WEBVTT - AstraZeneca CFO Talks Tariffs, Forward Guidance, Earnings

0:00:00.160 --> 0:00:04.920
<v Speaker 1>The medicines that we provide are essential medicines, whether it's

0:00:04.920 --> 0:00:09.639
<v Speaker 1>an ecology or rare diseases or cardiovascular So there is

0:00:10.080 --> 0:00:14.160
<v Speaker 1>a public health element here and drug shortages and things

0:00:14.200 --> 0:00:18.560
<v Speaker 1>like that that one needs to take into account, you know,

0:00:18.600 --> 0:00:22.439
<v Speaker 1>if any tariffs were to be to be implied. And

0:00:22.480 --> 0:00:25.040
<v Speaker 1>then also one has to take into account the fact

0:00:25.160 --> 0:00:30.400
<v Speaker 1>that manufacturing and supply chains are not a lift and shift.

0:00:31.240 --> 0:00:35.200
<v Speaker 1>You know, these are highly complex manufacturing supply chains and

0:00:36.280 --> 0:00:41.239
<v Speaker 1>they need to be regulated and quality controlled and approved

0:00:41.240 --> 0:00:44.839
<v Speaker 1>by the FDA, etc. So there's also a time element

0:00:45.000 --> 0:00:46.720
<v Speaker 1>to moving supply chains.

0:00:47.040 --> 0:00:50.640
<v Speaker 2>President Trump there has repeatedly said that TE plans to

0:00:50.720 --> 0:00:54.360
<v Speaker 2>apply levies to the pharmaceutical sector, although it seems to

0:00:54.480 --> 0:00:57.240
<v Speaker 2>seems to be paused for the moment. If there are

0:00:57.480 --> 0:01:02.160
<v Speaker 2>US tariffs on imputed meds into the US, who pays?

0:01:02.280 --> 0:01:05.240
<v Speaker 2>Is it companies? Is it US consumers? You just mentioned

0:01:05.280 --> 0:01:08.480
<v Speaker 2>how complex it would be for firms like Astra Zeneca.

0:01:08.920 --> 0:01:11.440
<v Speaker 1>Yeah, so I would say, you know, again, every company

0:01:11.520 --> 0:01:18.959
<v Speaker 1>is different. We're actually in a very fortunate position for manufacturing,

0:01:19.000 --> 0:01:22.720
<v Speaker 1>so we have thirty one manufacturing slits globally. Over the

0:01:22.800 --> 0:01:27.400
<v Speaker 1>last several years, we've actually been manufacturing, investing in manufacturing

0:01:28.000 --> 0:01:31.440
<v Speaker 1>separately in China, you know, in the US, in Europe

0:01:32.200 --> 0:01:36.360
<v Speaker 1>and our manufacturing is fairly segregated. So the product we

0:01:36.480 --> 0:01:41.000
<v Speaker 1>manufacture in China is for China and emerging markets, and

0:01:41.520 --> 0:01:44.360
<v Speaker 1>we have eleven of those thirty one manufacturing sites in

0:01:44.400 --> 0:01:47.880
<v Speaker 1>the US. The vast majority of the product that we

0:01:48.480 --> 0:01:51.760
<v Speaker 1>that we sell in the US is actually manufactured domestically.

0:01:52.640 --> 0:01:56.080
<v Speaker 1>There is a minority of product that we do import

0:01:56.200 --> 0:01:59.880
<v Speaker 1>from Europe into the US. However, as you know, for

0:02:00.280 --> 0:02:07.600
<v Speaker 1>pharmaceutical product, we always maintain dual sources of supply, so

0:02:07.800 --> 0:02:10.480
<v Speaker 1>that will require you know, if there were caraffs put

0:02:10.560 --> 0:02:15.160
<v Speaker 1>on Europe, that would require some sort of measure of

0:02:15.600 --> 0:02:18.799
<v Speaker 1>changing those supply chains. But that's a process that we've

0:02:18.840 --> 0:02:23.400
<v Speaker 1>already started to rebalance the amount that comes from Europe

0:02:24.320 --> 0:02:27.239
<v Speaker 1>versus the US for those minority of products.

