Wary pharma: AstraZeneca sours on UK

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1:05The Economist.

1:13Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer. And I'm Rosie Bloor. Every weekday we provide a fresh perspective on the events shaping your world.

1:28Ukraine's war has shown how drones will play a bigger role in future conflicts. Not just impromptu, off-the-shelf stuff, though. From an aircraft carrier deck, we look at the first signs of a hybrid air wing, the future of manned-unmanned cooperation in the skies. And in the Caribbean, successive hurricanes have battered the coral and devastated the barrier reef. Our correspondent took a hardship gig to a tropical island, where projects to restore the coral have had impressive results.

2:04First up though

2:13Later today, Britain's Prime Minister Keir Starmer will meet Donald Trump to enjoy the priceless, eternal and irreplaceable relationship as part of the American President's state visit Multi-billion dollar investments in the UK announced by Alphabet and Microsoft ahead of the trip will be welcome cheer to the embattled Prime Minister. And just yesterday, NVIDIA's boss Jensen Huang said he was there to declare that the country will become an AI superpower, as he too took a£500 million stake in a British firm. But here's the thing. The UK already is a global superpower in another high-tech sphere, life sciences.

2:52and in that sector the outlook for Starmer's government is far less bright. AstraZeneca became a household name during the COVID-19 pandemic. In the last half an hour and the first AstraZeneca vaccine has been delivered in the UK in the last hour or so. It manufactured one of the COVID vaccines in partnership with Oxford University. Vinjeru Mukandawire is a news editor at The Economist. it's one of the most valuable listed companies in the country and it spends more on research and development than any other company in britain but now astrazeneca has soured on britain and it's reportedly considering moving its primary listing to new york and last week it announced it was pausing a planned 200 million pound investment at its main research site in cambridge so far from keeping the top companies in the UK, Britain is at serious risk of losing its life sciences superpower status.

3:57Okay, so let's take this one step at a time. AstraZeneca isn't pulling out of Britain, but it's paused a planned investment. Why has it done that? Well, AstraZeneca has long had concerns about the commercial environment in the UK. They think the clawback taxes paid to the NHS are punitive and they argue that this reduces the incentive to invest in the UK. For example, this year, drug companies will pay nearly a quarter of their total sales, which is quadruple the average rate that they're paying in France. And Britain's drug approval process is another issue that these companies have. Last year, NICE, the National Institute for Health and Care of Excellence, which approves drugs for use in the NHS, rejected one of AstraZeneca's breast cancer drugs on cost-effective grounds, but it's been approved in many other countries in Europe.

4:52If it's considering moving its focus to the US, presumably that's also about Trump and his tariffs. Well, AstraZeneca has said it's not actually about Trump's tariffs. They've said that they want to increase their focus on America. And they're investing about 50 billion on manufacturing plants and R &D in the US. But it isn't the only big player that's thinking this way. Merck, the American pharma giant, also scrapped 1 billion of investment in Britain. And GSK pledged 30 billion in America yesterday. And so a lot of these companies will say that it's actually not about Trump or tariffs, that it's just about the fact that the American market is so large and it's growing.

5:35So even with that large and growing market in the US, it sounds like Britain could still be doing more to attract investment from this sector. AstraZeneca certainly seems to think so. And this issue isn't limited to Britain. It thinks that a lot of European countries could be doing more to attract investment from these big pharma companies. But the problem with Britain in particular seems to be that its appeal has diminished over time. We see this in the data. Britain invests far less of its health care budget on drugs than countries like France and Germany, and its share of global pharma R &D has fallen compared with explosive growth elsewhere.

6:15And Britain also attracts fewer clinical trials than it used to, and that's been a real issue for pharma. And is there any appetite from the government to change these things and do the things it needs to do to keep investment or attract more? First of all, it's acknowledged the problem. It's acknowledged that the commercial environment in Britain does need some work. But at the same time, there is still a lot of opportunity in Britain. Britain still has world-class scientific talent. It's got groundbreaking research, which is one of the main reasons that AstraZeneca is even based here in Cambridge.

6:48Britain's academics account for more than a tenth of global citations in medical science. And the NHS has a huge patient database, which is great for research for these companies. And let's not forget that that famous COVID vaccine was developed in the UK. Pharma bosses are currently negotiating how much they spend on drugs in the UK. That's something that they fundamentally believe needs to change. they also think that the drug approval process needs reform. One thing that would be really helpful would be to lift the regulatory barriers for clinical trials, as well as to increase public R &D and public-private partnerships.

7:30But for the moment, Britain's loss is America's gain. It certainly seems that way. AstraZeneca employs more people in America than it does anywhere else at the moment. and it thinks that America will account for half of its revenues by 2030. At the moment, it's currently 44%. So that's bad news for Britain and it's bad news potentially for the NHS. And it's not just America that AstraZeneca is investing in. They've invested$1.5 billion recently on a cancer drug factory in Singapore. They've invested$570 million in Canada, 1.5 billion on an R &D centre in Spain, 2.5 million on a new one in Beijing.

