Soriot plots pharma Brexit: Labour’s failures have alienated a national champion, says ALEX BRUMMER

The ambitions of Pascal Soriot for Anglo-Swedish medicines giant AstraZeneca have no bounds.

Since Soriot saw predator Pfizer off in 2014, he has been on a glorious path that has catapulted the firm to number two in the FTSE 100 (just behind HSBC), while its work on immunology drugs has elevated the reputation of Britain, and Cambridge specifically, as pharmaceutical powerhouses.

But the Astra chief executive has been alienated from the UK by the failure of Keir Starmer’s former Labour administration to support its plans for developing a vaccination facility near Liverpool and its back-door effort to squeeze more income from the pharma sector for the NHS.

The tilt towards America has become pronounced, with a switch to a full quote on the New York Stock Exchange and Soriot’s Oval Office promise of $50billion of investment in the US, including a parallel research and development (R&D) site in the other Cambridge, in Massachusetts.

Given this shift towards the US, an attempt to pull off a deal with American pharma behemoth Bristol Myers Squibb doesn’t entirely come as a shock.

However, the sense of merging with a lower-valued, less innovative pharma group is highly questionable.

More seriously, for Andy Burnham’s government, a deal, should it go ahead, would be an enormous blow to Britain’s role as a research and pharma heavyweight.

At present, some 43 per cent of Astra’s revenues come from the US.

A deal with Bristol Myers, valued at $133.4billion – considerably more than Britain’s other drug giant GlaxoSmithKline at £77billion– would signal American dominance.

It would hasten the departure of a forward-looking national champion. The blow to Britain’s science-based economy would be immeasurable.

These are early days, and a mega-deal on the scale of the merger would raise profound anti-trust questions.

It is possible, however, that Soriot believes he has enough credit in the bank with US President Donald Trump’s White House to get away with the merger with minimal scrutiny.

NO ONE should doubt Trump’s willingness to try to override regulators, as seen in the case of the reverse takeover of media titan Warner Bros Discovery by David Ellison’s Paramount Skydance.

Changes at Britain’s Competition and Markets Authority by former Chancellor Rachel Reeves, designed to speed up the growth agenda, could also make it easier for Astra to push through such a deal.

It is going to require a muscular response from Burnham, Cabinet Secretary Antonia Romeo, and the sub-octane Business Department to prevent such a transaction.

Successive governments have come to regard big takeovers involving UK firms as a signal that post-Brexit Britain is open for business. In this case, Cambridge-based Astra is the predator and the much larger enterprise.

Yet a deal would change the weighting of the company to the US. The economics are not particularly attractive either, as the 9 per cent tumble in Astra’s share price yesterday shows.

The strain on management of executing big mergers and making them work is enormous.

Aside from sorting out executive roles and aligning the pay scales of management on both sides of the Atlantic, investors would demand big cost savings and a rationalisation of R&D facilities.

The disruption, as we know from the Glaxo Wellcome merger with SmithKline Beecham in 2000, can last for years and put a crimp in bringing drugs to market.

That doesn’t mean there aren’t potential upsides. In any combination, Astra would be the dominant partner, buoyed by its oncology pipeline, its exposure to China and a laser focus on R&D.

Acquiring Bristol Myers’ cancer drug portfolio would make the new company a global powerhouse in the sector.

The addition of the US firm’s heart disease treatments would also be useful.

But there are questions as to whether healthcare systems in the US and the UK would find such dominance acceptable.

As exciting as it may be for a British company to now be the predator, a deal with the American giant risks value destruction on a grand scale.