Working with Suppliers to Manage Total Environmental Footprint of Active Pharmaceutical Ingredient Manufacture

Working with Suppliers to Manage Total Environmental Footprint of Active Pharmaceutical Ingredient Manufacture Caireen Hargreaves, AstraZeneca Essential SHE

Presentation Contents Overview of AstraZeneca Background: why manage external environmental footprint? Measurement of external footprint for established products Minimising footprint of new products Conclusions Future opportunities Questions 2 23rd June 2009

AstraZeneca Overview One of the world s leading pharmaceutical companies A 70-year track record of innovation that includes the introduction of many world-leading medicines Active in over 100 countries; corporate office in the UK; strong presence in key markets; growing presence in important emerging markets Over 65,000 employees: 51% in Europe, 32% in the Americas and 17% in Asia, Africa and Australasia 17 principal research centres in 8 countries 26 manufacturing sites in 18 countries Extensive sales and marketing networks worldwide 4 23rd June 2009

Meeting the Needs of Patients Our skills and resources are focused on six important areas of healthcare These include some of the world s most serious illnesses We have a broad range of medicines, including many world leaders Designed to be innovative, effective and offer added benefits such as reduced side effects or better ways of taking the treatment We also continue to explore all the ways in which our medicines can be used to get the most benefit for patients CANCER CARDIO- VASCULAR GASTRO- INTESTINAL INFECTION NEUROSCIENCE RESPIRATORY & INFLAMMATION 5 23rd June 2009

Our Business Environment We operate in a dynamic and rapidly changing business environment that presents both opportunities and challenges for our industry There is a growing demand for healthcare people are living longer, expanded patient populations are emerging in new markets and many diseases are still not well managed At the same time, our industry faces real challenges, including pricing pressures, higher regulatory hurdles and fierce competition The demand for healthcare will be met not only be existing therapies but also by innovation resulting from advances in both the understanding of disease and the application of new technologies 6 23rd June 2009

Background why measure and report? AZ Code of Conduct SHE content states We are committed to minimising any adverse environmental effects from our activities and products, while working to reduce our consumption of natural resources and otherwise operating in an environmentally sustainable manner Major reporting frameworks and Socially Responsible Investment indices driven by stakeholder expectation highlight transparency, inclusiveness, materiality and relevance as key principles Examples - Global Reporting Initiative, Greenhouse Gas Protocol, Dow Jones Sustainability Index 8 23rd June 2009

Background why measure and report? Active Pharmaceutical Ingredients (APIs) are complex molecules This complexity is mirrored by API supply chains Manufacture of these materials (intermediates and API) is unique to AZ and we are acknowledging our responsibility Changing shape of business increased outsourcing of manufacture (especially primary) so goal for future targets is to measure broader environmental footprint Demonstrate success of our SHE improvement (including bicalutamide Green Chemistry) programmes through process development F HN CN 9 23rd June 2009 O O CF 3 O S O F N N SO 2 Me N OH OH rosuvastatin O OH N S N N O OH quetiapine

Supply Chain Complexity Supplier X AstraZeneca / Supplier Z Mat A Mat B Inter I Inter II Inter III Inter VII API Product Mat C Inter IV Inter VI Supplier Y Mat D Inter V 10 23rd June 2009

Corporate Environmental Targets SHE Objective 2 for 2006-2010 Aim for continuous improvement in the sustainability of all our activities by, amongst other things, economising on the use of natural resources and working to eliminate pollution. Area Climate Change Waste Key Performance Indicator (KPI) Total GWP Emissions (M Tonnes CO 2 Equivalent) Total GWP Emissions (excluding pmdi Use) (M Tonnes CO 2 Equivalent) Ref. Point 2001/02 2008 Actual 2010 Target 1.68 1.22 1.68 0.82 0.93 0.82 Total Waste (Tonnes / $million sales) 3.63 1.71 2.20 11 23rd June 2009

