AstraZeneca PLC (AZN) Earnings Call Transcript & Summary

Welcome, everyone, to AstraZeneca's 2026 Sustainability Update for Investors and Analysts. I'm Philip Sparks, Director of Investor Relations. And before we hear from Pam and members of our sustainability team, I'd like to remind you of our forward-looking statements, including our safe harbor provisions. And now I will hand over to our EVP, Global Operations and Chief Sustainability Officer, Pam Cheng, who will run through the latest progress in our sustainability strategy before we move on to Q&A. Pam, over to you.

Thanks, Phil, and welcome, everyone. It's a pleasure to be here today. In addition to leading our global operations, which includes manufacturing and supply and global IT, I have had the pleasure of being AstraZeneca's Chief Sustainability Officer since 2023. I'm pleased to share an update on our sustainability performance today and welcome any questions at the end. In addition to Phil, I'm joined today by Liz Chatwin, who leads our sustainability strategy and safety, health and environment as well as Stefan Weber, who leads policy, advocacy and health equity. Next slide, please. Let's first start by considering the context we are operating in and why as a pharmaceutical business, we place a significant focus on sustainability. At AstraZeneca, we are focused on improving health. We understand that the health of people, society and the planet are deeply interconnected, and we believe we have a role to play in taking action here. Climate change and nature loss are worsening and changing the burden of disease with a rise in noncommunicable diseases and impacts on human health. The delivery of health care carries a significant environmental footprint, so we are focused on delivering more sustainable care. At the same time, health systems are under increasing strain with aging populations, the rising burden of chronic diseases and continued pressure on health care funding. We know that by acting early on disease improves health outcomes and reduces pressure on health systems as well as minimizing carbon and resource-intensive hospital care. And health disparities are widening within and between countries, worsening health equity and pressures on health systems. I will speak more to this shortly. Ultimately, governments and health care providers recognize the need to improve health outcomes through more effective, sustainable care. We believe we can play a key role to help achieve this through collaboration. Next slide, please. Central to improve health care is the delivery of the remarkable science and innovation before us. Today's medical breakthroughs can truly transform outcomes for patients. And AI is helping us bring these medicines to patients faster and with a greater probability of success. In R&D, AI is helping to accelerate drug discovery, improve decision-making and support the design and execution of clinical trials. Across our operations and manufacturing, AI is helping us improve productivity and efficiency, thereby reducing energy use. And digital and AI-enabled tools can support earlier diagnosis, more targeted care and better patient follow-ups. We are deploying the latest technology to develop medicines and treatment pathways that can help keep patients healthier for longer. This is good for the health of people as well as society and the planet. Next slide, please. At AstraZeneca, sustainability is embedded in our business strategy. Operating sustainably is good for business and core to operating a responsible, efficient and resilient business for the long term. Our sustainability strategy focuses on how we make a positive impact through actions on climate and nature, health equity and health systems resilience and how we run a sustainable business through a focus on good governance, our people and values. All of this is underpinned by science. Next slide, please. When it comes to our climate and nature action, over the past decade, we have shown that business growth and decarbonization can go hand-in-hand. As of December 2025, we have reduced Scope 1 and 2 emissions by 88%, while more than doubling our revenue compared to 2015. Our bold ambition is to reduce Scopes 1 and 2 by 98% by December 2026 where addressable. As a matter of fact, 11 of our sites have already met that goal. We've also made progress on our value chain or Scope 3 emissions. More than 80% of our supplier spend is with companies with science-based targets. We are making a $500 million investment to transition our pressurized metered dose inhalers to a next-generation propellant with near zero global warming potential for respiratory medicines. More on this shortly. We've also transitioned our car fleet to electric vehicles. 