Draghi urges EU to abandon unanimity requirement

This is an audio transcript of the FT News Briefing podcast episode: Draghi urges EU to abandon unanimity requirement

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, May 4th, and this is your FT News Briefing.

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BP reported its best quarterly earnings in more than a decade. Italy’s prime minister proposed ditching a core tenet of how the EU makes decisions. Plus, Biogen wants to get past the disaster that was the rollout of its Alzheimer’s drug. It’s starting with a new CEO. I’m Marc Filippino, and here’s the news you need to start your day.

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Energy group BP recorded its highest quarterly earnings in more than 10 years. According to a measure most closely tracked by analysts, underlying profits rose to $6.2bn in the first three months of this year. That’s more than double the number from a year earlier. These earnings come as hydrocarbon prices are soaring, and it comes despite the mammoth writedown from exiting its business in Russia. The earnings report has also stoked some calls from British lawmakers for a windfall tax on oil and gas profits to help British households offset energy costs.

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Italy’s prime minister Mario Draghi has called on the EU to abandon the requirement for unanimity on foreign policy decisions. Draghi’s call comes as the bloc struggles to respond to security and economic challenges created by Russia’s invasion of Ukraine. The FT’s Rome correspondent Amy Kazmin says scrapping unanimity would be a momentous shift for the EU.

Amy Kazmin
It’s one of the fundamental principles of the EU. It’s not just foreign policy decisions that require unanimity either. It’s other kinds of things too, like taxation, the accession of other countries to the EU, other potential EU members, and a couple of other things that are seen as just so sensitive that they require total consensus of all the EU members. So changing this policy of total unanimity would be a radical shift.

Marc Filippino
So, Amy, what did Draghi have in mind when he proposed this idea?

Amy Kazmin
I think there’s a feeling that the EU is held back from concerted and joint action on key sensitive issues. Now, of course, the context is that, you know, is the Russian invasion of Ukraine. Europe is facing a very hostile and aggressive neighbour to its east. You know, it is important that it can act quickly and swiftly and take needed decisions and that the unanimity principle is somewhat undermines its capacity to respond effectively to challenges. And also, I mean, just from a perspective that all Russia has to do is ensure strong influence over one EU member state and that EU member state can kind of act as Russia’s cheerleader within the EU or Russia’s defender and prevent tougher action. The irony is that in years past it was Italy itself that was sometimes seen as playing that role because Italian companies had such strong business interests in Russia so they were loath to see the EU adopt tougher sanctions.

Marc Filippino
Well, so it sounds like Italy’s really kind of changed the way that it sees Russia over the past eight years. So how much support does Draghi have for this idea of ending unanimity?

Amy Kazmin
I think that he floated it, but he may be the only one arguing for it. The whole issue of European, you know, national sovereignty versus power shifting to Brussels is, of course, a super sensitive issue, as you would be aware. So the powers that remain to require consensus or unanimity are those that some say go to the fundamental idea of nationhood, which is security policy, foreign policy. So countries still want to maintain their prerogatives to make key decisions. So Draghi in arguing for the end of unanimity is in fact, really proposing a radical shift. And in fact, it remains to be seen whether any other country or what countries would endorse this because it’s really very sensitive, the relationship between the member states and the EU itself.

Marc Filippino
Amy Kazmin is the FT’s Rome correspondent. Thanks so much, Amy.

Amy Kazmin
Thank you.

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Marc Filippino
Biogen said yesterday it will replace its CEO, Michel Vounatsos, and it will dismantle its global sales infrastructure for the Alzheimer drug that was supposed to be a blockbuster but ended up a disaster. Here’s the FT’s US pharmaceutical correspondent Jamie Smyth.

Jamie Smyth
Michel Vounatsos was really been instrumental in developing this new Alzheimer’s drug, Aduhelm. He’s been a core part of that strategy. And it was quite a surprise to the market to see that he was going to step down. And I think it’s almost certainly because of the really difficult and disastrous launch of Aduhelm.

Marc Filippino
Right. And just backing up a little bit, Jamie, can you remind us what happened there?

Jamie Smyth
Everybody thought that Aduhelm was going to be a blockbuster drug. Some analysts were predicting that the Alzheimer’s drug could generate, you know, as much as $10bn a year in sales. It’s the first treatment to tackle Alzheimer’s disease, which gained approval in almost two decades. But what’s happened is essentially it’s been dogged with controversy ever since it was approved last June by the US Food and Drug Administration. The main reason for the failure of the drug is that there’s really little evidence that it actually works to slow the progress of Alzheimer’s disease.

Marc Filippino
So, Jamie, how much of this mess will cost the company in total? And how much of a blow is it for the company’s future?

Jamie Smyth
Well, certainly the full costs for Biogen would be in excess of a billion dollars. In fact, the company said it was gonna have to introduce cost cuts of $500mn to compensate for the relative failure of Aduhelm. And this is on top of $500mn of annual cost cuts, which it had announced previously because of the poor sales of the drug. So we’re talking about a multibillion dollar hit to Biogen. Really, the company now needs to go back and reassess its strategy completely because Aduhelm was really seen as a drug that could generate tens of billions of dollars of revenue over a decade. And it was gonna compensate for several other of Biogen’s drugs which have come off patent and lost their exclusivity and now face competition. So it’s gonna be a struggle for the company going forward. It has to try and find a new pipeline of drugs to try and replace the earnings that it won’t get from Aduhelm now.

Marc Filippino
Jamie Smyth is the FT’s US pharmaceutical correspondent.

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Before we go, we’ve been talking a lot about how badly US stocks have been doing now that interest rates are going up. The tech heavy Nasdaq is down more than 20 per cent since the start of the year. And some hedge funds that have invested in tech stocks are getting pummelled. One of the most prominent is Tiger Global. It was founded by well-known growth investor, Chase Coleman. Tiger Global’s flagship hedge fund is now down 40 per cent this year. A big chunk of those losses came just last month. Other high profile casualties include Baillie Gifford’s Scottish Mortgage Investment Trust and Cathie Wood’s flagship Ark Innovation ETF.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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