Corporate Environmental Targets AZ plc Total Global Warming Potential Emissions (GWP) Total GWP (thousand metric tonnes) Total waste (metric tonnes/$m) 4 3 2 1 0 2000 1500 1000 500 0 2001/2 Ref Pt 2001/2 Ref Pt 2003 2004 2005 2006 2007 2008 2009 2010 Total Waste (indexed to group sales) 2003 2004 2005 2006 2007 2008 2009 2010 Total GWP excluding pmdi (thousand metric tonnes) 1200 1000 800 600 400 200 0 AZ plc Total Global Warming Potential Emissions (excluding pmdi use) 2001/2 Ref Pt 2003 2004 2005 2006 2007 2008 2009 2010 12 23rd June 2009

AZ Environmental Footprint Material Suppliers Research Partners [Virtual R&D] AstraZeneca Outsourced Manufacture [Virtual Operations] On site Service Providers Off site 14 23rd June 2009

Survey Scope Key intermediates or API for launched products identified for inclusion Manufacture of development material excluded Questionnaire used was an extract of the one all AZ sites answer, covering energy used and waste generated Year 2005 2006 2007 2008* Number of purchased materials 60 61 64 60 Purchased material weight (tonnes) 629 646 803 844 Number of suppliers 32 36 36 34 15 23rd June 2009 *preliminary data validation ongoing

Survey Results 2005-2008 Waste CO2 from energy 80 70 Amount (ktonnes) 60 50 40 30 20 10-2005 2006 2007 2008 Year 16 23rd June 2009

Survey Results 2007 Waste Outsourced hazardous waste is about 14 thousand tonnes approx. 53% of that from AZ Ops sites Hazardous waste Third party 18% Other waste Third party 19% Hazardous waste AZ Ops sites 34% Other waste AZ Ops sites 29% 17 23rd June 2009

Survey Results 2007 Waste Disposal 16,000 14,000 Amount (tonnes) 12,000 10,000 8,000 6,000 4,000 Other treatment Landfill Incinerated WITHOUT energy recovery Incinerated WITH energy recovery Material reuse or recycling (external to the site) 2,000 0 Hazardous waste Other waste Rates for reuse, recycle and incineration with energy recovery Hazardous waste Nonhazardous waste Suppliers 70% 51% AZ Ops sites 51% 62% 19 23rd June 2009

Survey Results - Waste 10,000 Product A Supplier X Total Waste (kg/kg product) 1,000 100 10 1 Product B Supplier Y 0 1 10 100 1000 10000 Total Waste (tonnes) 20 23rd June 2009

Survey Results 2007 Energy Energy use and related CO 2 emissions are much less than from AZ internal Operations: Direct fuel use and imported electricity, steam and district heating CO 2 emissions from direct fuel use and imported electricity, steam and district heating Energy Products Third party 9% Direct energy Third party 3% Energy Products Third party 12% Direct energy Third party 3% Energy Products AZ Ops sites 41% Direct energy AZ Ops sites 47% Energy Products AZ Ops sites 45% Direct energy AZ Ops sites 40% AZ Operations sites used 1670 GWh energy in 2007 Outsourced key inters and bulks used 220 GWh energy (about 13% of AZ Operations sites) Emissions from AZ Operations sites energy use were 392 thousand tonnes CO2 emissions Outsourced key inters and bulks energy use caused 71 thousand tonnes CO2 emissions (about 18% of AZ Operations) 21 23rd June 2009 AZ Operations energy use includes all site activities

Development projects SHE Triggers In the development of future commercial manufacturing processes the AZ SHE Triggers model is used Aims Cover long-term SHE aspects during development of Active Pharmaceutical Ingredients Keep SHE issues off critical path for projects Meet regulatory requirements Applies across AZ and outsourced development Important to ensure effective and comprehensive management of our environmental footprint 23 23rd June 2009

SHE Triggers Basis Prevent Minimise Likelihood of success increases as we move back up the Development Chain Render harmless 24 23rd June 2009 BUT: conflicts with project attrition profile i.e. there are many more early projects and less resource is available

