Could Astrazeneca completely switch its allegiance to the US?
The UK’s largest listed companies are turning their heads towards the glimmer of the Nasdaq after growing impatient at the lacklustre performance of the London Stock Exchange.
Chief among them is pharmaceutical giant Astrazeneca, which cancelled plans for a Liverpool vaccine plant due to lack of economic support earlier this year and has expressed frustration over the rejection of the use of breast cancer drug Enhertu on the NHS due to cost grounds.
Now, CEO Sir Pascal Soriot is reportedly considering a New York listing and could join the exodus of the LSE, as it turns more of its investment and manufacturing capabilities to the North American market.
AstraZeneca is the largest company on the London Stock Exchange and was formed in 1999 through the merger of Sweden’s Astra AB and Britain’s Zeneca PLC. It remains headquartered in the UK despite its widening influence over the US.
The step would be widely seen as a boon for US president Donald Trump who has courted pharma firms to come back to America “where they should be” while dangling the spectre of tariffs to be tacked on their imports if they stay away.
The hunt for higher valuations and revenue
Companies tend to move listings to the Nasdaq after being attracted to the prospect of higher valuations and the opportunity for future acquisitions on US soil, with pharmaceutical manufacturing in the US having become the beneficiary of significant investment in efforts to decrease the number of imports.
This included drug maker Indivior, which completed the cancellation of its turbulent eleven year secondary listing in London last Friday, shifting all focus to the US market, where it listed as a primary in 2024.
The pharma group cited low trading volumes as well as rising administrative costs in London and the concentration of its shareholder base in the US as key factors to the decision.
Astrazeneca ticks some one of these boxes, providing grounds for shifting to New York, a move which could set alarm bells ringing in the capital.
However, Russ Mould, investment director at AJ Bell, noted the end of the Liverpool vaccine plant expansion should have been a “big clue” the company was “losing patience” with the UK government and would turn its focus elsewhere.
The American dream?
While no listing has been confirmed, the drug company’s half year results pointed to an increase in focus on the US market with Soriot highlighting the market’s “importance”, as sales in America were up 14 per cent and make up 44 per cent of its total revenue.
Last week, Astrazeneca announced plans for a “landmark investment” of $50bn [£37bn] in the US, which President Trump called an “honor”. Analysts added Astrazeneca is “eager” to be on the side of the government as it looks to fulfil its ambition to deliver $80bn revenue by 2030.
Speaking from New York after unveiling the company’s latest set of results, Soriot said, “We are a very American company. We are global, but we are very much rooted and present in the US … I love America and its focus on innovation.”
Dan Coatsworth, investment analyst at AJ Bell, said: “It is investing billions of dollars in the country and is eager to be on the right side of the government, considering the risk of tariffs and a desire to get grants or incentives in exchange for building new factories and creating jobs.”
The drug maker plans to boost its research and manufacturing options in the US through a multibillion dollar drug ingredient centre in Virginia. New and expanded facilities are also planned for Maryland, Massachusetts, California, Indiana and Texas.
Expanding the number of US facilities prompts another incentive to list after a recent suggestion by Trump that pharmaceutical companies with a significant US manufacturing presence might be treated favourably upon tariffs being announced, but gave no clarification on what shape this concession might take.
London stability
However, the Trump administration has “sparked market volatility” through the tariffs and its economic policy, with Lee Wild, Head of Equity Analysis at interactive investor arguing that “a slightly higher tax rate and stamp duty on share purchase” is a small price to pay for the stability of the London Stock Exchange.
But while the “UK government might do everything they can to stop it defecting” should that situation arise it would not have the power to block the move of one of its most valuable companies and instead will be left scrambling to fill the hole plugged by the drug maker.
Fingers will be crossed that no announcement to delist pops up one morning at 7 am on the stock exchange.