Zeneca Makes Announcement.

WILMINGTON, Del.--(BUSINESS WIRE)--Dec. 1, 1997--

PART ONE OF TWO

EXCELLENT GROWTH PROSPECTS BASED ON 87 PROJECTS

INCLUDING 26 NEW COMPOUNDS IN DEVELOPMENT

Zeneca's exciting early and mid-stage Pharmaceutical R&D pipeline

and value added product life cycle management to provide strong

future growth

An exciting early and mid-stage R&D pipeline in areas of unmet medical need and a wide range of high return enhancements to existing products, will continue to deliver strong growth for Zeneca, the company said today.

Dr. Richard Auty, R&D director of Zeneca Pharmaceuticals, will tell analysts and investors during a presentation at the company's pharmaceuticals international headquarters at Alderley Edge, Cheshire, UK that there are currently 87 development projects underway, including 26 new compounds (NCEs).

During the past three years, Zeneca has been highly successful with the launch of six major new products - 'Accolate', 'Casodex', 'Zomig', 'Seroquel', 'Arimidex' and 'Tomudex'.

Zeneca's aggressive life cycle management programme for these and other existing products, coupled with its balanced portfolio of new compounds, will extend the range of highly targeted products. This will ensure rapid progress in the market place across all the company's franchises.

A BALANCED PORTFOLIO

Zeneca is working across five broad therapeutic areas with a pipeline of compounds in each. Its dynamic portfolio will continue to be balanced throughout - highly original projects by less risky ones, primary care products by oncology treatments and in-house discoveries increasingly balanced by in-licensed compounds. The company will deliver these through one of the most effective R&D processes in the industry.

The balance of the portfolio is important in feeding projects into each of Zeneca's major franchises which are:-

-- Oncology, where the company aims to realise its goal of becoming number one.

-- Primary Care with the launches of 'Accolate' and 'Zomig' adding to a strong, established position in cardiovascular medicine especially with 'Zestril', 'Sular' and 'Tenormin'. New compounds in development provide plenty of other opportunities with compounds for cardiovascular and respiratory diseases, urinary incontinence and with a series of advanced superior analgesics.

-- Hospital and Specialist Products, with novel approaches to stroke, unstable angina, severe rheumatoid arthritis, Adult Respiratory Distress Syndrome (ARDS), gynaecology and diabetic neuropathy.

LIFE CYCLE MANAGEMENT

Line extensions and new formulations of existing products will provide excellent value- enhancing prospects. This is good commercial practice, being relatively low risk, yet opening up significantly larger market opportunities and yielding high returns.

The life cycle management projects include:

-- 'Zomig' - intra-nasal form, promising significant expansion in the fast growing migraine market;

-- 'Zestril' - a new indication in diabetic retinopathy for this important cardiovascular therapy.

-- 'Zoladex ' - opportunities in benign gynaecology treatment, a market which could be worth more than a billion dollars.

-- 'Diprivan' - new products for anaesthesia such as a pre- filled syringe and 'Diprifusor'.

-- 'Casodex' - in early prostate cancer, an untouched market three times the size of the advanced disease market;

-- 'Arimidex' - for first line treatment of breast cancer potentially more than doubling its market potential;

-- and, 'Seroquel' - for the treatment of psychoses in Parkinson's disease and Alzheimer's disease in the elderly - a market which potentially could double the number of patient treatment days for the compound.

Dr. Auty pointed to a steady stream of major approvals and launches in the key markets of Europe, US and Japan during the next five years, each giving a great new commercial opportunity.

DEVELOPMENT PROJECTS

The full development portfolio is reviewed in the attached appendix. The key features highlighted during the presentation were as follows:

Oncology

Research on anti-proliferation, anti-angiogenics, apoptosis inducers, anti-invasives, further targeted cytotoxics and immunostimulants all give exciting new opportunities to build up a portfolio of agents effective across all major cancers, with compounds including:

-- 'Faslodex' - the first pure anti-oestrogen, could be a more effective therapy and shows an improved side effect profile over the standard therapy, megestrol acetate, in advanced breast cancer. It may also have long term uses in gynaecology, particularly in endometriosis and dysfunctional bleeding, doubling the potential sales in the first decade of the next century.

-- ZD9331 - an anti-metabolite in Phase II for a wide variety of tumours.

-- ADEPT - a targeted chemotherapy whose manufacturing problems have been overcome - has entered cancer patient studies.

-- ZD0101 - an anti-angiogenic , which deprives tumours of nutrients and oxygen, has now entered Phase II. Its unique mode of action means it could be combined with other agents.

