The great Indian debate on national champions

In the spring of 2014, the American pharma giant Pfizer offered to take over the British pharma company AstraZeneca, partly to take advantage of lower taxes in the United Kingdom (UK).

- Pramit Bhattacharya

The offer sent shock waves across the British establishment, which viewed AstraZeneca as an important scientific asset. The most vocal champions of globalization discovered the virtues of protectionism at that time.

The "cost-crunching merger" would imperil the UK's scientific base, the Financial Times warned in an editorial. "Britain is uncomfortable with the idea of national champions and state interventions," the editorial said. "But as it considers the deal, AstraZeneca's board must lift its eyes from tax returns and consider the long-term interests of the company and the industry of which it forms a part."

Eventually, AstraZeneca's board decided to reject Pfizer's offer, and the firm went on to play a stellar role in coming up with an effective vaccine against Covid-19. Easy access to the Oxford-AstraZeneca vaccine (sold under the brand names Covishield and Vaxzevria) allowed the UK to vaccinate its citizens ahead of most parts of Europe. The national champion paid its debt to the nation.

The AstraZeneca example suggests that even in highly globalized economies, the economic policy establishment may treat some companies as national assets and be fiercely protective of their implicit nationality. But whether national champions should receive State subsidies, and under what terms and conditions, remain contentious issues.