AstraZeneca's £37bn US Bet Sparks Fears of Abandoning UK Listing

AstraZeneca's Major Investment in the US Sparks Concerns About London Listing

AstraZeneca, a leading pharmaceutical company listed on the FTSE 100, has announced plans to invest £37 billion in the United States as potential new tariffs under Donald Trump’s administration loom. This move has raised concerns that the company may shift its primary stock market listing from London to New York, which could have significant implications for the UK financial sector.

The investment is part of an accelerated expansion strategy in the US, aiming to create tens of thousands of new jobs. Analysts believe this decision could be a major blow to the UK, with some suggesting that the government will regret not taking stronger measures to retain such a prominent company.

The pressure on the pharmaceutical industry comes from Trump’s threat to impose new import levies, potentially as high as 200%, which he has indicated could be implemented by the end of the month. These tariffs are intended to push drug manufacturers to move their production facilities to the US.

For AstraZeneca, the US is its largest market, accounting for 42% of sales. The company’s CEO, Pascal Soriot, aims to increase this figure to 50% by the end of the decade. This focus on the US market has led to speculation that investors might push for a switch in the company’s primary stock listing, which would negatively impact the UK stock market.

Strained Relations with the UK Government

Relations between AstraZeneca and the UK government have become increasingly strained since the Labour Party came to power last year. The company recently canceled plans for a £450 million vaccine factory near Liverpool due to a funding dispute with ministers. Soriot has openly criticized the UK as “a very unattractive place to do business,” highlighting the growing frustrations within the company.

Despite these tensions, Soriot emphasized that the investment in the US is driven by a belief in America’s innovation in biopharmaceuticals and a commitment to patients globally. This decision has been seen as an embarrassing snub to the UK government, which had recently unveiled plans to boost the life sciences sector.

Industry-Wide Shift Toward the US

AstraZeneca is not alone in its shift toward the US. Other pharmaceutical giants, including Swiss firm Roche, French company Sanofi, and FTSE 100 business Hikma, have also increased their investments in the US amid fears of rising tariffs. This trend underscores the growing uncertainty surrounding the UK’s ability to compete in the global pharmaceutical market.

Russ Mould, investment director at AJ Bell, noted that the UK government may regret AstraZeneca’s decision to invest in the US, as it would miss out on the associated economic benefits. He highlighted the importance of retaining major companies like AstraZeneca for the health of the UK stock market.

Sanofi Acquires British Biotech Firm

In another significant development, a French pharmaceutical giant has agreed to acquire a privately owned British biotech firm for up to £1.2 billion. The deal involves Sanofi taking control of Vicebio’s early-stage combination vaccine candidate for respiratory syncytial virus (RSV) and human metapneumovirus (hMPV).

This acquisition is expected to complement Sanofi’s existing vaccine portfolio, allowing the company to offer a broader range of options to doctors and patients. Emmanuel Heron, CEO of Vicebio, expressed confidence in Sanofi’s ability to realize the full potential of their innovative technology, citing the company’s global scale and expertise in vaccine development.

The deal highlights the ongoing consolidation in the pharmaceutical industry, as companies seek to strengthen their positions through strategic acquisitions. It also reflects the growing interest in biotech firms that are developing cutting-edge treatments for complex medical conditions.