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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Pharmaceutical companies have clout. The life science sector’s strategic and economic value drives fierce international competition for investment. That’s why the former UK government offered a state aid package to secure a planned £450mn investment for a new vaccine plant in Merseyside in north-west England. And that is why the new government should be reluctant to let the project slip away, even as it reportedly haggles over the bill.
The Treasury described its discussions with AstraZeneca over the investment as positive, coming up with warm words about making the UK a world-leading hub for innovative medicines. Given that Labour’s manifesto put stability at the core of its life sciences policy, it risks being painted as an unreliable partner if it plays hardball.
Yet even if this issue is resolved, there will be other clashes between the pharma sector and a cash-strapped government. The two sides signed a new deal over drugs pricing in November last year, after fraught negotiations in which some companies threatened to stop investing in the UK. But this won’t change what drugs companies see as the inordinately low share of health spending that the UK devotes to medicine. The UK’s share of 9 per cent is little more than half that in Germany, Japan and Italy, according to research company IQVIA.
Tight budgets constrain patients’ access to new, costly medicines. After the NHS was blocked from using AstraZeneca’s advanced breast cancer drug Enhertu on cost grounds last month, its chief executive Pascal Soriot called on the government to take a new look at how medicines are assessed.
Difficulties in selling new drugs to the UK dampens companies’ enthusiasm for using it as a base for conducting clinical trials. The number of clinical trials initiated in the UK fell from 690 to 394 in the six years to 2021, before edging up 4 per cent the following year, according to the Association of the British Pharmaceutical Industry (ABPI) trade body. By contrast, Spain is doing well in securing trials, while relatively low-tax Ireland attracts a disproportionately high number of pharmaceutical manufacturing projects.
The UK’s universities are a real strength when it comes to life sciences. But alone, that has not been enough to stop the UK’s share of global pharmaceutical research and development investment falling by a third to 3.3 per cent in the eight years to 2020, according to the ABPI. Turning this around is a daunting challenge, given the travails of the NHS and the public finances. But easing the squeeze on the share of health spending that goes on medicine would be a start.