UK government eyes AstraZeneca factory expansion deal

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UK ministers are hoping to secure a major new vaccines investment by AstraZeneca with a possible state aid package worth tens of millions of pounds, in a deal that would deliver a big boost to Britain’s life sciences sector.

The investment would be a coup for Rishi Sunak’s government after AstraZeneca’s chief executive Sir Pascal Soriot last year chose Ireland over the UK for a new $360mn factory, blaming Britain’s “discouraging tax rate”.

Ministers are expecting a formal application by AstraZeneca for financial support to expand its operations at Speke near Liverpool in the coming weeks, according to government officials briefed on the discussions. 

Some inside government think AstraZeneca could ask for as much as £100mn in support. “They want some government cash,” said one official. “It would be looked on favourably.”

The plans are not final and the company could still expand at other sites, including its Macclesfield manufacturing base, according to a person familiar with the matter. AstraZeneca declined to comment.

Chancellor Jeremy Hunt has named life sciences as one of his five key sectors for the British economy. He set aside £520mn in his November Autumn Statement to “build resilience for future health emergencies and capitalise on the UK’s R&D strengths”.

The government said about £1bn of overall public support for the life sciences sector was available.

Maria Eagle, the Labour MP whose constituency includes the Speke plant, said the company was looking to produce “next generation” vaccines on land adjacent to the current factory, which makes influenza vaccines.

“I will support in any way I can their expansion plans,” she said. “It would be good for the country in terms of resilience against future pandemics and for the local community.

“I hope the government will support them to enable this development to go ahead,” she added.

Last March Hunt said Britain had “a very strong base” in life sciences with the largest industry in Europe, but the government’s policies have recently come under attack from some in the sector.

Last February Soriot criticised the UK’s tax rates — Britain’s main corporate tax rate is 25 per cent — and said the UK government had not been supportive enough of the industry in recent years.

In October 2023 Merck’s research chief called on the government to make Britain more welcoming to pharma companies, even as the US-based drugmaker prepared to break ground on a £1bn research centre in London.

The industry has been particularly frustrated that the UK pays much less than many other developed countries for drugs, culminating in a dispute last year about rebates drugmakers are required to pay the NHS. A new deal between drugmakers and the health service was agreed in November.

AstraZeneca set up a vaccines and immune therapies unit after it partnered with the University of Oxford to develop a Covid-19 vaccine.

The vaccine was one of the most used around the world in 2021, but concerns about a rare blood-clotting side effect and the fact it was less effective than mRNA jabs meant it has since fallen out of common use. 

Before the pandemic, the only vaccine the drugmaker sold was “Flumist”, a nasal influenza vaccine manufactured in Speke.

One person familiar with the matter said the UK government had been worried supplies of this vaccine, used in British schools, could dwindle since it is no longer recommended in the US. The investment could secure Flumist’s future, they added. 

AstraZeneca is investing in new ways to make vaccines that may be more efficient and faster than the old egg-based manufacturing processes still used in Flumist.

Late last year, AstraZeneca agreed to buy its first vaccine company, Icosovax, in a deal worth up to $1.1bn.

A government spokesman declined to comment on “commercial matters”, but said: “The government is committed to cementing the UK’s status as one of the best locations in the world for global life sciences companies to invest and innovate.”