8:13And so for Britain, winning back AstraZeneca won't be simple or cheap. Benjeri, thank you so much for talking to me. Thank you for having me.

8:51podcasts. Do check it out. Download the app if you haven't already. Open. Absorb.

9:07Almost every major navy in the world is experimenting with drones. Shishank Joshi is our defence editor. One of the most ambitious is Britain's Royal Navy. The first sea lord, that's the grand title of General Sir Gwyn Jenkins, Head of the Royal Navy, has been tasked with introducing a hybrid air wing, that's one with drones and crewed aircraft, onto British aircraft carriers within the next five years. At its core will be the F-35, accompanied by its uncrewed escorts, but supported by a range of uncrewed platforms that will provide airborne early warning, refuelling, anti-submarine capabilities.

9:50I spoke to General Jenkins on board HMS Prince of Wales, one of Britain's two aircraft carriers in Tokyo Bay in Japan. He told me about scenarios in which drones could do jobs currently taken by crewed aircraft. That could be things like running mail, exchanging spare parts, or he said in the future even moving personnel between different ships in the aircraft carriers' strike group. All of those plans could have really profound implications for naval tactics, and even the way that navies are organised. So Shashank, you got to see the thin end of the wedge on this stuff, I guess. What did you actually see?

10:44Well, I always loved visiting aircraft carriers. They're incredible ships. You have all this firepower sitting on the deck. They looked fantastic with Tokyo in the background. But there are a lot of people who think carriers are basically obsolete. Navies around the world disagree with that. They are keeping their carriers. They're building lots of new ones. But I think the important thing is they're also reinventing the air wing that flies off the top of them. They are replacing some crewed planes with pilots in the cockpit with drones that can be developed much more quickly and used in very different ways.

11:21And presumably another major advantage is that just frees up people from doing some of that work, as earlier mentioned. Part of it is freeing up crewed planes, which you can then fly less, and that means the airframes suffer less wear and tear. So that's a good thing. But there's also another aspect to this, which is that if drones are a bit cheaper to build, a bit less expensive because they are simpler, they have less inside them to protect a human, you can probably use them more aggressively. You can accept more losses in wartime and you can buy them in bigger numbers to cope with that kind of attrition.

11:55General Jenkins was also talking to me about how you can design the drones differently if you do not have to have a human in the cockpit from the beginning. By definition, an uncrewed system doesn't need to go through the same level of health and safety scrutiny that my crude platforms do. It's easier to update the software on an uncrewed system than it is on a crude system because of some of the checks and balances that are engaged. We can build open systems architecture, uncrewed systems that will enable us to update them in real time in Comban. And how much of this is a future vision and how much of it is a right now vision?

12:39It's a mix. So the first sea lord said that his target was that hybrid air wing within five years. My understanding is that the Royal Navy wants a totally uncrewed air wing by 2040 with only a couple of exceptions. And that is the F-35 jets, because they're supposed to last till the 2060s, and aircraft that have to carry people. And that process is absolutely well underway. So, for example, when I was on Prince of Wales, inside the hangar, alongside these jets, alongside helicopters, I also saw a Malloy T-150 quadcopter, which is this huge quadcopter. It can carry, I think, something like 65 kilograms.

13:23And not long before I was visiting, that Malloy had delivered spare parts to a destroyer just over a mile away, a job that might previously have taken hours of crew time. So that's baby steps, but it was clear to me from talking to General Jenkins that this was something he only saw moving in one direction. I just don't see how we can believe that we will compete effectively as a modern war fighting force unless we can feel these uncrewed systems at some scale in the near future. And you say navies around the world are thinking this way. How much is Britain a leader here? Navies around the world are experimenting in different ways.

14:06In fact, the U.S. Navy just this summer said it had given contracts to a number of companies to design what is sometimes called loyal wingmen drones. These are bigger drones than the kind of small things you see from Ukraine, Jason. They may be 20, 30 million dollars each, and they would fly alongside the F-35, extending its range, working with the pilot in the cockpit of that F-35. I think the big question in all of this is that we see a lot of experimentation around surveillance, around logistics, around maybe dropping sonoboys to hunt submarines. But how much will drones also take over the strike mission?

14:45They're called an aircraft carrier strike group for a reason, because strike is the heart of what they do. So will at some point these drones be entrusted with the same sorts of missions of launching long-range weapons, launching missiles that crewed planes currently have? I think that's really one of the big questions right now. But that raises thornier questions than simply delivering spare parts and mail, right? How much are these things autonomous and how much are they piloted from afar? Right now they are mostly remotely piloted. They're not actually all that autonomous, except in some very basic ways.

