AstraZeneca

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Monday 3 February.

“As the largest company listed on the London Stock Exchange, employing more than 10,000 people and investing about £2.5 billion every year in the UK, AstraZeneca is a close and valued partner to this Government and is critical to the UK’s thriving life sciences sector. We saw that in the Covid-19 pandemic, when AstraZeneca partnered with the University of Oxford to create a safe and effective vaccine that was manufactured and distributed around the world, saving millions of lives.

This type of partnership for the prevention of illness is critical to achieving the Government’s ambition of reducing the burden on the NHS. AstraZeneca’s decision not to invest in Speke, Liverpool is therefore deeply disappointing and follows intensive work and collaboration between the Government and the company. This collaboration on Speke dates back to 2020 and led to an announcement at the Spring Budget 2024 when AstraZeneca set out its intention to invest £450 million into its flu vaccine manufacturing facility. To secure that investment, the previous Chancellor provided assurance of His Majesty’s Government support, valued at around £90 million, subject to successful completion of due diligence. That support was based on His Majesty’s Government’s initial assessment of figures provided by the company.

Both the previous Government and this Government have always made it clear that full due diligence would be required before a final government offer could be confirmed. Since the Spring Budget, AstraZeneca confirmed a significant change in the composition of its proposed investment, resulting in a smaller level of research and development being conducted in the UK. As the shadow Minister would expect, that change in AstraZeneca’s UK investment resulted in a corresponding change in government support.

Our revised government offer sought to ensure value for money for the taxpayer and followed due diligence of the investment put forward by AstraZeneca. We remain closely engaged with AstraZeneca as we develop our new industrial strategy, build a health system fit for the future and drive up economic growth. In the spring, the Government will release our industrial strategy, containing a comprehensive plan for growing the life sciences sector. That will build on the significant momentum generated by the plan for growth, including delivery of the Oxford-Cambridge growth corridor, as well as the Budget announcement of the life sciences innovative manufacturing fund, the suite of inward investment announced at the international investment summit, and the strategic partnerships announced with Oxford Nanopore and Eli Lilly”.

12:03:00

My Lords, does the Minister realise that AstraZeneca’s move to reverse its decision to establish a £450 million manufacturing facility in Speke has come as a tremendous setback to my home area, to Merseyside and to the UK? I am very glad that the Minister is answering this Question, because he is widely respected for the work he did as Chief Scientific Adviser to the Government for five years, and also for the research he has done and the work he did in the life sciences sector. Does the Minister realise that attracting inward investment is one of the most competitive areas across the globe? Is it true that the Treasury, in a last-minute bid to cut the amount of the grant by what is described as an infinitesimal amount, sabotaged the deal? Will he please explain to his colleagues at the Treasury that we need to re-establish an attractive business environment in the UK, rather than the increased tax burden and the Employment Rights Bill which is going to destroy jobs? He alone can probably explain what went wrong. Does he realise that Dr Clive Dix, the former chair of the Covid-19 Vaccine Taskforce, has said: “The Government had an open goal”, and have scored “an own goal”? What went wrong?

Clearly, I understand this area rather well. It is disappointing that the AstraZeneca deal fell through. The deal was first raised in 2020 and was then offered in 2024. Subsequent to that, AstraZeneca changed its mind on how much work it wanted to put into the UK, including reducing the R&D component, which meant that there was a reduction in the offer that came from the Government. I understand that there are a number of reasons why this particular deal fell through, but I also reassure noble Lords that there is a very active programme of attracting investment, including discussions with AstraZeneca which are ongoing on other matters.

My Lords, I draw noble Lords’ attention to my registered interests as chairman of the Office for Strategic Coordination of Health Research. Is the Minister content that His Majesty’s Government are doing enough to support global investment in UK life sciences, not only through fiscal measures but through their own investment in securing the infrastructure and capacity for clinical research in our country and the base for fundamental and translational research in our universities through funding for the National Institute for Health and Care Research and the Medical Research Council? Is the Minister able to reassure us that these matters will be considered very carefully in any future comprehensive spending review?

I thank the noble Lord for his question. Yes, I am very aware of the need for funding in this area and for attracting external inward investment. The noble Lord may well know that a number of companies have been attracted to the UK recently, such as Eli Lilly, with a big deal of £279 million. Last week, Moderna opened its new facility in Harwell within two years. There is a lot going on in terms of inward investment, and the noble Lord is quite right to point out the importance of both NIHR and MRC funding as part of that process.