-- ZD1839 - an epidermal growth factor receptor tyrosine kinase inhibitor for non-small cell lung cancer, pancreatic cancer and other cancers over-expressing EGF receptors.

Central Nervous System (CNS)

Two Phase II compounds in the treatment of pain are:

-- ZD4953 - an EP1 antagonist, the first of a new class of products for moderate pain. Clinical trials will report next year.

-- ZD9379 - a glycine antagonist in early Phase II which demonstrates oral activity and will be studied in a broad range of pain types.

Other novel approaches are:

-- a neuronal calcium channel programme and an alpha 2c receptor agonist programme, both for severe pain;

-- a DRG sodium channel treatment for neuropathic pain;

-- and, a unique discovery patented by Zeneca - the venom of the pink, Chilean tarantula which, in the wild, kills painlessly. The protein component of the venom promises a new class of analgesic for severe pain, free of abuse liability, addiction potential and the cognitive effects of morphine.

In stroke treatment, Zeneca is taking a three-pronged approach with the following compounds identified by high throughput screening of its rich compound collection:

-- ZD9379 - a glycine antagonist - entering Phase II for the treatment of both pain and stroke;

-- a unique class of compounds discovered by Zeneca that inhibit glutamate toxicity without interacting with the glutamate site or calcium channels.

-- CASPASE-3 - a protein identified as important in programmed cell death.

Respiratory/Cardiovascular

These new compounds in development demonstrate Zeneca's ability to work "end-to-end" across the cardio-respiratory range:

-- ZD8321 - the lead compound of human neutrophil elastase inhibitors for treatment of Adult Respiratory Distress Syndrome (ARDS), in early Phase II.

-- ZD2486 - an anti-platelet compound for oral and intravenous treatment of unstable angina in early Phase II.

-- ZD1611 - an endothelin A receptor antagonist in pre-clinical for the oral treatment of chronic heart failure and Chronic Obstructive Pulmonary Disease (COPD).

New Opportunities

Disease focus, commercial opportunity and high quality science have combined to produce the following four opportunities:

ZD6169 - for urinary incontinence, a major unmet medical need with more than 30 million people affected worldwide and at least 12 million in the US. This compound is potent at decreasing bladder contractility with minimal side effects on blood pressure and heart rate. The competitive position is good and efficacy trials will start in the first quarter of next year.

ZD5522 - an aldose reductase inhibitor - for neuropathy in diabetes. In the Western world and Japan, diabetes affects more than 35 million patients with increases of at least 14 per cent predicted by 2002. In pre-clinical trials, the compound has shown 200-fold better results than earlier compounds, such as 'Statil'. Clinical trials are due to start next year.

ZD7349 - a VLA4 antagonist - is a potent cyclic peptide that blocks leucocyte recruitment to inflamed tissues and is effective against arthritis and multiple sclerosis in mice models. Work is underway to develop the compound using the co-polymer sustained release system used for 'Zoladex'.

ZD2315 - an inhibitor of MHC Class II - works on the immune process against rheumatoid arthritis. This peptide is also compatible with Zeneca's depot technology and will be developed as a subcutaneous injection.

RESEARCH

For the immediate future, 11 projects in late research are likely to give a family of compounds for early development in the next 12 months. The best will then be taken into full scale development.

As the company grows, a bigger pipeline will be needed, fuelled largely by in-house research. Research output is set to double over the next five years. Zeneca aims to quadruple the size of its diverse compound collection and increase chemical diversity. Potential new products will move faster from research into development through the merging of the previously separate Research and Development functions.

Zeneca is using the latest scientific advances to build an exciting technology platform. Existing and new external collaborations are matched with internal investments to increase the number and quality of products, and deliver a novel and prolific pipeline into the next millenium.

Its strategy seeks to:

-- enhance target discovery abilities;

-- make lead discovery faster and more successful;

-- improve the speed and quality of lead optimisation;

-- increase the chance of success in development.

Zeneca has built a state of the art genomics capability including relationships with Incyte, Molecular Dynamics (Amersham), Oxford University and SEQ.

These first rate collaborations have been matched by internal investments in gene discovery, human genetics and bioinformatics to convert genomic data into the best drug targets quickly.

In cell biology, collaborations with Sugen Inc, Rutgers University, Baylor College of Medicine and the University of California complement Zeneca's own capability, facilitating the conversion of genomically derived data into valid research targets.

For example, using the Incyte database and cell biology, Zeneca has identified two potassium channels with exciting properties - a calcium activated potassium channel, a good target for immunomodulation, and a voltage-gated potassium channel for a range of neurological diseases.

