AstraZeneca threatens to stop investing in Britain

AstraZeneca’s UK chairman has threatened to halt investment in Britain unless the Government backs down over an NHS drug pricing row.

Shaun Grady warned that Britain was in danger of disappearing from a list of attractive global destinations unless it brings its “appalling” drug pricing regime into the 21st century.

Speaking at the Conservative Party conference, Mr Grady said the UK “fell down” on adopting innovation with patients being denied cutting-edge drug treatments as a result.

He blamed a lack of government support for new projects and an agreement that places a cap on how much the NHS spends on branded medicines for putting future investment at risk.

AstraZeneca announced last month that it was putting on hold a planned £200m upgrade of its Cambridge research site. The company had earlier axed a £450m expansion of its vaccine manufacturing plant in Liverpool after Labour cut funding for the project.

Mr Grady said: “We’ve [the UK] failed to keep pace on medicine investment over the years.”

Asked what it would take for the company to go ahead with the Cambridge investment, he said: “Unless the commercial environment changes, the UK is not going to be on the list.”

Mr Grady added that the company would “revisit and reflect” on its Cambridge plans as talks with the Government continue.

Wes Streeting, the Health Secretary, walked away from talks with drugmakers this summer after failing to strike a new pricing deal on medicines supplied to the NHS. It is understood that talks are still ongoing, led by Lord Vallance, the science minister.

While Mr Grady said AstraZeneca remained a significant investor in the UK, he said it was missing out on vital investment because of an antiquated system used by the National Institute for Health and Care Excellence (Nice) to determine which treatments are available on the NHS that has largely remained the same since 1999.

This is determined by a formula which looks at drug effectiveness in terms of how much it would cost to give a person a year of healthy life.

“The thresholds have not been changed for 25 years, which is pretty appalling,” said Mr Grady.

He added that, unlike the UK, countries including Ireland and Singapore were offering companies significant subsidies or tax breaks to invest there. He also compared Britain with the US, where the company announced in July it would invest £50bn by 2030.

“This is a competitive global pitch,” said Mr Grady. “We announced a £50bn investment in the US. We met the governor of Virginia in our offices in London, we announced that £50bn investment 33 days later. We need to think about that speed and what truly is a concierge service.”

Speaking on the same panel, Lord Harrington – who led a review on investment under the last Tory government – said a lack of joined-up thinking was also stymieing growth.

He said: “There’s a room full of civil servants in the Department of Health whose job it is to basically kick the c--- out of pharmaceutical companies to get the price that the government pays for drugs as low as possible. They are not allowed to consider holistically the effect of those decisions on investment in a country, whereas a company clearly does.”

The decision by AstraZeneca, the UK’s largest listed company, means all of its £650m investment package announced in 2024 risks being shelved.

The Department of Health launched a review of so-called NHS rebates earlier this year under pressure from Donald Trump, the US president, who has demanded that pharmaceutical companies lower their drug prices in the US – where they are much higher than the UK and Europe.

A voluntary agreement currently places a cap on how much the NHS spends on branded medicines as part of efforts to keep costs down.

The total bill is allowed to rise by a certain percentage each year. If the NHS spends more than expected on branded medicines, it is able to claw some of that money back in rebates on drugs.

The Government raised the rate unexpectedly to almost 23pc for 2025 for newer medicines at the end of last year.

Pharmaceutical bosses have warned the scheme is preventing the launch of cutting-edge medicines in the UK. They have pressed the UK to cut the rate of rebates into single digits, a level seen elsewhere in Europe.

The Government has been contacted for comment.