Britain’s tough tax rates led to it losing out on a £320 million new COVID-19 vaccine facility, AstraZeneca’s chief has said.
Pascal Soriot said his drugs group chose Ireland as the base for its new state-of-the-art factory owing to the Republic’s low tax laws and commitment to green energy.
Addressing the pharmaceutical chief’s comments on Friday, British Chancellor Jeremy Hunt said the government was “disappointed” by the decision.
However, he said the UK would not consider tax cuts “funded by borrowing.”
“We’re disappointed that we lost out this time and we agree with the fundamental case they’re making which is that we need our business taxation to be more competitive and we want to bring business taxes down,” Hunt told broadcasters at a science facility in London.
“But the only tax cuts we won’t consider are ones that are funded by borrowing because they’re not a real tax cut. They’re just passing on the bill to future generations.”
The corporate tax rate is due to rise from 19 percent to 25 percent in April, while a tax relief scheme for businesses is expected to end and energy support will begin to fall away.
AstraZeneca has warned the UK for some time not to take its life sciences sector for granted and that it is losing out on investment to more competitive countries.
‘Discouraging’ Tax Rate
According to the Financial Times, Soriot blamed the “discouraging tax rate” for AstraZeneca’s decision to build its multi-million pound factory in Ireland rather than the UK.“We really have invested a lot and the country was making a lot of progress building a life sciences sector. I have to say in the recent past [it] has not been as supportive as we would have hoped,” he said.
AstraZeneca unveiled plans for the Dublin facility in September 2021 with what was then a $360 million price tag to construct an active pharmaceutical ingredients facility for small molecules.
The site will also help the UK-based drugmaker’s global manufacturing network in late-stage development and supply early commercial supplies for certain medicines.
Soriot also pointed out that Ireland’s commitment to developing more green energy in the coming years played a factor in the decision.
Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry (ABPI), said the AstraZeneca factory decision was “very disappointing” and called for government action to provide a “level playing field.”
Speaking to BBC Radio 4’s “Today” programme on Friday, Torbett said, “There are more stories about losing investment, like the one we’ve seen with AstraZeneca, than the positive noise stories coming in, and we really have to turn that around.”
He continued: “I do think there is a basic point that the economy is not growing fast enough at the moment to pay for the public services that we all need, so we’ve got a choice.
“We can either go so far down the route of fiscal conservativism that it would undermine potential growth industries, or we act responsibly but we try to make sure we are competitive with other countries that are going through similar challenges.
“The agreement we have with the NHS, that has got to the point where companies are now paying more than a quarter of their revenues—not profit but revenues—back to the government.”
Torbett said the cost is “in excess” of anything the industry pays “anywhere else in the world”.
Vaccine Sales Drop
On Thursday the drugs giant said it believes that in 2023 it will only sell a small amount of the COVID-19 vaccine that shot the company into the spotlight during the pandemic.The Cambridge-based business said it expects revenue from the vaccine, now called Vaxzevria, to hit “minimal” levels.
It follows a 94 percent drop in Vaxzevria sales in the last quarter of 2022.
A year earlier the business sold $1.8 billion (£1.5 billion) worth of Vaxzevria, but in the final three months of last year it sold just $95 million (£78.7 million) worth.
The fall comes despite a big jump in sales of one of the COVID-19 medications, Evusheld.
The drug helps prevent COVID-19 and is recommended in the UK for people who cannot have vaccines, or who are unlikely to mount an immune response to a vaccination.
Sales of the drug—approved in the UK in March last year—rose from $135 million (£111.8 million) in the final quarter of 2021 to $734 million (£608 million) a year later.
AstraZeneca said revenue increased by 25 percent to $44.4 billion (£36.8 billion) when accounting for currency fluctuations. On an actual basis it rose 19 percent.
Revenue in the final quarter rose by just 1 percent, owing to the fall in Vaxzevria sales, it added.
But the UK’s biggest company still swung back into profit last year.
The business had lost $265 million (£219.5 million) before tax in 2021; last year it made $2.5 billion (£2.1 billion).