81% of our global fleet is now electric. We've also reduced our water and waste by 23% since 2015. These are strong results, which we are proud of and continue to double down on. Next slide, please. Now turning to health equity. Our work spans 3 areas: science, health care delivery and community investment. We aim to improve equitable health outcomes in low middle-income and higher-income countries. By the end of 2025, more than 40% of our genomic data came from people in underrepresented populations, an industry-leading achievement. This is key as it will help us develop medicines that will benefit a broader range of patients. Through our Young Health Programme, we have partnered with more than 60 NGOs, including UNICEF and Plan International. We've reached more than 23 million young people in 56 countries over 15 years. Since 2024, AstraZeneca's health education, screening and early detection programs have reached more than 49 million people. And 156 million people from underserved communities have been positively impacted by our health equity programs since 2024. Next slide, please. Now turning to health system resilience. Many health systems remain structurally oriented towards managing disease at later stages without enough emphasis on prevention and early intervention. Building resilience requires a better balance across the care pathway with greater focus on acting early to improve outcomes and reduce long-term system pressure. We are co-creating solutions that slow disease progression, reduce hospital admissions and prevent premature deaths while helping health care professionals to deliver more sustainable care. This includes earlier detection, access to guideline-directed care and the use of digital technology to identify risk sooner and respond more effectively to patient needs. And we are advocating for evidence-based policy change as a founding member of PHSSR, the Partnership for Health System Sustainability and Resilience, I apologize. We have been driving systemic changes since 2020 alongside our partners across the health care sector. The PHSSR is now active in more than 37 countries, has published over 30 reports and engaged more than 200 policymakers on health system strengthening, translating insights into policy change that is improving care for millions of patients. Next slide, please. Examples of action and impact, as I will just outlined, are included in our 2026 sustainability impact publication released in April. Here, we also included our sustainability targets to 2030. Our targets focus on areas of greatest materiality to our business and where we believe we can make the greatest impact. For climate action, we have updated 2 of our 2030 targets. Firstly, Scope 3 emissions, which I will discuss shortly; and secondly, the target for AZ Forest, which we have adjusted to planting 100 million trees by 2030. The original target was 200 million. The change is based on our learnings since we've launched the initiative and a more focus on high-quality projects over volume. Our health equity and health systems resilient targets outlined here have not changed over the past few years [indiscernible] target areas, Scope 3 emissions and health equity. Next slide, please. With great progress having been made in reducing our sites and fleet emissions, we are now increasingly focused on reducing the emissions from across our value chain. As we grow to deliver more medicines to more patients, our Scope 3 emissions have increased alongside our business growth with expanded product portfolio, capital investments and geographically diverse supply chains. Our commitment to our science-based net zero target for 2045 remains steadfast. However, we have recently updated our near-term Scope 3 target to reflect our business growth and aligned it with our ambition to deliver $80 billion in total revenue and 20 new medicines by 2030. Our updated target for 2030 aims to reduce Scope 3 emissions by 35% versus 2019. The original target was 50% reduction off a smaller base given our business growth. It is worth noting that the absolute amount of emission reduction with the new target is the same as the original target. Our action on Scope 3 remains very focused with key areas outlined on this slide. We are prioritizing supplier engagement. We've engaged our suppliers to adopt science-based targets for several years now and sustainability requirements are included in supplier contracts. We are expanding supplier access to renewable energy through group initiatives like Energize and the Sustainable Market Initiative, Health Systems Task Force, a CEO group to advance the decarbonization of health care systems chaired by AstraZeneca's CEO, Pascal Soriot. As mentioned, we are focused on sustainable product innovation, including our inhaled respiratory portfolios transitioning to our next-generation propellant. We are reducing the environmental footprint of our products by driving improvements throughout the product life cycle. We are delivering sustainable [indiscernible] mines across our sites, utilizing low-carbon material and energy-efficient architecture from the U.K., Ireland, France, Puerto Rico, China to Singapore. Our sites are