Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Investors are warning that if AstraZeneca left London to list in New York, it would be a loss for the entire market and potentially the UK economy.
Iain Pyle, a fund manager at Aberdeen, said it would be “disappointing” if the largest FTSE company leaves the UK market. AstraZeneca’s chief executive, Sir Pascal Soriot, has expressed his frustration with the UK environment, according to two people familiar with the matter.
“It’s the biggest name in the market and it has a ‘halo’ effect as a successful and innovative pharmaceutical company,” he said.
Shares in AstraZeneca rose 2.9 per cent to 10,446p after a report in The Times on Tuesday said Soriot has had private discussions about a US listing. AstraZeneca declined to comment.
Some AstraZeneca shareholders may have hoped that a US listing could increase the company’s valuation, as there are more specialist investors who would take the time to understand the drugs earlier in its pipeline.
A US listing would also make it easier to raise pay for its executives, including Soriot and his successor. “Pascal was the highest paid CEO in 2023 in the FTSE but still, US executives are paid more,” Pyle said.
Soriot received £16.9mn in 2023 after hitting most long-term targets. Median pay for CEOs of FTSE 100 companies stands at $6.5mn, compared with $16mn for those heading companies listed on the S&P 500.
A move by AstraZeneca could also be seen as a political win for the Trump administration, which is putting pressure on the pharmaceutical industry with threats of tariffs and price cuts.
In the UK, news of the potential move is fuelling worries among investors about the decline in the attractions of the UK equity market and its implications for the broader financial services sector.
“If you don’t have a working equity market backdrop, then it is definitely an alarm signal,” said Sonja Laud, chief investment officer at Legal & General’s fund management arm, stressing the importance of the City of London to the UK economy. She urged changes to improve liquidity and other measures to “prevent a cyclical trend [in listings] from becoming structural”.
The UK market has suffered from a steady stream of listed companies being taken private or moving their primary listings to the US. Wise, the £11bn fintech that listed in 2021 said last month that it planned to switch its primary listing from London to New York, citing the deeper liquidity of the US market.
The threat of moving to the US could be a wake-up call to the UK government, which is stuck in protracted negotiations with the pharmaceutical industry over drug pricing. Companies have warned that investment in the UK is at risk if the country does not spend more on medicines.
Government insiders said Soriot was “just grumpy”, and had not made any specific decisions around a change in listing or set a timeline.
Soriot has complained about the process of deciding which drugs are value-for-money after AstraZeneca’s breast cancer drug was not approved for use in the NHS. AstraZeneca also pulled an investment in a factory in Speke in Merseyside after the government cut its subsidies for the site from the previous government’s proposal.
One top 20 shareholder in AstraZeneca said that the sector is having a “tense period” with the UK government. He said the government has previously responded to these “types of threats”, such as making moves to protect the car industry.
“In terms of the UK economy, the loss of this listing and domicile would risk the UK losing high value jobs across science, manufacturing and research and development,” he said.
