AstraZeneca Blames 'Toxic' Climate As It Walks Away from Over $550 Million UK Vaccine Plant

AstraZeneca Plc AZN has abandoned plans for a $554.32 million (450 million pounds) vaccine manufacturing facility in the U.K. following disagreements with government officials over state support, marking a setback for Prime Minister Sir Keir Starmer's administration.

In August 2024, AstraZeneca reconsidered its planned investment in a new vaccine-manufacturing site, a departure from CEO Pascal Soriot's previous statement that the company was "absolutely ready to go."

Also Read: FDA Approves AstraZeneca, Daiichi Sankyo's Enhertu For Certain Type Of Breast Cancer Patients

The U.K. Treasury, under the direction of Rachel Reeves, is reportedly considering decreasing government support for AstraZeneca by over 20 million pounds.

As a result, AstraZeneca said it might relocate the project from Speke in Merseyside, U.K., to France.

According to the Financial Times report citing sources familiar with the matter, the pharmaceutical giant rejected a revised offer of 78 million pounds in financial aid after months of negotiations.

The U.K. government initially planned to provide around 90 million pounds in support under the previous Conservative administration, including 70 million pounds in grants and 20 million pounds for research and development.

However, after Labour took office last summer, officials reviewed AstraZeneca's proposed R&D investment and concluded it was lower than expected.

As a result, the government reduced its support package to 40 pounds million. Although a later offer raised this figure to 78 million pounds, AstraZeneca ultimately turned it down.

The Financial Times report adds that AstraZeneca also raised broader concerns about the UK's pharmaceutical environment during discussions about the Liverpool-based plant.

These included the NHS's rejection of its breast cancer drug Enhertu and the health service's approach to drug pricing, sources said.

One individual close to AstraZeneca described the industry's relationship with U.K. officials as "toxic," arguing that the country now has one of the least favorable commercial environments for pharmaceuticals in the Western world.

AstraZeneca recently announced a plan to invest C$820 million ($570 million) in Canada, creating more than 700 jobs across all business areas.

The investment will support the move to a larger, state-of-the-art office facility in the greater Toronto area.

Price Action: At last check on Monday, AZN stock was down 0.56% to $70.37.

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