sustainable by design. We are also reducing our transport footprint by shifting from air to sea freight where possible. And we are optimizing business travels, having cut business air travel by 58% versus 2019. Next slide, please. Turning now to the transition to our next-generation propellant, which is core to our Scope 3 progress. The transition of our pressurized metered dose inhalers to a next-generation propellant is a landmark innovation in sustainable health care. We are making a $500 million investment in this propellant with near zero global warming potential. Our goal is simple: support patients with asthma and COPD, support health care systems and reduce the environmental footprint of respiratory care so that no one has to choose between the most appropriate treatment and a healthier planet. In a world and industry first, last year, the U.K. approved this new generation propellant for one of our respiratory medicines, and it is now in use across the country. The transition is also complete in Europe and other regions to follow very soon. We aim to transition our wider product portfolio by 2030 as part of our Ambition Zero Carbon strategy. Next slide, please. Next, we turn to our work in advancing health equity. Health outcomes are [indiscernible] environmental and genetic factors that amplify inequities in every region of the world. Quality, timely health care remains out of reach for so many, and those at highest risk of disease often face the greatest barriers to screening, early detection, diagnosis and treatment. By closing these care gaps, we can improve health outcomes across our therapeutic areas from cancer to cardiovascular to rare diseases. As our company grows, so does our opportunity to improve access to diagnosis, care and treatment for underserved patients. We see health equity as an area where sustainability, patient impact and long-term economic impact comes together. Diagnosing and treating patients earlier can add years of quality life expectancy to individuals and improve the resilience of health systems. Of the 1 billion people we aim to benefit through our health equity programs, we aim to reach 400 million people from underserved groups as classified by 2 principles. First, we include all patients from low income, low middle income and upper middle-income countries due to the significant challenges assessing quality care in these regions. Second, we include all patients with rare disease due to inherent challenges posed by the rarity of their conditions. We recognize there are limitations with this definition. For example, there are also underserved populations within high-income countries. As our understanding of care gaps both between and within countries deepens, we are committed to refining our classification of underserved groups so that our definition accurately reflects the reality on the ground. Next slide, please. So how will we reach 1 billion people? Most of our patient reach is driven by medicines given the prevalence of chronic diseases and that reach will continue to grow. As we bring new medicines to markets, expand our geographic footprint and work with governments and health systems to improve affordability and access, we are reaching more patients in more places. Beyond medicines, we reach patients through clinical trials, awareness and education and screening and detection programs. Today, multiple programs across our business units are enabling earlier impact by connecting people to care before disease progression, relieving the burden of late-stage disease for individuals and health systems alike. Healthy Heart Africa is a strong example. The program is now active in 9 countries, including recent expansion into Egypt and Morocco and has screened more than 80 million patients for elevated blood pressure and chronic kidney disease. In rare disease, we are partnering to expand access to newborn screening and next-generation sequencing with the aim of identifying serious genetic conditions earlier and connecting children to appropriate intervention sooner. We continue to invest, evolve and expand, including new programs and lung health equity to reach more underserved patients. Next slide, please. Let me close with 3 points. First, AstraZeneca has made considerable sustainability progress to date, all while our business has grown. We continue to value sustainability and embed it across the company. Second, our few updated targets aim to ensure we are realistic and transparent as we focus on and measure the next phase of our impact. Third, Scope 3 and health equity are 2 complex areas where the balance between setting bold ambition, driving real action and bringing others along with us truly matters. I hope this has been a useful update and gives you a clear sense of our progress and our priorities as we continue to play our part in improving the health of people, society and the planet. I will stop here so we have time to answer questions. Thank you.

