‘Concern’ for the future of Big Pharma in Britain, not just Pfizer

Why did Pfizer really pull out of Sandwich in Kent? It is a matter that the Government should take very seriously. Possibly more seriously that they are at the moment. I have detected a certain amount of “Move along, nothing to see here” about the closure of Britain’s largest foreign-owned research and development facility. The key message from the Government: it was a corporate decision, reflecting global pressure, nothing to do with us, and nothing we could have done.

Today’s appearance by Pfizer executives at the House of Commons Science and Technology Committee confirmed this official view of events. Pfizer had bought another pharmaceutical giant Wyeth, and then chosen to greatly reduce its global R&D footprint. Sandwich was focussed on non-priority areas. There’s also a lingering suggestion that Sandwich’s geography at Britain’s edge rather than inside the Golden Triangle cluster (London-Oxford-Cambridge) counted against it.

However, it should be of no surprise that having pulled the plug on the facility in Sandwich at a time of growing concern, Britain’s biggest medicines supplier did not stick the knife in. Because the industry, particularly the foreign-owned pharma giants may soon be voting with their feet, adding to the Pfizer decision.

That is why the new CBI Director General John Cridland has chosen to speak out to me on a visit to Eli Lilly’s facility in Surrey. “I’m concerned about the future of pharma in the UK …. I think Government has taken the sector a little bit for granted. I’ll say it on behalf of the sector. They need to feel loved and wanted. The UK is not as good a place to invest as it was three years ago when we went into recession.”

And contrary to government suggestions that this is an isolated case, Cridland told me: “We have lost several thousand research and development jobs from pharma in the UK over the last three years. That’s happening partly because of global factors but partly because of local factors.”

So yes there is a seismic shift in pharma away from giant single company campuses towards more nimble startups. Yes, Big Pharma all round the world is under pressure from increasingly aggressive government pricing, expiring blockbuster patents, and dwindling government incentives. But there are specific UK factors holding back what should be a poster child industry for Britain.

Mr Cridland spelt out his new fears: “So many other countries in the world are looking at tax. The patent [Box] tax proposal – we’ve got to make sure that all the pharma companies in britain can make use…”

And whether the NHS should pay the cheapest price or try to offer support for the industry? “The Government should always look for value for money – all we expect of government is that when looking for value for money they also think about value for money for international shareholders. [We need to do] the right thing for the health service but also give reasons for businesses to continue to invest here.”

Two big issues. First a lingering suspicion among foreign Big Pharma that Britain’s tax breaks are weighted towards domestic domiciled companies, GsK and Astra Zeneca. That applies to the R&D tax credit and the new Patent Box. Second the Coalition’s announced move to “value-based pricing” for NHS purchases though a valuable, understandable response to the need to cut NHS costs, will have unwanted and unforeseen consequences. I’ll say it because the industry and the Government can not. Pharma is tacitly subsidised, some might say bribed, by over-the-odds payments for drugs in the US and UK, both of which house a disproportionate amount of the world’s R&D. It might have been right to break that compact, first with NICE, then with VBP. But do not act surprised when the jobs flee.

Other countries are now muscling in. Listen to the clip in my report from Thom Thorp of Eli Lilly. A clear reference to the fact that although Britain has the Chemistry Nobel Prize winners, China and India are now beginning to match the UK. They are bigger markets too. And they’d have no problem coughing up for the next generation of R&D facilities.

Remember these jobs, and 6,000 in total have been lost recently, are the very jobs that we were told that would be kept in Britain as low value exports went East. That notion seems optimistic. So is the answer to kowtow again to Big Pharma? Can we afford not to? If we are trying to go with the flow of the new industry realities, do we really have the money to pour into new sites, when science budgets are being cut in real terms, and the capital budget is being slashed.

In Sandwich the local Regional Development Agency has been axed. Yes the Government is doing some interesting things on clinical trials. But aren’t all other countries that are trying the same trick pouring money into their science base rather than removing it?

Big Pharma, and Big Armour are our two remaining world class manufacturing sectors. There are some very Big Questions unanswered about them. The CBI’s new boss has made a welcome contribution.