15:22They can fly a certain flight routine. They can avoid objects. But if you give them weapons, if you entrust them with complex missions like, hey, take out that Chinese air defense or patrol the skies around the carrier strike group and take out threatening planes, then the problem is you can remotely control them. But the assumption in a future conflict, as we have seen in Ukraine, is that electronic warfare, that is jamming, is going to sever the pilot, perhaps on the carrier, from the plane up in the air. And so you either have to have the plane abort the mission, or you give them the ability encoded in their software, and trust them with the ability to perform those very delicate missions, and trust that, for example, they don't go and blow a civilian airliner out of the air by mistake.

16:06Right now, I think navies like air forces are reluctant to say you can completely go autonomous on the most advanced combat capabilities. They still want optionally crewed planes in which you could have a human in the cockpit or a human communicating with the drone. But that could change. So all of those hotshot Navy flyboys might feel a little threatened by all this. They're being taken out of the loop. Yeah. You think of the great role of aircraft carriers and naval aviation in pop culture and Top Gun comes to mind. I actually asked a retired American rear admiral and said, why has the U.S. Navy been relatively slow in pursuing UCAVs, they're called, unmanned combat aerial vehicles?

16:49And he said, fundamentally, it's because, and I'm quoting, fighter pilots are running the decision-making process. So there's a certain cultural caution around this. But ultimately, I think for mid-sized navies like the Brits and many others around the world, this is also about reckoning with the fact they simply can't afford the requisite number of extremely expensive F-35s and jets they need to fill out their carriers. Britain has two carriers. It does not have planes for two carriers. So if you want to fill out your airwings and you want that combat mass, you no longer can do it with sufficient Tom Cruises and the planes they fly.

17:29You will increasingly have to think about doing it with drones. Shushong, thanks very much for your time. Thank you very much, Jason.

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18:28If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about in a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC.

18:57The hurricane season, it shows no signs of ending yet. Tropical Storm Iota has formed, forecast to become a major hurricane. First alert, Chief Meteorologist Steve Weigel joining us now with where... In November 2020, a Category 4 hurricane barreled into a scatter of coral-ringed islands in the Western Caribbean. Claire McHugh writes about the Americas. Hurricane Iota destroys the Colombian island of Providencia, including most of the Barrier Reef. In response to this devastation, scientists used government funds worth around$2.9 million in today's money to restore these storm-smashed corals. Three years later, around 200 hectares of coral reefs, that's about 280 football pitches, had been rebuilt along Colombia's Caribbean and Pacific coasts.

19:50Now this project, which is called One Million Corals for Colombia, is one of the largest reef restoration projects in the world to date. Spurred by that success, Colombia's conservationists have hatched a new coral care plan, and their efforts are urgent. The Caribbean has lost up to 80 % of its corals since the 1970s. Researchers are racing to rescue coral reefs before they're cooked by climate change. Rising sea temperatures make coral polyps expel their photosynthetic algae. That deprives the corals of food and bleaches them white. As record heat grows more common, it's becoming tougher for reefs to regenerate.

20:42I travelled to the Colombian city of Santa Marta in the Caribbean to find out more about some of these coral restoration efforts. At the end of May, a new laboratory for coral propagation opened there. It joins a bunch of other countries in the region with hatcheries, including Mexico and the Dominican Republic. Now, instead of cloning corals and replanting these fragments into the wild, biologists in the laboratory are assisting with the reef's reproduction.

21:14So cameras installed underwater signal when the corals begin to spawn. Then divers go and collect these bundles of eggs and sperm and fertilize them back in the laboratory. And by August, the researchers had fertilized almost 600 ,000 eggs. The coral gardeners, as they're known, then seed these resulting hatchlings onto floating nurseries in the ocean. And then they transplant the adolescent corals into the wild around six to eight months later. Now the idea behind this coral IVF is to preserve the reef's genetic diversity. The idea is that you can increase the chance of heat-resistant genes developing over time.

21:59The next step for the laboratory is to speed up this process of natural selection by selecting the hardiest varieties.

22:11During the One Million Corals for Columbia programme, Reef restoration efforts off Santa Marta were some of the most successful in Colombia. That's probably to do with the marine conditions around Santa Marta. There's currents of cold water that help reefs survive heatwaves. And unlike elsewhere in the Caribbean, populations of long-spined sea urchins keep the coral-smothering algae in check.

22:43I spoke to Miguel Pineda, who's a reef ranger, and he told me that marine life is now returning to these restored coral reef. When I went to visit, there was squid hovering around the nursery. At the moment, they have 1.5 hectares restored, and their aim is to reach 36 hectares in total. Funding remains a problem. Reef restoration in Colombia is cheaper than elsewhere. The laboratory estimates that they spend around$36 ,000 per hectare. That's about a third of the regional average.

23:28Carlos Correa was Colombia's environment minister from 2020 to 2022. so during the hurricane. He thinks that the Colombian government really needs a long-term plan to fund coral conservation and spur science more broadly.

23:47Using artificial intelligence to monitor the transplanted corals could reduce the costs too. The Colombian coral gardeners used to be fishermen. Back then, they thought that coral was just a rock. and now they're the ones who are caring for the corals.