Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
AstraZeneca has warned it could relocate its vaccine manufacturing site from Merseyside to Philadelphia amid a deadlock in negotiations with the Labour government over plans to cut state aid promised to the project.
People briefed on the government’s thinking say chancellor Rachel Reeves wants to reduce the amount the state provides to the British pharmaceutical company’s vaccine centre, cutting a pledge made by the last Conservative administration from about £90mn to £40mn.
The previous offer included up to £70mn in grants to develop a facility in Speke, as well as £20mn in research and development support from the UK Health Security Agency, according to two people briefed on the matter.
Senior representatives from AstraZeneca have told government officials they are considering moving the planned vaccine operation to Philadelphia in the US, where generous financial support is offered to industrial projects.
It also suggested manufacturing could take place in India, where the company has produced vaccines in the past, according to people briefed on the discussions.
The Tory government announced in March that AstraZeneca was investing £450mn on researching, developing and manufacturing new vaccines in Speke. The Financial Times reported at the time that the company was looking to secure up to £100mn in support.
Britain’s decision to rescind some of the funding on offer, as part of a Treasury review of financial decisions made by the previous government, stands in stark contrast to the significant perks offered by US President Joe Biden as part of his industrial strategy.
Shadow tech secretary Andrew Griffith, who was involved in the initial agreement with AstraZeneca, said that if the new government failed to increase its funding offer it would be a “huge backwards step for the UK”.
“This is the most valuable listed company in the UK, in one of the most valuable sectors, the life sciences, and it is essential that the UK remains at the heart of the research that AstraZeneca conducts,” he said.
One person briefed on the discussions said: “As far as AstraZeneca are concerned, they got promised that this was all in the bag by the previous administration,” adding that the company was “not happy” with the deal being offered.
The person said: “We could end up importing these vaccines instead of exporting them and we’d lose a lot of sovereign capability,” referring to the company’s possible move to manufacture jabs abroad.
AstraZeneca established its vaccines unit after working with the University of Oxford to develop a Covid-19 jab. It withdrew the vaccine in May, saying demand had fallen in favour of other treatments able to deal with new variants.
The vaccine was safe and effective overall but confidence in it was damaged in 2021 after rare blood-clotting incidents led European authorities to limit its use among younger people.
The existing Speke site, south-east of Liverpool city centre, is used to make a nasal flu vaccine called FluMist, designed using an egg-based manufacturing process.
AstraZeneca declined to comment.
A Treasury spokesperson said: “We are committed to making the UK one of the best places in the world to develop and manufacture new and innovative medicines, and we are in positive discussions with AstraZeneca to support the delivery of this planned investment in Speke.”