AstraZeneca’s chief executive said the U.K.’s “discouraging” tax rate was behind the company’s decision to build a $400 million API facility at the former Alexion campus in Dublin.
Speaking to reporters on a conference call Thursday, Pascal Soriot said that despite the U.K. government’s charge to make the country into a life sciences powerhouse, punitive tax rates are forcing decision-makers to look elsewhere.
“We've made a $400 million investment in the state of the art manufacturing facility, which we wanted to make in this country and we've made in Ireland because the tax rate was discouraging,” Soriot said. “We’re very committed (to the U.K.), but we need to see also supporting policies for the whole industry.”
AstraZeneca unveiled plans for the Dublin facility in September 2021 with what was then a $360 million price tag to construct an API facility for small molecules. The site will also help the U.K.-based drugmaker’s global manufacturing network in late-stage development and supply early commercial supplies for certain medicines.
Soriot pointed out that Ireland’s commitment to developing more green energy in the coming years also played a factor in the decision. Still, the overriding pressure of U.K. tax rates and other moves by the government continue to weigh on the industry, he said.
“If we want a flourishing life sciences sector, we need more than discovery science,” Soriot said, illustrating AstraZeneca’s $1 billion R&D center investment in Cambridge.
“It’s all very nice to discover something in the lab (but) at some point you need other types of people to progress the project,” he said. “Unfortunately, we're not in a in an environment where we see that happen. What we see is price reductions, that are really, really very large and disincentivize companies.”
In January, AbbVie and Eli Lilly announced they were walking away from the U.K.’s Voluntary Scheme for Branded Medicines Pricing and Access, a government-industry accord that traces its roots to the National Health Service’s formation.
The exodus was triggered by the British government’s move to force manufacturers of branded medicines return almost 3.3 billion pounds sterling in revenue—or 26.5% of sales—to the government in 2023. The repayment rate stood at roughly 0.6 billion pounds in 2021 and 1.8 billion pounds in 2022, according to the Association of the British Pharmaceutical Industry.