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The AstraZeneca (LSE:AZN) share worth rose 2.5% yesterday (1 July) on information that the corporate is contemplating transferring its shares to the US. That’s been a well-liked theme for UK shares just lately.
CEO Pascal Soriot has been essential of the UK’s method to drug firms. However I’m unsure transferring to the US can be an enchancment.
Value controls
Growing new therapies is a dangerous and costly enterprise. And there’s an fascinating query as to how corporations that do that efficiently – like AstraZeneca – needs to 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 therapies. Nevertheless it’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 medicine – equivalent to 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’ relatively than ‘extreme’ has been adverse 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 said intention is to cease the US paying greater than different international locations for a similar therapies.
This makes it look loads just like the US is transferring in the direction of the UK-style worth controls. And that would appear to restrict the extent to which it’s a extra enticing place for AstraZeneca to be listed.
Valuation
After all, one other main cause UK shares have been transferring their listings throughout the Atlantic is valuation. The S&P 500 trades at a lot greater valuations than the FTSE 100 and that’s not an accident.
Itemizing within the US subsequently makes a variety of sense for firms that wish to give their share costs a lift. However AstraZeneca is a wierd 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 slim. And the hole has closed considerably because the begin of the yr.
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 the moment commerce at unusually low price-to-earnings (P/E) ratios. An excellent quantity of that is the results of the altering regulatory setting within the US.
Against this, AstraZeneca shares at the moment commerce at a P/E ratio of 27. That’s excessive by nearly any commonplace and makes it unlikely that transferring to the US would appeal to a a lot greater a number of.
I’m not satisfied
Decrease multiples and a notably hostile regulatory setting imply I’m not satisfied AstraZeneca has a lot to realize by transferring to the US. However that may not be the plan.
Given the frustration Soriot has expressed at UK worth controls, speak of leaving may simply be a negotiating tactic to attempt to enhance issues. That appears to be the style for the time being.
In any occasion, I don’t suppose AstraZeneca is about to unlock significant worth for shareholders by shifting its itemizing. This doesn’t appear to be a lot of a possibility to contemplate to me.
