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AstraZeneca is pulling out of its plans to build a £450mn UK vaccine manufacturing plant after months of wrangling with British officials about state investment for the Merseyside project, in a major blow to Prime Minister Sir Keir Starmer’s government.
Officials put forward a revised offer of financial support for the site in Speke this month that was significantly higher than the £40mn offered last year, said people with knowledge of the arrangements.
Starmer’s Labour government sought last summer to reduce the amount of state support provided to the project from about £90mn to £40mn, according to people briefed on the matter.
“Following protracted discussions with the government, we are no longer pursuing our planned investment at Speke,” AstraZeneca said in a statement on Friday. “Several factors have influenced this decision including the timing and reduction of the final offer compared to the previous government’s proposal.”
The existing Speke site will continue to produce and supply the flu vaccine, the company said.
The decision is a blow to Starmer’s government, coming days after chancellor Rachel Reeves sought to position the UK as a highly attractive place for life science companies to invest.
However, her tax-raising Budget last year and a slew of other measures including a higher minimum wage have sparked a backlash from business leaders who warned the moves would make the UK a less attractive place to invest.
The previous offer to the pharmaceutical group by former Conservative chancellor Jeremy Hunt included up to £70mn in grants to develop an existing AstraZeneca vaccine facility at Speke, as well as £20mn in research and development support from the UK Health Security Agency, the people said.
The Treasury did not immediately respond to a request for comment.
People close to AstraZeneca said it was looking at other possible manufacturing sites.
The drugmaker, the largest UK company by market capitalisation, had become “deeply frustrated” with the UK government, another person said, with Speke just one point of tension in a wider industry clash over drug prices and the future of life sciences investment.
In November, AstraZeneca said it planned to invest $3.5bn in research and development and manufacturing in the US, the world’s largest pharmaceutical market, which generates 44 per cent of the company’s sales.
AstraZeneca’s chief executive Pascal Soriot said at the time that the investment reflected “the attractiveness of the business environment together with the quality of talent and innovation capabilities”.
The company is also planning a $1.5bn manufacturing facility in Singapore, and last week pledged a $560mn investment in Canada.
People with knowledge of the business said its decision on the Speke facility would not affect any of AstraZeneca’s other investments in the UK.
In March, the UK’s then-Conservative government said AstraZeneca would invest £450mn on research, development and manufacturing of new vaccines in Speke.
The Financial Times reported at the time the company was looking to secure up to £100mn in state support.
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