RAPACIOUS OLIGARCHY
When taxpayers money is going to highly profitable French biotech firms, we need to ask a few questions
Researching and writing these articles takes time, so please consider hitting the subscribe button below. Any support is deeply appreciated
WHY won’t anyone think of the poor private biotech business! How can anyone expect French biotech firm Valneva to get by on total revenues of only €348.1 million? How could anyone possibly expect them to be capable of maintaining Livingston plant jobs here in Scotland with only €346.7 million as of December 31, 2021 in cash and cash equivalent liquidity? Of course the Scottish Government, via their non-departmental public body ‘Scottish Enterprise’ must step in and hand the vaccine manufacturer with a gift of £20m.
This is what we are being expected to swallow.
According to Adrian Gillespie, the chief executive of Scottish Enterprise, Valneva’s commitment to continue to design and make its COVID-19 vaccine here in Scotland is proof of
“a huge vote of confidence in our life sciences sector”1
Personally, the only thing I believe it is proof of is how money talks. We’re talking about £20m of free cash being dispensed to a highly profitable French biotechnology company, to simply maintain their already existing manufacturing commitments in Scotland.
This £20m being dished out in order to ensure Valneva continues to keep its already-existing presence in Scotland doesn’t sound like a ‘vote of confidence’ in Scotland’s life sciences sector. At least to me. Rather, it sounds a bit like racketeering. Shady dealings whereby big business pockets taxpayers subsidies in order to simply keep doing their highly profitable business…the unspoken ‘or else’ isn’t difficult to imagine. Big pharma and big biotech begins to sound a little bit like a cartel in operation.
Valneva on its website boasts
“Total revenues of €348.1 million in 2021 compared to €110.3 million in 2020 – an increase of 216%”2
With revenues up 216%, the French vaccine manufacturer has clearly had a reasonably profitable pandemic. Thus I return to the issue at hand, do they really require Scottish taxpayers money to simply maintain their existing manufacturing in Livingstone?
Let us recall what free markets are supposed to be,
“The free market is an economic system based on supply and demand with little or no government control. It is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions”3
Now with liquidities of €346.7 million as of December last year and total revenues of €348.1 million, what are the justifications for taxpayers to be interfering with the biotech marketplace? And saying ‘oh, we need to ensure vaccine manufacturing continues in Scotland’ cuts no onions here either. After all, with a profitability like Valneva’s, I’m not sure they are facing any economic headwinds demanding downsizing in their Livingstone plant. And it isn’t as if global demand for their vaccine products are drying up anytime soon. So I struggle to imagine why Scottish Enterprise - a public body - feels the need to interrupt the regular supply and demand based natural order of the given biotech marketplace.
This all begins to sound less like free markets in operation and more like subsidies to big business. This all sounds less and less like free markets at work and quite far removed from Adam' Smith’s ‘wealth of nations’.
Of course, given Scottish Enterprise is a public body, and the Scottish Nationalists are in charge, there is a potential constitutional grievance dynamic at play too. One that Valneva seems to be happily benefiting from.
According to reports in the Times of London,
“The UK government initially ordered 60 million doses of Valneva’s Covid-19 vaccine in September 2020. Five months later it added a further 40 million before the deal was scrapped in September.
That decision cast doubt on what could happen to the Livingston plant, with expansion plans being put on pause.”4
Ah! So the dastardly UK Government is threatening potential Scottish jobs? But wait, why does a business like Valneva - boasting of total revenues being up 216% in a year -require taxpayers subsidy to expand their Livingston plant? Why does either government need to be subsidising a global French biotech firm profiting immensely from its vaccines during a pandemic?
Furthermore, why has a Scottish public body stepping in to dish out- as some sort of consolation prize -£20m to a highly profitable private sector business? Am I being too unreasonable to suspect that there is nationalist grievance making at work here? It wouldn’t be the first time we are asked to believe that somehow the Scottish economy is being neglected or overlooked by nasty old Westminster. And I am far from convinced that a certain soft-nationalism is not pervasive throughout public sector Scotland at this point.
But what really takes the proverbial biscuit is that Valneva expects its Covid-19 vaccine sales to be worth up to £420 million this year. But that £20m Scottish Enterprise grant isn’t a repayable. Nor is that £420m projected Covid-19 vaccine sale profit to be anything other than a private profit. A profit subsidised by the taxpayers.
Meanwhile Scotland’s deficit is over 22% of GDP5, and Scotland faces a projected income tax shortfall6 in coming years alongside rising child poverty7. But don’t worry, the big biotech firms with their rising pandemic profits can still access their subsidies.
Welcome to the rapacious oligarchy.
Cameron Grieg (2022, February 22), Scottish vaccine-maker Valneva celebrates £20m funding’, Times, https://www.thetimes.co.uk/article/scottish-vaccine-maker-valneva-celebrates-20m-funding-8lm50p75b
‘Valneva Reports Full Year 2021 Revenue and Cash; Provides First 2022 Guidance’, Press Release, https://valneva.com/press-release/valneva-reports-full-year-2021-revenue-and-cash-provides-first-2022-guidance/#:~:text=Valneva's%20total%20revenues%20were%20%E2%82%AC,by%20the%20COVID%2D19%20pandemic.
Investopedia, Free Market definition, https://www.investopedia.com/terms/f/freemarket.asp
Cameron Grieg (2022, February 22), Scottish vaccine-maker Valneva celebrates £20m funding’, Times, https://www.thetimes.co.uk/article/scottish-vaccine-maker-valneva-celebrates-20m-funding-8lm50p75b
ScotGov (2021, August 18), ‘Government Expenditure & Revenue Scotland 2020-21’, https://www.gov.scot/news/government-expenditure-revenue-scotland-2020-21/#:~:text=Net%20Fiscal%20Balance%202020%2D21&text=Excluding%20North%20Sea%20revenue%2C%20was,GDP%20(%C2%A336.9%20billion).
Scottish Fiscal Commission (2021, December 9). ‘Scotland’s Economic and Fiscal Forecasts – December 2021’, https://www.fiscalcommission.scot/publications/scotlands-economic-and-fiscal-forecasts-december-2021/
ScotGov, ‘Child poverty analysis Collection’, https://www.gov.scot/collections/child-poverty-statistics/
Interesting article. Why UK gov backed out out of contract with Valneva appears unclear, but this could fit the category of 'the ends justifies the means' politically. Quite why one would back a company with which UK Gov did not reach a commitment certainly is a curious one. I wonder also what the benefit argument must have looked like i.e. how many jobs, reinvestment etc, how much tax raised by French company operating in Scotland? Indeed, on what basis was the decision made?