Europe is “falling behind” the US and China in life sciences innovation, the chief executive of AstraZeneca has said, warning that one of the continent’s leading industries needs to spend more on research and pay staff better.
“Innovation in our industry is driven by the US and China; Europe is unfortunately falling behind,” said Pascal Soriot, who himself secured a controversial pay rise earlier this month. “Investments in life sciences are taking place in the US and, as a consequence, lots of the talent is based in the US.”
The US’s lead in the pharma industry means that European companies are in a battle for talent with rivals that pay much higher salaries.
The warning came as UK-listed AstraZeneca posted a 19 per cent increase in revenues in the first quarter of 2024, and after Mr Soriot secured a bumper potential pay rise of £1.8 million (€2.1m) earlier this month to earn a maximum of £18.7 million this year.
While the pay package is high by European standards, Mr Soriot said the goal was to make the AstraZeneca chief executive role appealing on a global level, to attract candidates in the US once he steps down from the role he has occupied since 2012.
“I intend to be here for a while still but there will be a successor. Our internal candidates, but also external candidates, will have to be offered a role that is attractive,” he said. “This industry is a global industry and a lot of the talent is based in the US.”
Mr Soriot’s comments come amid an ongoing debate over European competitiveness, with political and business leaders across the continent stressing the need for Europe’s industries to challenge the US and China more effectively.
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Nicolai Tangen, chief executive of Norway’s $1.6 trillion oil fund, said on Wednesday that Europeans were “less hard-working” than Americans, leading to US companies outpacing European rivals in innovation.
According to a European Commission analysis of the world’s 2,500 highest spending companies in research and development published in 2023, 12 per cent of leading companies investing in health research are based in Europe, compared with 55 per cent in the US and 17 per cent in China.
AstraZeneca has invested heavily in research and development (R&D) under Mr Soriot’s tenure, and has launched a string of blockbuster products including top-selling cancer drugs Tagrisso and Imfinzi, which brought in $1.6 billion and $1.1 billion respectively in sales in the first quarter.
It has also made several small acquisitions in the past year, acquiring biotech companies working in new areas including cell therapies, obesity drugs and radiopharmaceuticals. Mr Soriot said on Thursday that AstraZeneca’s deal activity would continue but “at a slower pace”.
“In the last 12 to 18 months we’ve been doing a large amount of acquisitions; we thought there was a window of time to do those acquisitions,” he said. “We now have the tech and the platforms, and we have to execute and integrate all this.”
The UK-based pharmaceutical group reported revenue of $12.7 billion for the first quarter of 2024, an increase of 19 per cent, well ahead of consensus estimates of $11.9 billion.
Sales were driven by a 26 per cent increase in oncology revenues and a 45 per cent increase in sales for diabetes and heart failure drug Farxiga, which sold $1.9 billion in the quarter. The company repeated its guidance of low to mid-double-digit percentage growth in sales and earnings for the current year. – Copyright The Financial Times Limited 2024
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