US drug giant Eli Lilly halts plans for new London base as it blasts Britain’s ‘stifling’ regulations and punishing tax regime
A US drugs giant has paused its plans to build a new base in London, warning that the UK is ‘stifling’ innovation due to its punishing taxes and regulation.
The move by Eli Lilly comes amid growing concerns from corporate leaders that Britain’s competitiveness is being undermined by onerous rules and the high cost of doing business.
Based in Indianapolis, Eli Lilly is one of the world’s biggest pharmaceutical companies and appointed property agent CBRE to scope out potential sites for a 65,000 square-foot hub in London designed to support start-up companies in bringing new medical products to market.
But yesterday it said it could look elsewhere in Europe if the environment did not improve.
On hold: US drugs giant Eli Lilly had been scoping out potential sites for a hub in London designed to support start-up firms in bringing new products to market
It said: ‘While we believe in the potential of the UK’s biotech talent, and share the country’s ambition to be a life sciences superpower, the stifling commercial environment does not invite inward investment at this time.
‘The UK needs to do more to reward scientific discovery through access to innovative medicines to speed up clinical research and regulatory processes.’
The comments followed those from Eli Lilly associate vice-president Stephen Van Soelen, who said the UK’s treatment of businesses made ‘companies like ours really question investing in the innovation there’, and there were ‘other places in Europe to go’.
‘When you actually bring a product to market, you’re not getting rewarded for your innovation.
‘As the old saying goes, unless something changes, nothing will. The environment has to change,’ added Van Soelen.
Eli Lilly has a UK headquarters in Basingstoke in Hampshire and a research centre in Bracknell, Berkshire.
But pausing its plans in London is a blow to the Government, which is aiming to make the UK a ‘science superpower’.
But AJ Bell backs London
The boss of the investment platform AJ Bell said it was staying in London and that firms did not need to shift their listing to New York to attract American investment.
Michael Summersgill, who took over the top job from founder Andy Bell in October, said a London listing made ‘massive sense’ for the company and it managed to lure US backers without needing to decamp to Wall Street. ‘Around 20pc of AJ Bell’s institutional investors are from the US.
‘Being listed in London doesn’t stop you going there to appeal to investors if you have the right investment case,’ he said.
‘Go and do a roadshow in America. Go and get US investment. Do you really need to be listed in America to access those pools of capital?’
Its criticism comes after statements in February by Pascal Soriot, boss of pharma firm AstraZeneca, who said a ‘discouraging’ tax system was behind a decision to build a £330million factory in Ireland rather than the UK.
It had planned a factory in north-west England but had switched to Dublin. Astra employs about 83,100 staff globally, more than 8,000 of whom are in the UK.
Other senior figures in the City have sounded the alarm. Legal & General boss Sir Nigel Wilson said while entrepreneurship at UK universities was ‘off the scale’, the country was no longer competing in backing businesses and risked ‘falling behind’ rivals.
The oil and gas sector has also come out against Government tax plans, with Sir Jim Ratcliffe, one of Britain’s richest men and the founder of chemicals group Ineos, warning the UK’s windfall levy, which imposes an effective tax rate of 75 per cent on profits made from the North Sea, risked squeezing the sector ‘to death’.
And in the tech industry, Cambridge computer chipmaker Arm snubbed a listing on the London Stock Exchange in favour of a float in New York.
The chorus has left the Government scrambling to improve the country’s prospects, with plans being drawn up to loosen rules on stock market listings.
Chancellor Jeremy Hunt is also thought to be considering plans to force pension funds to invest part of their vast reserves in UK projects and start-ups.