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The AstraZeneca (LSE:AZN) share worth rose 2.5% yesterday (1 July) on information that the corporate is contemplating shifting its shares to the US. That’s been a preferred theme for UK shares not too long ago.
CEO Pascal Soriot has been essential of the UK’s strategy to drug corporations. However I’m undecided shifting to the US could be an enchancment.
Worth controls
Growing new remedies is a dangerous and costly enterprise. And there’s an attention-grabbing query as to how corporations that do that efficiently – like AstraZeneca – must be compensated.
One of many issues Soriot has objected to is the UK’s worth controls, which restrict how a lot the NHS pays for remedies. But it surely’s arduous to see how issues are far more beneficial within the US.
Within the UK, the Nationwide Institute for Well being and Care Excellence (NICE) assesses medication – reminiscent of Astrazeneca’s – for cost-effectiveness. This limits what the NHS is ready to pay for them.
NICE’s determination to categorise metastatic breast most cancers as ‘reasonably extreme’ slightly than ‘extreme’ has been unfavorable for AstraZeneca. However is the US prone to be extra profitable?
Robert F Kennedy – the present US Well being Secretary – has introduced plans to restrict drug costs. The acknowledged purpose is to cease the US paying greater than different nations for a similar remedies.
This makes it look rather a lot just like the US is shifting in direction of the UK-style worth controls. And that would appear to restrict the extent to which it’s a extra engaging place for AstraZeneca to be listed.
Valuation
After all, one other main motive UK shares have been shifting their listings throughout the Atlantic is valuation. The S&P 500 trades at a lot larger valuations than the FTSE 100 and that’s not an accident.
Itemizing within the US subsequently makes a number of sense for corporations that want to give their share costs a lift. However AstraZeneca is an odd candidate from this angle.
Supply: JP Morgan Information to the Markets UK Q3 2025
In line with information from JP Morgan, healthcare is without doubt one of the sectors the place the distinction in valuation is probably the most slender. And the hole has closed considerably because the begin of the 12 months.
Over the past 12 months, healthcare has been the one worst-performing sector for the S&P 500. And this has been displaying up within the multiples that US shares have been buying and selling at.
Pfizer, Merck, and Bristol-Myers Squibb all at present commerce at unusually low price-to-earnings (P/E) ratios. quantity of that is the results of the altering regulatory atmosphere within the US.
Against this, AstraZeneca shares at present commerce at a P/E ratio of 27. That’s excessive by nearly any normal and makes it unlikely that shifting to the US would entice a a lot larger a number of.
I’m not satisfied
Decrease multiples and a notably hostile regulatory atmosphere imply I’m not satisfied AstraZeneca has a lot to achieve by shifting to the US. However which may not be the plan.
Given the frustration Soriot has expressed at UK worth controls, speak of leaving would possibly simply be a negotiating tactic to try to enhance issues. That appears to be the style in the intervening time.
In any occasion, I don’t suppose AstraZeneca is about to unlock significant worth for shareholders by shifting its itemizing. This doesn’t seem like a lot of a possibility to contemplate to me.
