The Lex Newsletter: Disrupted times

By News Room Last updated May 9, 2024

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Dear reader,

Disruption is a fact of life that we all have to try our best to cope with. The FT even has its own newsletter dedicated to the subject. Just today, en route to a meeting, I was greeted with the unwelcome news on a London Underground station platform that the next train would be in 19 minutes.

The corporate world often faces disruption that is more existential to deal with, either from flashy upstarts, changing consumer tastes or once-in-a-generation events (we hope) like the pandemic. Over the past few days, the Lex column has been writing about various sectors and topics that fall into the broad category of “adapt or die”. Here are some highlights:

The London office — like many others around the world — is still adjusting to the disruption that the pandemic and the rise of working from home meant for office occupiers. Talk to any self-respecting landlord or office agent and they’ll tell you a story of bifurcations and huge demand for top-quality, well-located office space. Still, there are pockets of the market where vacancy rates have risen, not least at Canary Wharf in London’s Docklands. There, owners Brookfield and Qatar Investment Authority are hoping that pivoting to life sciences will help mop up excess space. The trouble is that they aren’t the only landlords to have spotted the opportunity to fill empty offices with labs, especially given the lack of much life sciences space in London and the shortage in cities such as Oxford and Cambridge. Read more here.
Publishing — like most of the media sector — seems to be in a permanent state of disarray. The fickle tastes of the media-consuming public, combined with new technology, means the competition for eyeballs and attention is always fierce. But the latest trend is one that is helping the publishing industry in its quest to reach its audience. BookTok is a community within TikTok where influencers can post content such as reviews of their favourite novels. Publishers, then, are having to respond to the preferences of this dedicated group of often younger readers, getting more into genres such as “romantasy”. Ultimately, though, those in the slightly fusty literary world have little ability to influence social media popularity. Make the most of it, then.
The pharma world has been thoroughly upended by the extraordinary success and growth of weight-loss treatments — a category of drug that many in the sector long thought would never make a real impact with patients or subscribers. The leaders in weight-loss drugs, such as Novo Nordisk and Eli Lilly, have soared ahead of rivals. But don’t lose sight of the industry’s previous powerhouse, as obesity steals the limelight. Oncology is the sector’s biggest source of sales, with projected 2028 revenues of $440bn. And advances in the treatment of cancer, including a type of precision-targeted drug that can deliver chemicals directly to tumours, are shaking up the outlook. That in turn has prompted a rash of dealmaking, with Roche, J&J and Genmab all sealing acquisitions this year following a bumper period for M&A and partnerships last year. That trend looks set to continue. Find out more.
Artificial intelligence is going to disrupt us all — not least journalists. But the past couple of weeks have been dominated by discussion about which big tech companies are doing what and spending what in AI. One that has remained pretty quiet about AI overall has been Apple. But last week chief executive Tim Cook opted to point investors in the right direction, declaring that generative AI was a critical opportunity for the company. (You can read Lex’s take here). The rising spending on AI and associated infrastructure was much in evidence in recent tech earnings — and will have further-flung effects yet. One deal that caught Lex’s eye last week was Microsoft’s agreement to back perhaps $10bn of new renewable projects from Brookfield to help power its data centres. As the energy demand from data centres mounts, tech giants focused on meeting their green commitments are taking matters into their own hands in ways that will shape energy transitions. Witness: Microsoft now has a director of nuclear technologies. Read more here.
The need to cut emissions from fossil fuels will shape our lives in the decades to come, in big ways and small. Lex looked at the debate and disagreement around carbon offsets — the credits that companies can buy to prove they have cut someone else’s emissions rather than their own. This is a market beset with scandals, measurement problems, and periodically mired in scandal. Overall, there is evidence that many of the voluntary credits available just aren’t very good quality in terms of actual emissions reduction. But dogmatic opposition won’t help, said Lex. There will have to be a way for companies to handle the hardest to abate parts of their emissions. And creating projects that permanently sequester carbon, in way that is properly measurable, is a good place to start. Trouble is, they are also hard to come by and wildly expensive. Find out more.

Best read

Catch up on the best-read pieces in the Lex column over the past week.

A TikTok ban would upset its 170mn US users, who want to be left to make memes about industrial-grade glycine in peace. It would also accelerate the “splinternet”.
Nintendo’s flagship Nintendo Switch has rewritten game console history.
Brokerage analysts in Europe have just finished the annual ritual of parading for votes in a survey of the best research teams. This is a flawed process that persists though no one can really explain why.
Enthusiasts once called investment trusts the City of London’s “best-kept secret”, thanks to their low profile and strong performance. Not any more.

Have a good week,

Helen Thomas
Head of Lex

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