Thank you, Pam. And thanks also to those of you on the call who have sent in some questions for Pam, Liz and Stefan in advance. [Operator Instructions] Let's kick off with a question on a hot topic for investors at the moment. And this one comes in from Ben Yeoh at RBC. Are AI tools helping reduce waste or energy or supply chain inefficiencies? Can you quantify or make any comments on AI and its impact on sustainability and operations?

Thank you, Ben, for the question. It's very timely indeed. AI is driving measurable efficiencies across our R&D and operations. It can actually help shorten drug development lead times, automate manufacturing processes and deliver earlier and more precise health care, all of which support sustainability and equitable care outcomes. So let me give a few examples. We are leveraging AI to enhance how we digitally model drug candidates, which means that we can now reduce the amount of physical screening required to assess new molecular designs. In development, our AI development agent accelerates pharmaceutical development of our late-stage medicine through digital twins and advanced modeling and generating roughly 35% productivity by 2030 is our ambition and at the same time, reducing the lead time by 50%. So in manufacturing, we are using AI to drive efficiencies and productivity, reducing manual tasks and driving right first time and AI is also helping us save energy through AI monitoring and control. In early diagnosis and early intervention, a good example is our AI tool called MILTON. It is trained to identify a patient's risk of developing a disease using data from the U.K. Biobank in this case, MILTON combines the identify health records with genetic and proteomic data to predict the risk of more than 1,000 diseases, in some cases, 10 to 15 years before clinical diagnosis. It's published in nature genetics and recognized by the World Economic Forum. MILTON accelerates target identification and reduces the time and resources needed in early discovery. A couple of more just to showcase what AI can do in this case. In patient care delivery, AI-enabled biomarkers is helping us get the right medicines to the right patient. This increases the probability of success in our trials and reduces the waste that occurs when patients do not respond to their treatment. AI can also turn low-cost imaging and listening devices into very sophisticated diagnostic tools, which can help the LMICs to make the most of their limited screening resources. And AI also has the potential to identify diseases early in its progression, enabling more efficient treatment than when diseases are diagnosed at a less -- at a late stage. And lastly, we recognize that AI computing has an environmental impact, and we are embedding sustainability into our AI strategy in a few key ways. First, we are shifting our data centers and compute needs towards more energy-efficient infrastructure powered by renewable energy. Then we ensure suppliers have climate change -- climate transition plans as part of our Ambition Zero Carbon strategy. And then lastly, prioritizing suppliers who are investing in water and energy efficiencies at scale. So as you can see, we have quite a few examples how we are embedding AI into R&D, into our operations to ensure that we -- to help us drive sustainability and more efficiency.

That's great. Thanks, Pam. And as a follow-up to that question, this one comes a lot in the calls I have with investors. Can you tell us a little bit about AZ's approach to AI governance?

Absolutely. This is a very important topic. We govern AI with a focus on human accountability, patient safety, privacy, security and legal and compliance and scientific integrity. These are all very important elements. Public AI tools are not permitted for AstraZeneca work unless they have been formally approved. AI use cases are assessed before deployment and systems that we deem to be higher risk are subject to ongoing validation and monitoring. An AI use case might be deemed high risk because of the scale of the rollout and the consequences of inaccuracy or the sensitivity of the data. So for example, an AI system that determined whether or not a patient would -- could participate in a clinical trial will be treated as a high risk. We apply clear legal boundaries if an AI use case is prohibited by applicable regulation, we do not allow it. Uses prohibited under the EU AI Act are treated as prohibited globally. Our employees are trained to identify risks and understand the ethical and legal issues around AI. And over 50,000 AZ employees have participated in our in-house training program on thriving in the age of AI that focus quite a bit on AI governance and ethical use of AI.

Thank you. And this is another one from Ben. Can you give any examples of where sustainability investments and thinking have created shareholder value either through lower costs, better access or stronger stakeholder relations?

Absolutely. Let me start with by saying we really believe sustainability is good for business. Embedding sustainability in our business strategy creates shareholder value by reducing costs, driving operational resilience and efficiency and reducing pressure on health care systems and at the same time, ensuring we can serve patients for the long term. Perhaps I can turn to Liz for -- to share some specific examples. Liz, over to you.

