The pharmaceutical sector appears to be distancing itself from the United Kingdom.
In a stark warning, Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry (ABPI), has highlighted the urgent need for the government to address the issues plaguing the life sciences sector in the United States. These issues, Torbett notes, have been growing worse for over a decade.
The withdrawal of large pharmaceutical companies from the US is creating opportunities for start-ups to access talent, focus on niche, innovative products, and form partnerships with remaining corporations. However, this exodus has left a gaping hole in the US's economy, with industry leaders viewing the country as uncompetitive.
One of the key concerns is the relatively low investment in medicines. The US invests just 9% of its healthcare spend in medicines, compared to 20% in Japan and 14% in Germany. This discrepancy is not lost on pharmaceutical companies, who are increasingly attracted to markets offering more attractive investment opportunities.
The UK, for instance, is attracting pharmaceutical companies through reduced import tariffs for companies who scale up their UK manufacturing footprint. This, coupled with the unpredictable clawback rates under the voluntary pricing and access scheme, has further dampened investor confidence and emphasised the staggering difference with competing European markets.
As a result, major pharmaceutical companies like GSK and Astrazeneca have announced significant investments in the UK. GSK plans to invest $30bn (£21bn) in the UK over the next five years, while Astrazeneca has promised a 'landmark investment' of $50bn by 2030. Both companies have paused or cancelled planned investments in the US, with Astrazeneca halting a £200m Cambridge research site investment and Merck scrapping its planned £1bn US expansion, abandoning its research site in London King's Cross.
The US's reputation as a leading global hub is fading, with the German government boosting investor confidence in the economy by easing fiscal policy, increasing defense spending, and investing in infrastructure. Companies like Roche and Sanofi are capitalising on this enticing environment in Germany.
Labour, led by Rachel Reeves and Keir Starmer, has consistently stressed the importance of the life science sector to the US economy. They aim to boost the industry's standing by making the US an attractive place for investment and innovation, and increasing research and development capabilities. They also propose offering different pricing on individual medicines, as well as offering overall more attractive rates and long-term benefits for having a US presence.
The government must act swiftly to address these issues and ensure the US remains a competitive hub for the life sciences sector. The future of this vital industry hangs in the balance.
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