0:02:27.639 --> 0:02:31.040
<v Speaker 2>Pascal Soyo, who was speaking to Bloomberg, also talked a

0:02:31.040 --> 0:02:34.880
<v Speaker 2>bit about the innovation in your sector, the innovation being

0:02:34.960 --> 0:02:38.240
<v Speaker 2>mostly paid for by America, Europe and mitture countries have

0:02:38.320 --> 0:02:42.200
<v Speaker 2>to invest more in farmer innovation. Was his message that

0:02:42.240 --> 0:02:45.800
<v Speaker 2>the model is unbalanced. Too much funding in the United States.

0:02:45.840 --> 0:02:50.360
<v Speaker 2>Do you expect more investment in drug innovation in Europe. Now,

0:02:50.440 --> 0:02:54.079
<v Speaker 2>President Trump's push in the defense sector move the needle

0:02:54.240 --> 0:02:57.480
<v Speaker 2>significantly on spending. Will it do the same in the

0:02:57.520 --> 0:02:58.400
<v Speaker 2>farmer industry.

0:02:59.520 --> 0:03:02.960
<v Speaker 1>Well, that's our hope, but obviously it's not for me

0:03:03.080 --> 0:03:07.919
<v Speaker 1>to comment on. I think Pascal has also talked about

0:03:07.960 --> 0:03:14.000
<v Speaker 1>this concept of health sovereignty, and it's both from making

0:03:14.040 --> 0:03:18.320
<v Speaker 1>sure that patients in Europe have access to the best medicines,

0:03:18.600 --> 0:03:22.720
<v Speaker 1>the best innovation in a timely manner, and that's important

0:03:22.760 --> 0:03:25.840
<v Speaker 1>for the patients and the citizens of that country, but

0:03:26.040 --> 0:03:31.320
<v Speaker 1>also that Europe maintains and spends more on innovation and

0:03:31.400 --> 0:03:35.760
<v Speaker 1>innovative drugs, and that will attract more investments in R

0:03:35.800 --> 0:03:39.720
<v Speaker 1>and D and more investments in manufacturing and so forth.

0:03:39.760 --> 0:03:43.960
<v Speaker 1>So I think it is in the best interest of Europe,

0:03:43.960 --> 0:03:47.320
<v Speaker 1>but obviously that's a policy matter and budget matter that

0:03:47.360 --> 0:03:48.720
<v Speaker 1>they'll need to consider.

0:03:48.680 --> 0:03:51.200
<v Speaker 2>As to drop to plan four hundred and fifty million

0:03:51.280 --> 0:03:53.480
<v Speaker 2>pounds investment here in the UK at the start of

0:03:53.520 --> 0:03:57.360
<v Speaker 2>this year, Chance of rahel Reeves then called Astra one

0:03:57.440 --> 0:04:00.520
<v Speaker 2>of the great companies. You said that in January as

0:04:00.520 --> 0:04:02.600
<v Speaker 2>she was setting out her plans to try to kickstart

0:04:02.600 --> 0:04:05.360
<v Speaker 2>the UK economy saying she was determined to make Britain

0:04:05.400 --> 0:04:08.880
<v Speaker 2>the best place in the world to invest. Are you

0:04:09.000 --> 0:04:11.600
<v Speaker 2>seeing any benefits at all that you could point to

0:04:12.040 --> 0:04:16.360
<v Speaker 2>of this attitude from the government, the need for more

0:04:16.400 --> 0:04:19.400
<v Speaker 2>economic growth, of focus on growth as the Labor government

0:04:19.400 --> 0:04:20.119
<v Speaker 2>has talked about.

0:04:20.680 --> 0:04:25.680
<v Speaker 1>Uh not yet, So we haven't really seen any of

0:04:25.720 --> 0:04:31.200
<v Speaker 1>that yet. I think bescal And has often mentioned an

0:04:31.240 --> 0:04:37.280
<v Speaker 1>example of this, which it relates to in her two

0:04:37.480 --> 0:04:40.880
<v Speaker 1>which I would say, you know, has one of has

0:04:40.960 --> 0:04:46.839
<v Speaker 1>been one of the key innovative drugs in breast cancer,

0:04:47.880 --> 0:04:50.400
<v Speaker 1>probably the best innovation in the last twenty years as

0:04:50.400 --> 0:04:54.360
<v Speaker 1>it relates to breast cancer, and that is not reimbursed

