% at CER), partly benefitting from the approval on 8 May 2018 for use as a tablet-based treatment for platinum-sensitive ovarian cancer, regardless of BRCA status. Brilique sales growth of 27% (14% at CER) to $172m was accompanied by Forxiga sales growth of 45% (28% at CER) to $152m. Fasenra was successfully launched in several European countries, with a strong initial uptake.

Established ROW

Product Sales of $1,335m; a decline of 11% (14% at CER).

Japan sales declined by 14% (17% at CER) to $917m, reflecting the impact of the entry of generic Crestor medicines in 2017. AstraZeneca expects these impacts to recede in the second half of 2018. Crestor sales in Japan declined by 71% (72% at CER) to $76m. Excluding sales of Crestor, Japan sales increased by 4% (stable at CER) to $841m. The performance was also impacted by the aforementioned biennial price cut.

As seen in other regions, new medicines delivered an encouraging performance in Japan. Tagrisso is currently approved as a treatment in EGFR T790M-mutated NSCLC and sales increased by 15% (11% at CER) to $118m, reflecting focused activities to maximise testing and utilisation rates in the 2nd-line indication. On 19 January 2018, the Company announced that Lynparza tablets, approved as maintenance treatment for women with platinum-sensitive relapsed ovarian cancer regardless of BRCAm status, were approved in Japan and the medicine was launched in April 2018. On 2 July 2018, the Company announced that Lynparza was approved for use in patients with unresectable or recurrent BRCAm, human epidermal growth factor receptor 2 (HER2) negative breast cancer who have received prior chemotherapy.

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Financial Performance

Table 10: H1 2018 Reported Profit And Loss

(27)  Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 Cost of Sales included $nil of costs relating to externalisation activities (H1 2017: $41m), which are excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.

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Table 11: Q2 2018 Reported Profit And Loss

(28)  Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. Q2 2018 Cost of Sales included $nil of costs relating to externalisation activities (Q2 2017: $3m), which are excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.

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Table 12: Reconciliation Of Reported Profit Before Tax To EBITDA(29)

Table 13: H1 2018 Reconciliation Of Reported To Core Financial Measures

(29)  EBITDA is a non-GAAP financial measure. See the Operating and Financial Review for the definition of EBITDA.

(30)  Other adjustments include fair-value adjustments relating to contingent consideration on business combinations (see Note 4), discount unwind on acquisition-related liabilities (see Note 4) and provision movements related to certain legal matters (see Note 5).

(31)  Each of the measures in the Core column in the above table are non-GAAP financial measures. See the Operating and Financial Review for related definitions.

(32)  Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 Cost of Sales included $nil of costs relating to externalisation activities (H1 2017: $41m), which are excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.

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Table 14: Q2 2018 Reconciliation Of Reported To Core Financial Measures