Speech by Tom McKillop, Chief Executive of AstraZeneca, at AstraZeneca's information meeting in Stockholm May 19, 1999

Ladies and Gentlemen! It's an honour and a great pleasure to be here in Stockholm for AstraZeneca's first meeting of shareholders. And I want to begin by thanking you. I want to thank all shareholders for the support and the confidence they've shown in our new company. Over the past few months, I've visited a large number of institutions and discussed AstraZeneca's prospects with many, many shareholders.

The overwhelming backing we've received for this "merger of equals" shows that you, our owners, believe strongly in the new company. I and all my colleagues will do everything we can to make sure we live up to your expectations.

Of course, I'm aware that concern has also been expressed. What might be the effect of the merger here in Sweden? Let me make it clear. AstraZeneca is not moving in or out of countries. We're creating one of the world's great Research and Development based companies, a global leader in Pharmaceuticals, with a powerful international network of units, each with its own competencies. We aim to grow. And Sweden, with its proud record of achievement in research and manufacturing, has a vital part to play. Sweden will participate fully in the success and growth.

The AstraZeneca Group now contains one of the world's leading Agrochemical businesses. It has a medical devices business. One of its companies is developing and marketing healthy new foodstuffs. And we have a company which runs cancer treatment centres in America. But above all, the merger creates a new force in world pharmaceuticals. And it's this powerful new business that I want to talk about today.

We're certainly a global leader. The top 5 companies all have about the same level of sales. By some criteria, we're number one. By other measures, we're number three. But we're growing faster than the others. This is particularly true in the United States, where at the end of 1998 we were number seven, but had grown by 27 percent. In Europe we're number one currently but will be behind Aventis if that company comes into being through the merger of Hoechst with Rhone Poulenc Rorer.

The same is true in terms of investment in Research and Development. Today we're number one but we'll become second to Aventis.

Even so, every working day we spend over 8 million dollars in discovering and developing new medicines, that's 67 million crowns each day. Part of our strength comes from us being focused on key selected areas of medicine. Two thirds of our sales involve primary care physicians dealing with cardiovascular, gastrointestinal and respiratory diseases. These are all very common and serious medical problems. Then we have very valuable businesses in oncology and in the hospital sector, especially anaesthesia and pain control.

In each of our chosen areas we have very strong, competitive positions. And often we're in the leading position with important classes of medicines. Here are just a few of our products which lead their class:

Losec is the world's biggest selling pharmaceutical product of all time. Zestril is the world's number two ACE-inhibitor for cardiovascular disease and the number one in America - the single largest market. Diprivan is the number one general anaesthetic and Xylocaine is the number one local anaesthetic.

What a terrific combination! And Nolvadex is the world's biggest selling treatment for breast cancer. All are hugely successful products.

In the past two or three years we've also been busy launching quite a number of new products. Here is a list of some of those new products that already look as though they are going to be very successful:

By combining our sales forces we'll be able to strengthen our sales and marketing. And these products will win even more success in the future.

You heard earlier about some of our Research and Development activities. This is the lifeblood of any pharmaceutical company. And I'm happy to say, we have a very strong development portfolio with over 50 completely new medicines being investigated. Quite a number of these are scheduled to be launched during the next three years. And I've picked out a few that have the potential to become very big products. They include drugs that will help us defend our very important gastrointestinal, cardiovascular and respiratory businesses, as well as extend our sales in cancer and central nervous system therapies and to explore new targets such as incontinence.

An important theme for AstraZeneca is "First for Innovation and Value". From being two medium sized companies, we are now one at the very top. Our customers, our suppliers, the patients we serve, our employees, the communities in which we work, you - our shareholders - everyone will expect much more from us. Here are just some of the things "First for Innovation and Value" must mean to us.

We must behave as responsible leaders in our industry and in the community. We must be the preferred choice of customers. And future employees must see us as the company in which they want to work - ahead of any other. We must be the kind of company everyone wants to deal with. In tomorrow's world, the ability to form partnerships and collaborations will be even more vital than today.

Employing creative people and having the kind of environment which encourages creativity to be expressed and translated into innovation, these will determine success in high technology businesses. Clearly, they are essential in Research and Development to ensure a flow of new products. But it's not only in R&D. In everything we do there are opportunities to improve our productivity and competitiveness. And operating this way means embracing change and managing risk. It's easy to say - an immense challenge in practice. But in AstraZeneca, we have outstanding people who will make it happen.

Our customers insist on quality products and services. And they will only continue to be customers if they get value for money. Shareholders can invest their funds in many competing ways. You expect and deserve good returns from investing in high technology companies like AstraZeneca.

We must be a performance-oriented company and deliver increases in shareholder value if we are to retain your loyalty. And our employees must get their rewards for creating success. "First for Innovation and Value" captures what we must achieve. Targets are being set for every part of the organisation and t heir performance will be measured.

Talking of targets and progress. Last December, when we announced the merger, we set some priorities. Maintain on-going business performance, achieve fast, effective integration while delivering the synergies and secure the flow of new products. Well, you've heard a little today about our progress in R&D and we'll report in more detail towards the end of this year.

How about the on-going business performance? We're well on track. Our sales forces remain focused on achieving their targets. We've worked to keep all employees informed about the progress of the merger, to keep them involved and to minimise any disruption from the activities of the merger. So the business is continuing to perform well even while we're busy with integration work.

But what's the progress with the integration? We set out with some core principles. We wanted to create a single, new company, not Astra, not Zeneca but AstraZeneca, and a unified company. Decision-making would be objective with all appointments based on merit. We would be fast, fair and flexible. We would resist the bureaucracy of size. And the whole company would be built on fundamental human values such as openness, honesty and respect. We've stuck by these and here's what we've achieved so far.

AstraZeneca is the largest European merger ever and we completed the transaction in record time, just 80 working days. Total agreement was quickly reached on how the company should be run. The organisational structure and all the key business processes have been defined and are being implemented with tremendous commitment. Over 500 managers have been appointed. Country headquarter sites are being selected. Many of our Information Systems have already been integrated, with others to follow. Cost saving targets are being allocated. And right throughout the whole organisation, teams are working in a harmonious and dedicated manner to get everything ready to launch the new company on June the first. This is the day when we'll switch everything over to operate as that single, new, unified company - AstraZeneca. I could not have asked for more. My colleagues have worked tirelessly and with outstanding team spirit, giving AstraZeneca a great start.

Through this merger, we have created a new force in world pharmaceuticals, a global leader. The company is being built on innovation and on delivering value to all stakeholders. I truly believe we can make this one of the world's great companies. Thank you!