ALEX BRUMMER: Drug manufacturer Indivior has been betrayed by British asset managers

Life sciences are one of Britain’s leading sectors with a reputation for excellence.

In recent weeks, the bosses of the two British pharmaceutical giants, Pascal Soriot of AstraZeneca and Emma Walmsley of GSK, have reaffirmed their faith in Britain.

Chancellor Jeremy Hunt also recognizes its importance and allocated £650 million to research last year.

So it’s against the grain that London-cited drug innovator Indivior, with a market value of £2 billion, is looking to move into the US and join companies looking to leave London in search of a higher valuation.

Granted, Indivior’s main operations are in North Chesterfield, Virginia. Both Astra and GSK have large American operations, but feel no need to change. On the contrary.

When US rival Pfizer tried to buy Astra in 2014, it was thwarted and Astra is now worth more than its former predator.

Glaxo had the opportunity to move to the US when it merged with SmithKline, but opted for a London quote instead.

Evidence suggests that companies that make the journey rarely increase their value (Arm Holdings is the big exception so far) and become tadpoles in a big pool.

One might have hoped that Indivior’s UK chairman, Graham Hetherington, former chief financial officer of two FTSE 100 companies, and senior non-executive Juliet Thompson would have shown some public resistance.

After all, the NHS is a testing ground for new substances and the regulator, the MHRA, is developing a reputation for identifying new drugs quickly.

Indivior specializes in developing medicines to tackle addictions and mental health – both key areas of public policy in the UK.

Here’s the problem: to make the move, the company needs the support of 75 percent of its shareholders.

The problem is that Britain can no longer count on long-only investors to champion London-listed companies.

Invidior’s share register is dominated by US funds, with New York’s Two Seas Capital being the largest holder with 10.21 percent.

The first British shareholder on the register is Barclays Capital with 1.32 percent in 15th place, while Liontrust is in 20th place with 1.1 percent.

There is no trace of a British pension fund or a large insurer like Aviva.

The great traitors to investment in the London market are long funds with little tolerance for risk-taking and little regard for the national interest. It is a shocking indictment of British asset management culture.

Japan reborn

In 1999, my then employer The Guardian sent me to Tokyo to write about Japan’s lost decade.

The stock market had collapsed from the dizzying heights of 1986 and real estate prices in central Tokyo were devastated, leaving owners with negative net worth.

Even more astonishing, a miracle economy that had enjoyed a long period of full employment was in a nosedive. A neat tent city of homeless people had sprung up in a park near the Imperial Palace.

It took 34 years to restore the Tokyo stock market to peak levels.

Japan has been on a journey of fiscal expansion and monetary largesse. Its reputation for electronics and innovation has been overshadowed by the rise of China.

Throughout all this, the groundbreaking of hydrogen cars, carbon fiber for aircraft and equipment production for semiconductor manufacturers continued apace.

Among the Western investors who recognized the renaissance was the Oracle of Omaha, Warren Buffett.

In 2020, he went to Japan and bought significant stakes in five trading houses.

Buffett increased his stake to 8.5 percent last year. His assessment was confirmed when the Nikkei index closed yesterday at a record 39,098.68.

It’s time to encourage Buffett to focus on another undervalued market: the FTSE 350.

Lloyd’s canary

The biggest excitement in Lloyds Banking Group’s 2023 results should have been the 57 percent increase in pre-tax profits.

But since this is due in large part to its interest margins – the gap between what it charges borrowers and what it collects from savers and cash deposits – it hardly represents a triumph of financial genius.

Even more fascinating is the £450 million charge for possible compensation for poorly sold car loans. The scandal has been described by consumer analysts as the largest damages claim since payment protection insurance (PPI).

Yes!