AstraZeneca Increases U.S. Investment Plan Due to Economic Optimism

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One week after Donald Trump's election win, the company announced it is increasing its investment in its U.S. business.

AstraZeneca will invest $2 billion in research and development in the U.S., increasing its total capital expenditure to $3.5 billion by 2026. The funds will be used to enhance the company's R&D and manufacturing capabilities in the country.

The pharmaceutical giant, with its British-Swedish roots, anticipates that the new investment will result in more than 1,000 job openings, thereby contributing to the growth of the U.S. economy, as stated in a release. Currently, the company has 17,800 U.S. employees working across 17 sites in 12 states.

AstraZeneca announced that its expanded footprint will consist of a research and development center in Cambridge, Mass., manufacturing plants in Maryland and Texas, and other sites across the West and East coasts.

Earlier this year, AstraZeneca set a revenue target of $80 billion by 2030. The company has now announced the first step in achieving this goal with an investment.

After Trump's victory, the drugmaker is now one of the first major foreign companies to reveal plans to invest in the U.S.

During Trump's first term, several companies made significant investments in the US. Despite it being challenging to establish a direct link between these investments and his administration, Trump frequently attempted to claim credit for them.

AstraZeneca refused to confirm if Trump's re-election influenced its increased spending in the US.

AstraZeneca CEO Pascal Soriot stated during a media call after the company's earnings release Tuesday that the investment is a "reflection of our belief in the strength of the U.S. economy and market potential in the coming years."

On Tuesday, in a separate event in New York City, Soriot stated that the drugmaker has been considering the increased investment for several months.

A previous version of a Tuesday report from the Wall Street Journal suggested that AstraZeneca's new investment was motivated by other factors. However, a source familiar with the matter told the outlet that the company's decision was a bet that a second Trump administration would amend certain elements of President Joe Biden's signature Inflation Reduction Act. The current version of the report no longer mentions the IRA.

In 2022, legislation was signed into law that aims to reduce prescription drug costs for seniors by allowing Medicare to negotiate medication prices with manufacturers. This legislation, known as the IRA, has been acknowledged as a challenge to the businesses of drugmakers such as AstraZeneca, whose diabetes treatment Farxiga was among the 10 drugs targeted in the first round of negotiations, which set new prices for 2026.

On Tuesday, Soriot rejected the notion that the company's decision was influenced by potential IRA changes. During the media event, he joked about dreaming of the IRA being repealed, but not to that extent.

He stated that some provisions of the IRA are "good things," including the $2,000 cap on out-of-pocket spending for Medicare Part D enrollees starting in 2025.

Soriot stated that the company views the IRA as a permanent fixture, and the decision to increase its U.S. investment is not primarily driven by industry-specific policies.

"The belief that the economy will remain strong is widespread. If the economy is strong, it is likely to drive investments in innovation, not only in our industry but also in many others. We aim to take advantage of this innovation in the U.S."

Soriot stated that Trump's tariff policies are more applicable to other industries and businesses.

Trump has threatened to impose a tariff of up to 60% on all goods imported to the U.S. from China. However, Soriot deemed the tariff policy irrelevant to AstraZeneca because the company does not source products from China for the U.S.

AstraZeneca's products in the U.S. are manufactured in multiple plants across the country, and the company is investing in more now, as stated by the CEO to reporters.

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Summa Health has been acquired by General Catalyst's HATCo for $485 million in the latest development in health-care technology.

On Thursday, it was announced that a subsidiary of General Catalyst has purchased Summa Health, an Ohio-based integrated health system, for $485 million.

In January, the two organizations announced their acquisition plans, but the terms were not disclosed. Summa announced on Thursday that the deal will help it eliminate $850 million in existing debt when combined with its current cash. According to financial filings, the health system had about $859 million in debt as of September 30.

In northeast Ohio, Summa operates in five counties and supports over 1,000 inpatient beds through its network of hospitals, community-based health centers, and multi-specialty group practice. Last year, General Catalyst laid the groundwork for the acquisition by introducing a new company called HATCo, which operates on "decades-long" timelines.

The fund's objective is not to reduce expenses at Summa through the acquisition of a hospital, as HATCo executives informed CNBC. Instead, the company aims to create new revenue streams for Summa by introducing innovative technology and healthcare models.

In a January interview, HATCo CEO Dr. Marc Harrison stated that the current situation is not similar to a turnaround or a distressed system.

Summa has received $550 million in capital funding from HATCo over the first seven years, with $350 million allocated for tech investments and routine workflows, and an additional $200 million set aside for strategic and transformative investments, as stated in Thursday's release.

HATCo will assess tech solutions from various companies, not only those affiliated with General Catalyst, and will focus on mature companies rather than early-stage startups, according to Harrison.

The health system announced that Summa will become a for-profit organization after the acquisition, and the remaining funds will be used to establish a new health-focused community foundation in the greater Akron area.

"As an independent organization, we were unable to invest in and grow our team to the full extent we desired. However, as part of HATCo, we will have the opportunity to do so. Despite the shift in structure and model, our priorities will remain the same, and our providers, employees, and leadership team will transition to the new entity."

The deal between General Catalyst and Summa is pending regulatory approval. No comment was immediately provided by representatives for either company.

Read more about why HATCo is acquiring Summa here.

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