AstraZeneca Annual Review 2005 - AstraZeneca Annual Reports

11MEASURING OUR PERFORMANCEindividual and team roles and targets. We alsoencourage the sharing of knowledge and ideasacross functional and territorial boundaries tostimulate creativity and best practice within theCompany. Feedback is very important to us andopportunities for giving feedback are built in toour communications. We also use a two yearlyglobal employee survey to identify areas of bothsatisfaction and concern. Priority attention isgiven to areas for improvement highlightedby these surveys.Intellectual propertyPatents enable information on inventionsto be made widely available and are importantincentives for the continued innovation thatdrives society’s progress. Patent protectionand other types of marketing exclusivity for ourmedicines allow us time to generate the revenuewe need to continue our research, development,manufacturing and marketing of new medicines.We therefore vigorously defend our legitimateintellectual property rights.> MEASURING PERFORMANCE IS ESSENTIALTO UNDERSTANDING THE PROGRESS WEARE MAKING AND TO IDENTIFYING AREASFOR IMPROVEMENTWe use a range of financial and nonfinancialperformance measuresto assess our progress in deliveringour strategic objectives.The Board and SET use a regular businessperformance report to measure ourperformance, concentrating on productperformance, pipeline, productivity andprofitability, shareholder returns, reputationand governance. The means of measuringperformance in these areas range fromquantitative, comparative performancemeasures to more qualitative, discursiveanalysis. Together, they provide the frameworkCash and physical assetsfor consistently monitoring and reporting ourWe believe our cash resources will be sufficient progress towards achieving our objectives andfor our present requirements and include ultimately delivering enduring shareholder value.sufficient cash for our existing capital programme,share re-purchases and the costs of developing Specific measures that our Board and seniorand launching new products.executives use when assessing performance inthe areas noted above, or other measures judgedWe own and operate numerous production, to be helpful in enabling shareholders bettermarketing and research and development to understand and evaluate our business, arefacilities worldwide. We continually review our described and illustrated throughout this Review.physical assets such as laboratories, factoriesand equipment to ensure that they are appropriate Measuring reputationto meeting the needs of our business.The performance measures referred to aboveare measures of our progress in what we do inReputationthe business of delivering successful medicinesOur reputation rests on delivering our promises and thus shareholder value.in all aspects of our business. We focus onbringing new medicines to market that make In terms of measuring the way we do business,a difference for patients. Only by doing so are we have a range of key performance indicatorswe able to deliver the value for our shareholders, (KPIs) by which we measure our progress inwhich, as a publicly owned company, we have important areas of corporate responsibility (CR).a duty to do.Auditing of compliance is fundamental toWe know that how we do business, as well ensuring high standards of ethical behaviour,as what we do, is also important to ourand compliance is integrated into many ofreputation among stakeholders and wider the KPIs used to measure our CR progress.society. Maintaining their trust and confidence More details about these KPIs and our 2005in AstraZeneca as a responsible company means performance are provided in the separateensuring that wherever we have a presence Corporate Responsibility Summary Reportor an impact, we live up to our publicly stated 2005, or on our website.standards of ethical behaviour. More informationabout our approach to managing our corporate We also participate in leading external surveys,responsibility and about our performance, policies such as the Dow Jones Sustainability Indexes,and principles, can be found in the separate which are a helpful means of evaluating ourCorporate Responsibility Summary Report performance and understanding better the2005, or on our website • demands of sustainable development.AstraZeneca is listed in the 2006 Dow JonesSustainability World Index, used by assetmanagers globally to guide their sociallyresponsible investment. However, whilst weimproved our score, we did not regain the placewe lost in the previous year in the EuropeanIndex (Dow Jones STOXX), where competitionfor places is increasingly fierce.GovernanceThe AstraZeneca Code of Conduct, with whichcompliance is mandatory, sets out the highstandards we expect from our employees.As part of our commitment within the Codeto comply with all applicable laws and codesof practice, we apply all of the principles ofgood governance in the UK Combined Codeof Corporate Governance. We also comply withall of the provisions of the UK Combined Codeand our corporate governance practices aregenerally consistent with the New York StockExchange’s corporate governance listingstandards. Our ‘continuous assurance’ processesare designed to ensure we effectively monitorour compliance with these standards •Gross margin $m050403050403Operating profit margin $m0504034,0074,54714,386R&D and SG&A costs $m16,23310,405% of sales12,074 50.4%11,735% of sales18,594 77.6%75.8%76.3%54.8%55.2%% of sales6,502 27.2%21.2%21.3%The graphs above are examples of the measures we useto monitor our business performance.