According to the CEO of AstraZeneca, the UK is losing out on investments from AstraZeneca in more competitive countries.
Tom Keith-Roach stated that AstraZeneca had not made any new capital research and development investments in Britain since 2021. The uncompetitive fiscal climate could also mean that AstraZeneca’s R&D spending in Britain could be at risk.
The FTSE 100 and the wider life sciences industry are particularly concerned by the “wildly out-of-line” NHS sales levy. Jeremy Hunt, the chancellor has named them among the five most important sectors in the UK.
“We are proud to be , a rapidly growing global company with a UK headquarters. . . But our commercial results are generated by countries other than the UK, who are willing and able to reward innovation as well as who are really hungry for investments,” he stated.
AstraZeneca increased its R&D spending by $1.8 billion per year in 2020 to $2.5 Billion in 2021. This includes collaborations and researchers. However, it did so when the levy was “internationally competive”.
“As we have seen the levy scale go from 5.1 percent to 15% per cent and now to 26.5 per cent — which seems wildly out-of-line with other competitors economies — all the major R&D and manufacturing investments we have made to support growth since then have gone somewhere else. They have gone to Ireland, Spain, and the Middle East.
He said: “As AstraZeneca’s UK business leader, I want the UK to be a competitive environment where AstraZeneca as well as other life science companies want to invest.
AstraZeneca is one of Britain’s largest pharma companies. It is worth PS164 billion and has around 83,000 employees worldwide, including nearly 8,000 in the UK. On Thursday, it will release its full-year results.
Last month Sir Pascal Soriot was AstraZeneca’s group chief executive and Dame Emma Walmsley, head of GSK (Britain’s other major pharma company), had sent Rishi Sunak similar warnings in private correspondence obtained under the Freedom of Information Act.
Walmsley spoke out publicly about the issue at GSK’s results last Wednesday. He stated that Britain’s life science sector was at “tipping point” unless it was addressed quickly.
Keith-Roach is one of the leading industry negotiators with the government. He said that the “full extent of how critical we think is that we begin to see some sort of co-ordinated action across government” was not publicly reflected.
AstraZeneca, which employs approximately 83,000 people worldwide, is the second-most valued company on the London Stock Exchange.
This levy was intended to reduce the NHS’s medication bill and support innovation in the sector. However, it has seen an increase in demand and backlogs following the pandemic.
AstraZeneca would like the PS3.3Billion levy (called the voluntary scheme to price branded medicines pricing, access, or Vpas) to be reduced to 6.8% for 2024. This is the historic average for the eight years prior to the pandemic. The wider levy system should also be reformed.
Keith-Roach stated that the system had “locked” the industry into a prolonged period of slow decline, but it wasn’t the only problem with the UK’s commercial environment. This was causing a “huge disincentive” to invest.
Our award-winning business team provides morning and midday updates about economic and financial news.
He said that there are many barriers in the UK’s healthcare system that delay innovation. This means that patients across the country don’t have access to the best treatments.
Consecutive governments identified life sciences as a crucial sector post-Brexit England and set out a vision to make it a science and tech “superpower”.
“When you consider the opportunities that we have in the UK which is actually well articulated [by the] government’s life sciences vision, it is possible to build a life science R&D powerhouse while at the same creating an environment that is ‘world-class’. . . The environment is far from the rhetoric at the moment.
According to the government, the NHS has delivered record numbers of access agreements under the scheme. It is open to suggestions about the next levy.