0:04:54.360 --> 0:05:00.320
<v Speaker 1>in the UK. So, you know, it's industrial policy is

0:05:00.360 --> 0:05:03.440
<v Speaker 1>obviously one thing, but obviously access to medicines is also

0:05:03.480 --> 0:05:06.840
<v Speaker 1>important because you know, if you think about where we

0:05:06.880 --> 0:05:10.160
<v Speaker 1>do our studies and where we invest R and D investment,

0:05:11.200 --> 0:05:13.280
<v Speaker 1>you know, eventually at the end of all of that,

0:05:13.400 --> 0:05:16.880
<v Speaker 1>we do want patients in that country to have access

0:05:16.880 --> 0:05:20.000
<v Speaker 1>to medicine. So you know, if we spend all the

0:05:20.200 --> 0:05:23.120
<v Speaker 1>money in research and then patients don't benefit in that country,

0:05:23.200 --> 0:05:25.000
<v Speaker 1>that's very disappointing.

0:05:25.839 --> 0:05:30.480
<v Speaker 2>Yeah, So perhaps NHS patients in the UK missing out

0:05:30.680 --> 0:05:36.599
<v Speaker 2>on that. In terms of vaccines, the takeup of important

0:05:37.240 --> 0:05:40.760
<v Speaker 2>vaccines also is falling in the US and here in

0:05:40.800 --> 0:05:44.480
<v Speaker 2>the UK and worldwide. I want to ask you about

0:05:44.520 --> 0:05:47.560
<v Speaker 2>the MMR vaccine, the measles, mumps and Rebella vaccine. Are

0:05:47.600 --> 0:05:51.120
<v Speaker 2>you concerned at astra about the decline in vaccine take

0:05:51.200 --> 0:05:52.680
<v Speaker 2>up in the US and the UK.

0:05:53.440 --> 0:05:59.839
<v Speaker 1>So we don't actually supply vaccines, either childhood or adult vaccines,

0:06:00.360 --> 0:06:03.200
<v Speaker 1>so we're not really in the vaccine business. So from

0:06:03.240 --> 0:06:07.239
<v Speaker 1>a business standpoint, we we don't really have any concern.

0:06:08.440 --> 0:06:13.240
<v Speaker 1>I know it's a public health issue obviously that needs

0:06:13.240 --> 0:06:13.880
<v Speaker 1>to be addressed.

0:06:15.000 --> 0:06:18.360
<v Speaker 3>Coming back to some of the diversification of your supply

0:06:18.440 --> 0:06:20.880
<v Speaker 3>chains that you mentioned earlier as well from a cost

0:06:20.880 --> 0:06:22.520
<v Speaker 3>point of view, At a financial point of view for

0:06:22.560 --> 0:06:25.600
<v Speaker 3>the company, what is the added cost of producing in

0:06:25.960 --> 0:06:29.159
<v Speaker 3>a siloed sort of fashion that you described versus the

0:06:29.320 --> 0:06:31.200
<v Speaker 3>more integrated global supply chains.

0:06:32.560 --> 0:06:36.240
<v Speaker 1>You know, it's hard to say, you know, which is

0:06:36.240 --> 0:06:42.080
<v Speaker 1>more efficient because again every product is different. Components for

0:06:43.800 --> 0:06:48.559
<v Speaker 1>manufacturing do come from from different places. But you also

0:06:48.640 --> 0:06:52.159
<v Speaker 1>have reduced shipping costs for example, you know when you

0:06:52.240 --> 0:06:56.839
<v Speaker 1>have more segregated supply chains. But I also when I

0:06:56.920 --> 0:07:00.680
<v Speaker 1>talked about moving some of the supply and manufacturing from

0:07:00.720 --> 0:07:04.280
<v Speaker 1>Europe to the US. We already have, as I said,

0:07:04.320 --> 0:07:08.160
<v Speaker 1>eleven manufacturing sites, and many of them actually have additional capacity.

0:07:08.240 --> 0:07:11.720
<v Speaker 1>So it would be, you know, some incremental investment for US,

0:07:11.720 --> 0:07:15.080
<v Speaker 1>but you know, very from a marginal standpoint, it would

0:07:15.120 --> 0:07:16.480
<v Speaker 1>not be a lot of investment.