It has already cancelled investments in Liverpool and Cambridge, while muttering darkly about moving its listing to New York and its headquarters to the United States. Now AstraZeneca, the UK’s largest pharmaceutical company, is threatening to stop investing in Britain completely if the country does not spend more on medicine. There may be an element of arm-twisting in that, and the NHS is so stretched for cash it can’t easily spend much more on drugs. And yet, the UK also can’t afford to lose a company as significant as AZ. And if that means the NHS spending more on pills, and less on salaries, that is a choice worth making.
If that means the NHS spending more on pills, and less on salaries, that is a choice worth making.
For a company that is meant to be a national champion AZ has a very antagonistic relationship with its home country. Last month it put a £200 million upgrade of its research centre in Cambridge on hold, and earlier this year it cancelled a £450 vaccine facility in Liverpool. At the Conservative party conference this week its UK chairman Shaun Grady threatened to stop investment in the UK completely unless what he described as an ‘appalling’ NHS drugs pricing regime was dragged into the 21st century. Likewise, the American giant Merck cancelled a £1 billion investment in Britain earlier this year arguing that the health system was not doing enough to support innovation, while the science minister Patrick Vallence argued last month that the NHS would have to start spending more on medicines
It would be easy to dismiss that as special pleading. After all, huge companies always want to be paid more for their products. And of course, some of the specialist treatments, especially for conditions such as cancer, are incredibly expensive. Even so, the company has a point. The NHS is spending significantly less on medicines than comparable health systems around the world. The Health Secretary Wes Streeting is trying to make a virtue of playing hardball with the industry over prices, walking away from talks during the summer. The trouble is, he is playing a very dangerous game. The Labour government has lavished extra spending on the NHS, but most of it has been devoured by higher salaries. It spends slightly under £20 billion a year on medical devices and drugs out of a total budget of almost £200 billion.
That may have to change. The blunt truth is this: the UK can’t afford to lose a company as significant as AZ. The London stock market is down to just a handful of globally significant multinationals, and there is very little sign of any new ones coming along to replace those that leave or get taken over. AZ is one of the UK’s few remaining world-class companies, and life sciences is one of the few remaining world-class industries. Sure, the NHS needs to make sure it gets value for money – but if that means driving out major companies it is surely a false economy.
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