AstraZeneca backs out of $558.3M investment in UK vaccine plant, cites government support
AstraZeneca has scrapped plans to invest $558.3 million (£450 million) in a vaccine manufacturing plant in northern England, citing a reduction in UK government support.
The company had planned to expand an existing facility in Speke, Liverpool, but said discussions with the current administration led to a final funding offer that was lower than what was previously proposed. Reports indicate the UK government had offered $96,380,310 (£78 million) in funding, but this was not enough to sustain the project.
In an emailed statement to Pharma Manufacturing, an AstraZeneca spokesperson confirmed the company’s decision to withdraw the planned investment in Speke.
“Following discussions with the current government, we are no longer pursuing our planned investment at Speke,” the spokesperson said. “Several factors have influenced this decision, including the timing and reduction of the final offer compared to the previous government’s proposal. The site will continue to produce and supply our flu vaccine for patients in the UK and around the world.”
The decision comes as Prime Minister Keir Starmer’s government seeks to attract investment to stimulate economic growth. Finance Minister Rachel Reeves recently highlighted AstraZeneca as a key company contributing to jobs and investment in Britain. However, negotiations between the government and AstraZeneca last week reportedly covered issues beyond funding, including the UK’s decision to reject NHS use of AstraZeneca and Daiichi Sankyo’s Enhertu (trastuzumab deruxtecan) for HER2-low breast cancer and the high rebates required under the Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG).
Despite the setback in Liverpool, AstraZeneca is moving forward with a $247,129,000 million (£200 million) expansion of its Cambridge site. The company has also committed billions of dollars in investments globally, including projects in Singapore, Thailand, France, Canada, and a $2 billion investment in research and manufacturing in the United States.
Meanwhile, the VPAG rebate rate, which was expected to decrease, has instead risen to 22.9% this year, requiring pharma companies to return £3.4 billion to the Treasury — a factor that industry leaders say adds to tensions between the UK government and drugmakers.
AstraZeneca had previously warned that it might relocate vaccine production to the U.S. due to stalled negotiations over government aid. If the reported figures are correct, Chancellor Reeves’ £78 million offer was nearly double what had initially been reported in the media and close to the £90 million previously proposed by former Chancellor Jeremy Hunt.
The Treasury maintains that changes in AstraZeneca’s investment plan led to the reduced offer, but the situation underscores ongoing friction between the UK government and the pharmaceutical sector at a time when life sciences investment is seen as a pillar of economic growth.