The Pharmacogenetics Group, announced recently, will evaluate how people are genetically different in respect to susceptibility to disease and how each individual responds to and metabolises medicines. This information can be used in medicine discovery and development to design better research programmes, select the best indications for compounds and select patients for clinical trials.

Dr Auty said, "Zeneca will deliver in the future through being focused on important commercial targets that meet real medical needs, a dynamic portfolio balanced between highly original and less risky projects and through one of the most effective R&D processes in the industry." -0-

                   DEVELOPMENT PROJECT PORTFOLIO

             CANCER                  CARDIOVASCULAR

SALES        `ZOLADEX'               `ZESTRIL'
             `CASODEX'
             `ARIMIDEX'
             `TOMUDEX'

PHASE III    `FASLODEX' Adv. BC      `ZESTRIL' CHF
             `ZOLADEX' IVF           `ZESTRIL' - Diabetes
             `ZOLADEX' 10.8mg END
             `ZOLADEX' 10.8mg FIB
             `ZOLADEX' 10.8 PC (Jp)
             `ZOLADEX' 1.8mg (Jp)
             `ZOLADEX' Adj BC
             `CASODEX' EPC
             `CASODEX' Mono
             `CASODEX' 80mg (Jp)
             `ARIMIDEX' 1st Line
             `ARIMIDEX' Adj
             `TOMUDEX' Adj

PHASE II     `ARIMIDEX' (Jp)         ZD2486
             `FASLODEX' Gyn          Gpllb/llla)
             `TOMUDEX' (Jp & Other)
             ZD9331 (TSI)
             ZD1839 (RTKI)
             ZD0101 (Anti Ang)

PHASE I      ZD2767 (ADEPT)

PRE-CLINICAL `ZOLADEX' alternative   ZD1611}
                       formulations  ZD2574} (END)
             ZD9063P                 ZD4054}
             ZD4190 (VTK)            ZD4927 (Xa)
             ZD3980 (Anti Andr)

---------------------------------------
             CNS                     RESPIRATORY

SALES        `DIPRIVAN'              `ACCOLATE'
             `ZOMIG'
             `SEROQUEL'

PHASE III    ZD0859 no. 1            `ACCOLATE' Paeds
             `ZOMIG' FM              `ACCOLATE' (Jp)
             `ZOMIG' - adolescents
             `ZOMIG' - aura
             `ZOMIG' - cluster headache
             `SEROQUEL' SR
             `SEROQUEL' - ad. Labelling
             `SEROQUEL' - once daily
             `SEROQUEL' - 150/300mg
             `SEROQUEL' - (Jp)

PHASE II     `ZOMIG' IN              `ACCOLATE' SR
             `ZOMIG' (Jp)            ZD8321 (HNEI)
             ZD4953 (EP1)

PHASE I                              ZD0892 (HNEI)

PRE-CLINICAL ZD6804 (EP1)            ZD4407 (5LP0l)
             ZD6416 (EP1)
             ZD9379 (GLY)
             ZD7349 (VLA4)

--------
             METABOLISM/OTHER

SALES

PHASE III

PHASE II     ZD6169 (KCO)

PHASE I

PRE-         ZD2315 (MHC)
CLINICAL     ZD5522 (ARI)
             ZD0947 (KCO)
             ZD9720 (OSC)


-0-
DEVELOPMENT PORTFOLIO

ZD 0101       anti-angiogenic:  solid tumours
ZD 0892       human neutrophil elastase inhibitor:
              peripheral vascular disease
ZD 0947       potassium channel opener:  urinary
              incontinence
ZD 1611       endothelin antagonist:  heart failure
ZD 1839       EGF receptor tyrosine kinase inhibitor:
              solid tumours (cytostatic)
ZD 2315       MHCII antagonists:  rheumatoid arthritis
              etc
ZD 2486       GpIIb/IIIa antagonist:  unstable angina
ZD 2574       endothelin antagonist:  heart failure
ZD 2767       ADEPT:  colorectal cancer
ZD 3980       anti-androgen:  BPH
ZD 4054       endothelin antagonist back up:  heart
              failure
ZD 4190       VEGF receptor tyrosine kinase inhibitor:
              solid tumours
ZD 4407       5-lipoxygenase inhibitors:  asthma etc
ZD 4927       Factor Xa inhibitor:  prophylaxis of DVT
ZD 4953       EP1 antagonist lead:  pain
ZD 5522       aldose reductase inhibitor:  diabetes
ZD 6169       K channel opener:  urinary incontinence
ZD 6416       EP1 antagonist:  pain
ZD 6804       EP1 antagonist follow-up:  pain
ZD 7349       VLA4 antagonist:  arthritis, MS etc
ZD 8321       human neutrophil elastase inhibitor:  ARDs,
              bronchitis
ZD 9063P      ADEPT pro-drug back-up:  colorectal cancer
ZD 9331       thymidylate synthase inhibitor:  solid
              tumours
ZD 9379       glycine antagonist:  stroke
ZD 9720       oxido squalene cyclase inhibitor:
              cholesterol lowering

PART TWO OF TWO

RICH OPPORTUNITIES TO DRIVE ZENECA'S GROWTH

THROUGH THE NEXT DECADE

New science creating the capability to attack chronic, debilitating and life threatening disease is presenting rich opportunities which Zeneca is positioning itself to exploit, Dr. Tom McKillop, Chief Executive of Zeneca Pharmaceuticals, will say today.

