AstraZeneca Threatens To Move Vaccine Production Amid Reduced State Support

AstraZeneca Plc (NASDAQ: AZN) has reportedly warned that it might relocate its vaccine manufacturing site from Merseyside, U.K., to Philadelphia amid stalled negotiations with the U.K.'s Labour government.

The deadlock revolves around a reduction in state aid initially promised by the previous Conservative administration. The government wants to cut financial support for AstraZeneca's vaccine facility from nearly $118 million (90 million pounds) to 40 million pounds.

The initial package included up to 70 million pounds in grants to develop an existing AstraZeneca vaccine facility at Speke and 20 million pounds for research and development from the U.K. Health Security Agency, is now under review by Chancellor Rachel Reeves.

The Financial Times, citing sources familiar with the discussions, reveals that senior representatives from AstraZeneca have indicated they are exploring alternative sites, including Philadelphia, where more attractive financial incentives are available, and India, where the company has a history of vaccine production.

Last week, AstraZeneca said it will reconsider its planned million (450 million pounds) investment in a new vaccine-manufacturing site, a departure from CEO Pascal Soriot's previous statement that the company was "absolutely ready to go."

The report adds that AstraZeneca sought to secure around 100 million pounds in government aid.

However, the Labour government's proposed funding cut has sparked concerns over the U.K.'s ability to retain its status as a key player in the life sciences sector.

Shadow technology secretary Andrew Griffith, who played a crucial role in the initial agreement, warned that reducing the support would be a "huge backward step" for the U.K.

Griffith emphasized the importance of retaining AstraZeneca's research within the U.K., noting that the company is the nation's most valuable publicly listed entity.

The Financial Times report also highlighted that the former administration had assured AstraZeneca of previous funding and expressed dissatisfaction with the revised offer.

The potential loss of AstraZeneca's vaccine operations could mean that the U.K. might be forced to import vaccines instead of exporting vaccines.

Price Action: AZN stock is up 0.64% at $86.44 during the premarket session at the last check on Friday.