Soriot plays the China card: Astra boss should be careful what he wishes for when dealing with Beijing, says ALEX BRUMMER
Whether in China or the United States, Pascal Soriot knows how to capture headlines. In Washington last year, the chief executive revealed that Britain’s biggest company AstraZeneca would be putting down $50billion (£36.2billion) of investment in the US.
In China, its second-largest market, the proposed investment is $15billion (£10.9billion), of which $2.5billion (£1.8billion)already has been deployed.
Astra’s ancestors at Imperial Chemical Industries, spun out as Zeneca in the 1990s, would be proud. There will inevitably be questions about what is in the deal for UK plc.
Britain, as a research powerhouse, should prefer it if the pharma pioneer was splashing the billions at the firm’s labs in Cambridge.
We are assured investment will flow back here through research deals with Oxford and Cambridge, bringing thousands of jobs to Britain.
It is good that Soriot, star of the business delegation with Keir Starmer in Beijing, has put an end to the cold war between the Government and the nation’s leading company. Astra fell out with Starmer when he declined to back a vaccine plant in Liverpool.
Business trip: AstraZeneca chief exec Pascal Soriot (pictured) accompanied Prime Minister Kier Starmer on his recent visit to China
Soriot doubled down on hostility when Wes Streeting demanded a hike in the rebate which Big Pharma pays to the Government on medicines sold to the NHS.
That was too late to prevent Soriot putting a block on new investment in Cambridge, now lifted, and a share quotation in New York scheduled for Monday.
Much of the Astra investment in China will be on manufacturing, supplying the domestic Chinese market.
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The more fascinating stuff is joint research with Chinese scientists on immunology treatments for cancer and new radiology-based medicine which can target tumours.
Astra is in a good position to monitor its Chinese investments. Soriot has a family residence in Sydney and HSBC will be doing the banking.
But be careful what you wish for when you deal with authoritarian states. Competitor GSK ended up with a £355million fine for bribery in 2014, after several top officials were arrested.
Less than two years ago, Astra’s top executive in China, Leon Wang, and several colleagues were rounded up on charges of breaching privacy laws and selling unapproved medicines.
The greatest risk, however, is that co-operation on research projects becomes an excuse for Beijing to purloin and erode Western tech advantage.
Paper tiger
We are used to U-turns from the Government, but rarely do they come so quickly in the corporate world as at US-based International Paper (IP).
Less than a year ago, advised by Bank of America Merrill Lynch, IP swooped on UK cardboard recycler DS Smith and snapped it up for £7.8billion, including £2billion of debt.
IP boss Andy Silvernail has speedily discovered there is no such thing as a global paper and cardboard recycling market.
Advised now by Jefferies and Evercore, he has decided to do the splits. DS Smith is to be spun off and refloated in London, incorporating IP’s European assets, with an ambition to scramble back into the FTSE 100 with a value of £5billion-plus.
Under IP there has been a rationalisation of plants and synergies, with some £400million still to come.
The reality check is that this deal was done in the belief Covid conditions were here to stay. Every home and business, on both sides of the Atlantic, was awash with cardboard and it was a terrific growth business.
Trumpian influence means the world is now a paler shade of green and globalisation is fracturing fast.
It is to IP’s credit that, having squandered shareholder funds, it is self-correcting. Never believe the hype that accompanies so many takeovers.
Lloyds’ secret
Focus on Lloyds Bank results has been on a profits upgrade, a share buyback and write-offs for motor finance.
Amid the myriad of numbers there was one which chief executive Charlie Nunn declined to provide: the income his bank receives on reserves placed with the Bank of England.
Parliamentary records show that in 2023 this amounted to £2.3billion. If Reform has its way that could vanish overnight.
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