SHE Trigger Model & the Environmental Assessment Process CD Nom. ~ 6 Years Launch Trigger 1 Project Start Trigger 2 Route Evaluation Trigger 3 Route Freeze Trigger 4 Process Freeze Trigger 5 Detailed Process Freeze Prelim E Review Risk Assessment & Prelim E Assess. Environmental Assessment Environmental Assessment Final E Review Prevent Prevent Prevent Minimise Minimise Minimise Render Harmless Render Harmless Render Harmless 25 23rd June 2009

Environmental Risk Assessment Tool 1. Consequence/Hazard Score against each material 4 Very High Environmental impact material (major issue, legislation will prevent use or severely restrict emission in short/medium term) 3 High environmental impact material (significant issue) 2 Medium environmental impact material 1 Low environmental impact material (relatively) Acetone Ethanolamine Diisopropylamine 2-MethylTHF Acetic Acid 1 2 3 4 1,4-Dioxane Diethyl ether Acetonitrile Thionyl Chloride 1,5-Cyclooctadiene Methyl Iodide Dichloromethane Ethyl Bromoacetate Copper 1,3-Chloro-2- propanol Dimethyl Sulphate Dimethylacetamide Epichlorohydrin 26 23rd June 2009

Environmental Risk Assessment Tool 2. Likelihood Score against each material: Mass of material used in Stage (Kg) Likelihood = Mass of API (Kg) Projected TPA of API Ranking Low < 100 Medium < 1000 High > 1000 Risk = Consequence x Likelihood 27 23rd June 2009

Environmental Risk Assessment Tool Excel Interface Assumptions & limits Process Mass Intensity metrics Likelihood calculator Actions (AZ or contractor) Environmental Risk Profile 28 23rd June 2009

Risk Profile Environmental Risk Profile AZDXXXX Risk Matrix Plot Risks Likelihood eg (kg substance/kg API) x Predicted Annual API requirement (tonnes) >10 3 H 11, 29, 30, 31, 34 12, 33 >10 3 H >10 2 M 1, 4, 5, 6, 7, 8, 9, 13, 15, 16, 18, 20, 3, 3, 17, 17, 23, 29, 24, 3027 2, 2, 10, 14, 14, 19, 19, 3225 26 27, 21, 28, 22 31, 33 <10 2 L 28, 11, 32, 21, 35 34 23, 26 10, 12, 22, 36 24, 35 25 1 2 3 4 29 23rd June 2009 Consequence

SHE Triggers Working with Suppliers Based on the risk assessment and summary of environmental issues for each of the substance, actions are agreed between AZ and the supplier partner Following completion of development work supplier reports on Progress against agreed actions Basic environmental metric data 30 23rd June 2009

Example project Cyclohexane replaced by t-butyl acetate as solvent MTBE has been replaced with isopropyl acetate Prevent 1, 1-Bis(di-tert-butylphosphino)ferrocene stoichiometry has been reduced from 0.05mol eq. to 0.025mol eq. After significant development work no suitable solvent was found to replace chlorobenzene (except fluorobenzene) but total volumes used have been reduced from 28 vol. to 6 vol. Reduction in water use from 10 vol. to 6 vol. Minimise Render harmless 31 23rd June 2009

Conclusions Of all of the possible range of processes, materials and services we source from external suppliers, we seem to have hit the right targets for relevance and materiality by including primary manufacture Outsourced key inters and bulk drug products are an important and increasing contribution to AZ environmental footprint For sustainable environmental performance working with supply partners is essential 33 23rd June 2009

Future Opportunities Integration of third party environmental performance reporting into global system Extension to other spend categories e.g. formulation and packaging Expand scope to consider other key environmental metrics e.g. water use Uniform approach to data collection across the industry through collaboration e.g. ACS GCIPR 34 23rd June 2009

Acknowledgements AZ Essential SHE Ken Asken Vyv Coombe Stephen Evans Alan Horowitz Keith Moore Chris Tickle Process Research & Development James Baird Andy Wells Wesley White Global External Sourcing Changhong Liu Nicklas Westerholm and team 35 23rd June 2009

Thank-you for listening! Any questions?