- Trumping tariffs – We review the quixotic commitment to tariffs that could bite the US and its Healthcare provision/cost hard.
- AstraZeneca 2, UK Government 0 – AZ backed out of the £450m Speke development hours after being called a “great British company”, then reported record FY24 results, defining ‘growth’.
- Space rocks and green men – The geek in us is still fascinated by DNA being found on an asteroid. Was earth ‘seeded’ with life from space?
This week, our political soapbox is back (it’s hard to talk about anything else at the moment). We discuss the potential contradictions between Trump’s election promises and his actions on tariffs (if they go through). We bash the UK in equal measure, believing we have the opposite problem: a government seemingly obsessed with ‘planning for change’ rather than doing it. We also touch on the fascinating findings of DNA on an Asteroid.
Most enthusiastic contrafibularities, Mr Trump. The confusion, contradictions and strange decision-making continue in the US. The potential indiscriminate 25% tariff on all goods imported from Mexico and Canada (the only exceptions seemingly for “personal communications, donated products, informational material with limited face value, and travel incidentals”) was implemented on 1 February, then paused for 30 days on Tuesday 4 February, after Mexico and Canada both reinforced their borders to stifle migration and attempt to slow the flow of fentanyl. Whilst the latter is certainly a laudable endeavour, the blinkered decision-making reveals thoughtlessness on the nature of: i) nested problems; ii) cause and effect; and iii) unwanted side effects (see Figure 1).
Leaving aside any comment on the 10% China tariff for now (which as all know is not paused), it seems strange to us that there were no specific carve-outs for tariff-relief on healthcare products between Canada and particularly Mexico (perhaps alluding to how blunt a tool the presidential authority order is, but also how it was potentially always intended as just a negotiating tactic). For instance, one of Donald Trump’s few commitments on healthcare during his election run, aside from reducing addiction in the US, was addressing drug shortage and pharmaceutical prices.
Whilst in the long run it might be argued that imposing such tariffs on medical imports could encourage manufacturing in the US (many companies having some manufacturing capability over the border in Mexico), we would point out that in the short term it would very much hurt Americans through increased prices and drug shortages: one step forward (fentanyl) for every two back (drug supply and average prices). We would also note that supply chains for cheaper/generic drugs and MedTech are already vulnerable (following previous years’ reliance on China/India).
Historically (ie under Biden), the US always trod carefully in Healthcare in any cases involving tariffs (ie China), with specific carve-outs for medical products that benefit patients, so perhaps many are assuming this posturing and pause approach will provide the wriggle room needed to conclude negotiations and/or develop carve-outs for healthcare. We are in this bracket too, believing it deeply unlikely that America would commit this act of self-harm (in medical markets at least), but this all feels very much as if Trump is playing game of chicken. Perhaps though, Mexico, Canada and Europe would be well advised to be reminded that you should not play chicken with someone who has thrown away the steering wheel.
FIGJAM, but tomorrow. From one country totally unafraid to make decisions (regardless of the consequences) to another, the UK, which is seemingly paralysed by the market flat spin caused by Labour’s missteps since taking office. We know first hand that there are lots of activities behind the scenes in the UK to drive growth (and these are encouraging), but there seems to be very little that the government is doing ‘right now’ in order to improve things. Another market commentator (The Times, we think) recently compared this to “putting an open for business sign on a boarded up shop”.
In our view, the government should be asking itself, of every initiative it is working on “will this see an economic impact in 0-12 months, in 1-3 years, in 3-5 years, or is it pie-in-the-sky”. Sadly, we suspect much of the effort is being directed at the middle two buckets, and the Heathrow expansion is certainly in the last (a plan for it anyway, the planes should arrive in time for us drawing our pension). What we need are needle-moving initiatives (however small) right now, and we – and the wider PH research team – have discussed these at length in our thematic research publications (eg stamp duty, tax breaks on ISAs, dedicated UK growth funds, pension reform, etc). As things stand (and we hope to be wrong), it reminds us very much of our experience in the NHS: constantly redrawing a 10-year plan, to get us out of a pickle, rather than actually looking at the problems of today.
Are you not entertained? We were looking forward to a head-to-head between the government and AstraZeneca: for them to have it out as to what went wrong with the £450m deal to expand the vaccine plant in Speke, near Liverpool. However, the public embarrassment for the UK Government in name-checking AstraZeneca as one of the UK’s great companies, immediately before it pulled out of the £450m Speke redevelopment, was only made worse by AstraZeneca’s FY24 results meeting (on Thursday 6 February). This clearly showed all in attendance what growth, ambition and positivity look like (+21% YoY revenue), with the group on track for its 2030 target of $80bn in revenue. It left very few unsure of where the issues lay between the UK Government and AstraZeneca (to the extent that we do not recall a single analyst question on the topic). However, AstraZeneca CEO Pascal Soriot was quoted in the FT as saying there was “zero link” between Nice’s decision on Enhertu [to not reimburse the drug] and the Speke negotiations. He added that the country’s drug pricing clawback tax did discourage investment, but again said this was “absolutely separate from Speke”. More formally, the company has stated that the deal collapsed because of “the timing and reduction of the final offer [to £78m] compared to the previous government’s proposal [£90m]”.
We are not alone. NASA scientists have collected asteroid particles from the base of the ORIRIS-Rex craft (test your knowledge here) after it returned to Earth in September 2023, and have found that this space dust holds fascinating traces of life. The sample came from the 560m-wide asteroid Bennu, and two papers (here and here) published in Nature describe a “wealth of organic materials”, including the crucial building blocks for life – amino acids – leading the authors to conclude that “our odds of finding life elsewhere are increasing”.
Whilst many will have heard the theory before of an asteroid ‘seeding’ Earth with these valuable building blocks (a theory that arose following the study of an asteroid strike in Australia 1969, which was also contained amino acids), this is the first time we have found the material on an asteroid before it had scorched through our atmosphere and smashed into the ground.
Now, as analysts we are inherent cynics, so being scientists too that’s cynic2, and we also remember from our time in the lab how PhD students could manage to contaminate any sample with anything, leading to huge amounts of wasted time and embarrassing back-tracks. However, in this instance it certainly does not sound like contamination (unless the researchers actually spat their lunch into the sample), given the sheer volume and breadth of molecules, with c.16,000 organic molecules discovered, including 16 types of amino acids (which our cells use to make proteins), and all four nucleosides that are the structural units of DNA (more commonly known as adenosine, cytosine, guanine and thymine), and the remaining nucleoside used in RNA, uracil: a readymade ‘toolbox for life’.