Sure. And thanks, Pam, and good afternoon, good morning, everyone. Thanks so much for joining the call and for this question. We see numerous examples across our business where sustainability is good for business and good for health care systems, good for now and for the long term. A few examples for you. So with our renewables investments, so we've made investments in sustainable energy, for example, renewable electricity and clean heat, including in the U.S., in China, the U.K. and Sweden. And through that, we've seen enhanced operational resilience and reduced risk and costs. For example, in particular, we've had reduced exposure to energy price volatility that we've seen this year. Also, I can talk to investments which lower energy and reduce water use and waste across our sites, support long-term operational continuity and also, in some cases, reduce our costs. Pam talked extensively about our investment in the next-generation propellant, where we're reducing our own footprint and the environmental footprint of respiratory care through the transition of our pMDI or our pressurized metered dose inhaler to a next-generation propellant. This was $0.5 billion investment back in 2020, and we're already starting to see the transition in the U.K. and Europe with other markets to follow. We chose to be proactive here in taking action and leading by doing because we really believed it was the right thing to do. And we see this as really important now given the increasing nature of environmental regulations. And I can say the launch has been greeted extremely positively by the respiratory community. An example in health care in the United Arab Emirates, they've adopted a guidelines-based care approach to the treatment of CKD, which involves early detection and appropriate treatment, which they found has reduced costs and the environmental impact of care and improved outcomes for patients. An example in our science portfolio with one of our new cardiovascular medicines being developed, our scientists have been working extensively on improving the process design to reduce the environmental impact of its manufacturing process when it finally moves to commercial manufacture. So from first in-license to the first commercial stage manufacturing, the environmental impact has reduced by more than 90% and 40 complicated process steps have reduced by 1/4. So these sustainable design improvements also have the added benefit of lower overall cost of manufacture once the product is launched. As probably a final example, and we have many is we find that innovations in our manufacturing process that enhance productivity often also have a sustainability benefit. So one example is a new process called continuous direct compression. And this is a capability which has reduced the production time for one of our new hypertension medicines from 20 days to 20 minutes for the production of tablets. This lowers energy use, reduces waste and supports efficient inventory management and ultimately helps getting medicines to patients more quickly. So as Pam said, sustainability, we truly believe is good for patients. It's good for health care systems and is also good for our business.

Thanks, Liz. Moving on then to the topic of health systems resilience. This question came in from Richard [indiscernible] at Northern Trust. Regarding the health systems resilience target, what does AZ need to achieve in order to strengthen the health system of an individual country and then count that country towards the target of 45%?

Thank you for the question. Let me start and then hand over to Stefan to give more specifics. In terms of our metrics for health system resilience, a country counts towards the health system resilient target when we can demonstrate that AZ is helping strengthen health systems through evidence-based advocacy and partnership with governments. Perhaps, Stefan, you can go into more specifics. Over to you.

Absolutely. Thank you, Pam, and hello, everyone. So as Pam mentioned in the presentation, our main platform through which we do that is the Partnership for Health System Sustainability and Resilience, PHSSR, which we cofounded in 2020. So through the PHSSR, we commission research with leading local health system and policy researchers, and we use these findings to engage and advocate for evidence-based policies. So it's really research and action, if you want, and then we can count a country towards our target. As you've heard before, PHSSR is currently active in 37 countries. We have over 30 research reports published already, and we're expanding the scope of PHSSR geographically and also across different health system problems. But this year, we expect to launch engagements and reports in Mexico, Indonesia, Finland, and Turkey, bringing the total number of PHSSR countries to over 40 by the end of 2026. So close to our target of 45 in our 2030 ambition. An example of that is Greece, for example, where we recently concluded research on what the health system would need to do to promote earlier action on noncommunicable diseases together with the University of West Africa. And with the research findings, then the PHSSR partners and AstraZeneca included, we engaged with the government on the importance of expanding access to early detection of chronic kidney disease, one of the main diseases that causes an immense burden on the Greek health system, on population health outcomes and cost to the economy. So informed by this work, the Greek Ministry of Health then strengthened early detection programs on CKD and introduced a screening program using the national electronic prescription platform to send SMS invitations to high-risk citizens for free diagnostic tests. So as you can see, a really proactive approach of the health system to engage people at risk with a free test, which is obviously important because we know through the research how little people engage and pay for tests for a disease that they don't know they even have or at risk of having. So the aim of this work is obviously to close the diagnostic gap, enable timely referral to care and ultimately strengthen the Greek health system resilience while also advancing health equity. So a great example of how we've connected research and policy action.

Thanks, Stefan. Now we're staying on the topic of health equity. We've actually a couple of questions on the overlap between health equity and AI. One from Francis [indiscernible], who's asked, given increasing reliance on AI-enabled screening and diagnostics, how does AstraZeneca ensure equitable deployment and mitigate potential biases in underserved populations? And then this one was from Lucy [indiscernible]. How is your collaboration going with Qure.ai to screen 5 million patients? And what is the impact that is having on low- to middle-income countries?

Great. Thank you for the question. Indeed, Qure.ai has some great examples that we have actually accomplished. So maybe, Stefan, could you please share the specifics?