AstraZeneca cancels UK vaccine plant amid funding cuts

U.K. – In a surprising decision, AstraZeneca (AZ) has canceled its £450 million (US $558 million) plan to build a vaccine manufacturing plant in Liverpool, UK.

The move comes after the UK government reduced its financial support for the project. According to an AZ spokesperson, the decision was influenced by “several factors […] including the timing and reduction of the final offer compared to the previous government’s proposal.”

This development deals a significant blow to the Labour government’s efforts to boost economic growth and attract investment.

Prime Minister Keir Starmer and Chancellor Rachel Reeves, who have been vocal about encouraging capital investments, now face a public relations challenge.

Reports suggest delays in finalizing the funding proposal caused AZ to miss its internal deadlines for starting construction.

The project was originally announced in March 2024 by former Conservative Chancellor Jeremy Hunt, who described it as a “vote of confidence” in the UK’s life sciences sector.

The previous government had offered a more generous package, reportedly worth £90 million (US $111.2 million), including grants and R&D support from the UK Health Security Agency.

However, under the Labour government, the offer was reportedly reduced to £40 million (US $49.5 million), leading to friction between AZ and the government.

Rumors had previously circulated that AZ was considering alternative locations for the facility, including Philadelphia in the US or possibly India.

While AZ initially dismissed these claims, the decision to scrap the UK plant indicates there were indeed behind-the-scenes challenges.

Despite this setback, AZ’s other investments in the UK remain unaffected. The company is moving forward with its £200 million (US $247.3 million) expansion of its Cambridge site, which includes its flagship Discovery Centre (DISC) R&D facility. This expansion is expected to add 1,000 researchers to the existing workforce of 2,300.

Meanwhile, the decision to cancel the Speke plant comes at a time of growing tension between the UK government and the pharmaceutical sector.

Drugmakers have expressed frustration over the UK’s rebate system for prescription drug sales to the NHS, which has led to an 11% decline in the real value of the UK’s branded medicines market over the past decade.

Although a new voluntary scheme in 2023 temporarily reduced repayment rates, a government decision in December to increase the rate to 22.9% in 2025 has reignited industry anger.

The Association of the British Pharmaceutical Industry (ABPI) estimates this could cost companies around £3.4 billion (US $4.2 billion).

While the UK faces challenges in attracting investment, AZ continues to expand globally. The company recently announced a US $570 million investment in Canada and plans to spend US $3.5 billion to grow its R&D and manufacturing operations in the US by 2026.