AstraZeneca chief executive Pascal Soriot delivered a pretty tough message to Rishi Sunak’s government last week when outlining the reasons why the British-Swedish pharma giant had opted to build a massive €340m plant in Ireland instead of the UK.
The French-born Australian citizen said Britain’s business climate was deterring biopharma companies from investing in the country. (The AstraZeneca decision was actually a shift in plans from the UK in favour of Ireland.)
Soriot, who was knighted last year for AstraZeneca’s part in the provision of Covid vaccines to millions of Britons back in 2021, talked about some of the reasons for the switch to Dublin.
It reveals much about our industrial policy approach in Ireland
He said that while Britain is already considered a research powerhouse, it is also lacking in other areas – such as manufacturing incentives, and access to green energy.
He also talked about Vpas – the UK’s voluntary scheme for branded medicines pricing and access. Set up in 2019, its aim is to help make drugs more affordable for the NHS by returning a proportion of funds (based on the sales of branded prescription medicines) when a maximum sales growth rate is exceeded.
That proportion has been going up since the scheme began. Initially, the Vpas rate was capped at 2pc per year. As the pandemic unfolded, that triggered sharp spikes in payback rates, to 15pc in 2022, then jumping to 26.5pc in 2023.
When you analyse Soriot’s reasons, it says as much about our industrial policy approach in Ireland as it does about the UK.
Coming year will show if progress on renewables planning regulations is all just hot air
Adrian Weckler: Many drone alerts are false alarms – but we still should beef up protection
Brands must get real when it comes to younger age groups, new research shows
EU at 50: Ireland’s love affair with Europe is still going strong – but the potential for even greater success is still huge
Firstly, he talked about manufacturing incentives. This means tax breaks. But one of the supposed benefits of Brexit was that the UK could break out of the EU’s state-aid rules straitjacket.
It was supposed to enable the UK to attract investment by increasing incentives without the constraint of EU rules. This clearly hasn’t happened in the biopharma sector.
Soriot also spoke about the Irish Government’s determination to deliver on green energy in the next few years. This was a little surprising, because the UK is already a major green energy powerhouse, with significant wind energy resources – both onshore and offshore.
Nobody doubts the Irish Government’s intent or determination to make big inroads in wind power, but that is far from a guarantee it will actually happen.
Last week wind energy industry representatives warned about delays in the planning process hampering Ireland’s ability to build new renewable capacity in lines with targets – despite wind generating 41pc of power needs in the month of January.
Then there is the Vpas scheme, which is aimed at ensuring the NHS doesn’t overpay for drugs. Surely, this is a good idea. Yet, there mustn’t be a similar or equivalent one in Ireland when the British scheme is seen as an obstacle.
So the Irish State ends up paying big prices for drugs – but the country lands the pharma plant instead. It is a trade-off that might be worth closer examination.
Soriot went on to say the British government’s ambition to become a life sciences “superpower” has been hampered by a discouraging tax environment, suggesting the country was grappling with an “explosion of costs” driven by the impact of the Covid on the healthcare system.
Without the incentivising elements, he added, companies will seek to develop drugs in other markets “where you know you’re going to get access and you’re going to get a price that can justify the investment”.
The AstraZeneca investment will be most welcome at a time when there are some serious wobbles in the tech sector on jobs and valuations.
It will create at least 105 new well-paid jobs at the 18.5-hectare Alexion Biopharmaceutical Campus in Blanchardstown.
Big pharma projects don’t always deliver huge employment numbers in the same way that tech can. However, some of the real wobble is around the potential hit to corporate tax receipts if things became very challenged in tech.
Now that would require a miracle drug.
Credit Suisse’s Swiss mountain to climb
‘We can fix it, but it will cost ye’ seems to be the mantra at Credit Suisse, which last week reported its biggest loss since the financial crisis..
Credit Suisse lost SFr1.4bn (€1.42bn) in the fourth quarter of the year, as investment banking revenues slumped and clients pulled money from the group’s wealth management business. This brought the annual loss to SFr7.3bn (€7.38bn).
Former Bank of Ireland chief executive Francesca McDonagh is chief operating officer at the group, which places her in the top three of the management team.
With so much client money being withdrawn there is always the danger that management might move on too.
Reports last week said the bank’s top executives are set to share a bonus pool of SFr350m (€353m) if they pull off a major restructuring, and bring the bank in line with stated targets for return on equity.
The bonus pool will cover the top 500 managers, according to the Financial Times.
Given McDonagh’s senior role at the bank, it would place her in line for a very big pay day in 2025 when the deadline for the targets occurs.
The bonus plan would be going to the top 1pc at the bank – at a time when it is in the process of shedding 9,000 of its 52,000 staff.
Management retention is clearly important here, but the idea of risk reward should be there too. What’s the risk for top executives to warrant the massive rewards?
The bank executives have to achieve a spending target that keeps the bank’s cost base below SFr14.5bn (€14.66bn), according to the report.
It is certainly a long way from the €500,000 pay cap issue in Ireland that prompted McDonagh to rail against the exit of her then finance director Myles O’Grady.
Man City wished for an invisible press release
The story of the Premier League allegations against Man City broke in a very unusual way last week.
A journalist from The London Times went on the Premier League fantasy football website to check the progress of his team – and stumbled upon the announcement of the charges against the club.
Putting something up on your website without drawing anyone’s attention to it usually signals news you have to disclose – but aren’t exactly happy about it.
I remember hearing of one Irish listed company with bad news to bury. A PR adviser suggested that for compliance reasons they should announce it, but only put it on the website.
One senior executive on the conference call baulked at the ridiculousness of this and joked: “Maybe we could issue a statement written in invisible ink.”
The often-used alternative is to leak it exclusively to a favoured journo who won’t go too hard.
Coming year will show if progress on renewables planning regulations is all just hot air
Adrian Weckler: Many drone alerts are false alarms – but we still should beef up protection
Brands must get real when it comes to younger age groups, new research shows
EU at 50: Ireland’s love affair with Europe is still going strong – but the potential for even greater success is still huge