He will tell financial analysts and investors during the conclusion of a presentation on the company's pharmaceuticals R&D portfolio of his confidence in Zeneca's future growth prospects for the next decade.

"There is plenty of fuel in the tank to drive us through 2001 and well into the next century," he said.

Successful innovation in pharmaceuticals will continue to be well rewarded.

"I am confident that Zeneca is and will continue to compete successfully in the innovation stakes," added Dr. McKillop.

Major new markets and new technology both present opportunities for the company.

"We are opportunity rich." said Dr. McKillop. "For both the industry and Zeneca, new technology is creating undreamt of capability to attack chronic, debilitating and life threatening disease. Zeneca is positioning itself skilfully to exploit this wave of new science. We have put together the key pieces of the jig-saw in a cost effective manner and every day we are leveraging this in new programmes. There is no shortage of good disease targets for Zeneca," said Dr. McKillop.

The company is building strongly on its well earned reputation for effective commercialisation of its products. Sales forces have been increased in many markets and Zeneca is, in appropriate markets, advertising products directly to consumers. The goal is to maximise shareholder value by driving the business forward as hard as possible.

The cancer portfolio is strong, placing Zeneca as the world' s clear No 2 cancer company with many more ideas to pursue. The aim is still to be No 1 with compounds from the company's own research, together with licensed products.

In primary care, progress with 'Accolate', 'Zomig' and `Sular' have strengthened the portfolio.

Dr. McKillop is confident Zeneca can meet the challenge of fuelling growth through investment in marketing new products and building R&D capability while maintaining good financial ratios. All factors point to a strong performance during the next few years.

'Zestril' and 'Nolvadex' are the current products most vulnerable to generic competition after patent expiry. The patent for 'Zestril' expires in the US in December 2001, though exclusivity runs for several more years in some other important markets. The expiry date for 'Nolvadex' in the US, the last patent protected market, is August, 2002.

Zeneca will be in a better position to face these patent expiries than in 1991, when the patent for 'Tenormin' expired in the US - its last market. Then, 42 per cent of pharmaceutical total sales were represented by 'Tenormin'. Mature products accounted for 33 per cent of sales and only 25 per cent were products in their growth phase. During 1991-95, Zeneca generated a compound annual growth rate of more than eight per cent in sales, despite the expiry of `Tenormin' patents.

By contrast, in 2001, nearly 60 per cent of sales are anticipated from products still in their growth phase with 19 per cent in the mature category and only 22 per cent in `Nolvadex' and 'Zestril'. Not all of the 22 per cent would be at risk. Clearly, Zeneca's position is much stronger, with half the exposure of sales to patent expiry and more than twice the level of products still in growth phase.

A group of products, including 'Accolate', 'Seroquel', 'Casodex', 'Arimidex' and 'Zomig', will be contributing to growth by this time.

In 1998, nine approvals are expected in the US, Europe and Japan. The launch of 'Zomig' in the US and 'Casodex' in Japan are important but the value of line extension work around 'Zestril', 'Zoladex' and 'Casodex' should not be underestimated.

In 1999, a further 12 approvals, involving line extensions on many of the new products, are expected.

By the year 2000, Zeneca expects first approvals for three key products in Japan - `Accolate', `Seroquel' and `Arimidex' - as well as further line extensions throughout the world.

The first wave of new products should arrive in 2001 with 'Faslodex' for breast cancer and ZD 9331, a thymidylate synthase inhibitor for major solid cancer tumours.

Approvals for many of the new compounds in the future R&D pipeline are anticipated in 2002.

"We have put together one of the most effective development machines in the industry. We have the resources. We have the technology. And we know how to manage the life cycle of our products," added Dr. McKillop.

CONTACT: Media Contacts:

Zeneca Pharmaceuticals

Steve Lampert, 302/886-7862

or

Zeneca Inc.

Judith Auchard, 302/886-3638

or

Investor Relations:

Zeneca Inc.

Ed Seage, 302/886-4065