My Lords, when the former Chancellor announced that AstraZeneca was set to inject £450 million into the establishment of a new manufacturing plant in Liverpool, the metro mayor hailed the investment as a vote of confidence in the work of the Liverpool combined authority, providing the new investment and jobs for local people that the plant would bring. Just days after the Chancellor laid out billion-pound plans mainly for the south-east, the so-called “golden triangle”, AstraZeneca, as we know, pulled out of Liverpool. Can the Minister tell us whether the metro mayor was involved in the discussions over AstraZeneca, and if not, why not? Secondly, how do the Government plan to develop the city’s life sciences and pharmaceutical sector?

I reassure the noble Lord that the metro mayor was aware of the discussions with AstraZeneca. It is important to remember that AstraZeneca will continue to produce vaccines in Speke. It is not that AstraZeneca has pulled out of there; it is that the new investment has not come there. I have recently been speaking to metro mayors about how we can make sure that the R&D funding is supportive of what metro mayors are trying to achieve.

My Lords, the Minister is a little bit complacent because, as he knows, the investment was for future-generation flu vaccines and not for existing vaccines. As the Lords Science and Technology Committee said recently, this raises “troubling concerns” about the UK’s lack of “capacity to manufacture vaccines for future biological threats”. What are the Government doing to ensure a portfolio of vaccine technology can be manufactured in the UK and that we are not just relying on mRNA?

I thank the noble Lord—that is the first time I have been called complacent about vaccines. There is a lot going on: the Moderna investment in a new facility at Harwell; the BioNTech investment; the recent announcement of £60 million by GSK with Oxford; and there is a review of all the vaccine facilities across the country. It is absolutely essential to get this right, as the noble Lord has said, for future pandemic preparedness, as it is a key area. AstraZeneca remains, of course, with its major R&D base in this country, and I will be speaking to it again shortly.

My Lords, I would call my noble friend the Minister a very dedicated public servant and not a bit complacent. Does he agree that a number of pharmaceutical companies, not least AstraZeneca, have benefited a great deal over the years from UK investment, including in universities and including through the purchasing power of the NHS, which is not inconsiderable? What do the Government plan to do to introduce an element of contingency into those relationships? Have the Government considered perhaps even their own state manufacturing capacity?

I thank my noble friend for her question. The UK is fortunate to have two very large pharmaceutical companies in this land, and we have many biotechs starting up as a result, because many of the people in those biotechs were trained in the big companies. As my noble friend quite rightly points out, the relationship with the NHS is important. All of these things create an ecosystem for life sciences investment which we are very keen to continue. The history of state-run manufacturing facilities is not one that generally leads to advanced manufacturing and efficiency.

My Lords, can the Minister give us more detail as to why AstraZeneca pulled out? He said there were a number of reasons, so I wonder if he could go into more detail.

Yes, I am happy to do so. The first was the restructuring of the deal because of the AstraZeneca decision to put less into R&D, which meant that there was a proportionate decrease in the state funding, which I think most people would think would be an appropriate position in a deal. Secondly, I think that it has expressed concerns about the voluntary scheme for branded medicines pricing and access programme. It was also concerned about NICE’s decision to refuse approval for its recent drug Enhertu. But I think noble Lords would agree that it is not appropriate for the Government to link decisions on individual drugs to investment in other parts of the system.

My Lords, would the Minister confirm that the chief executive of AstraZeneca has said that it was a purely commercial decision and that a potential grant of £80 million should not be significant to a company that has made a profit of nearly £9 billion and increased its profits by 38% in the last year? Surely it is the company’s responsibility, unlike what has been suggested by the unfortunate spokesperson for the Opposition?

I think it is undoubtedly a commercial decision. Having been head of R&D for a multinational pharmaceutical company, I know exactly how these decisions are made. It will have been a commercial decision as to where it needs to make the right investments for its vaccine manufacturing. I think the small change in the deal from the UK Government was probably a minor part in the overall decision-making.

Given the fact that the project will not now go ahead and that we wish to be self-sufficient in the production of vaccines, what steps are the Government taking to ensure that we will be self-sufficient in producing vaccines going forward and not dependent on imports?

I refer the noble Baroness to the answer I gave earlier: the Moderna facility in Harwell is a massive new vaccine investment in this country; there is the BioNTech deal to bring that company here as well; and there are several other opportunities, including the life sciences innovation manufacturing fund of up to £520 million, which people are applying for at the moment. There is a lot more going on in vaccines now than there has been, but I am absolutely not complacent about this. It is an area we need to get right and an area where we need to make sure that the vaccine facilities are being used to produce vaccines on a daily basis—there is no good at all in having plants lying idle, waiting for something to happen.