Good morning from the Financial Times.
Today is Wednesday, December 3rd, and this is your FT News Briefing.
The British political landscape might be looking very different soon, and OpenAI could be losing its lead over its rivals.
Plus, China's biopharmaceutical sector is rapidly expanding.
I think the next big question is whether or not some of these Chinese biotechs can actually strike out on their own and become the Pfizer's, become the Eli Lilly's, become the AstraZeneca's of tomorrow.
I'm Mark Filippino, and here's the news you need to start your day.
Nigel Farage has told donors he expects a deal or merger between his Reform UK party and the Conservatives ahead of the next general election.
That's according to donors who spoke to the FT.
It suggests that Farage doesn't think he can win an election alone.
The next general, by the way, will be held by 2029.
The right-wing populist party has surged lately.
It's currently leading in the polls at about 30%.
Meanwhile, the Tories are hanging out at about 17%.
But talks about a deal shows the challenges in turning political momentum into actual power.
A split vote on the right could allow left-leaning voters to combine forces and keep reform out of office.
Farage however, told the FT that a deal with the conservatives, as they are would quote, cost us votes.
The artificial intelligence chatbot race is really heating up.
This week, the French startup Mistral unveiled powerful new AI models.
The announcement came just days after OpenAI's chief executive declared a quote.
Sam Altman said his company needs to improve chat GPT because rivals are closing in on its early lead in the AI space.
So where do things stand in the world of AI-fueled chatbots?
The FT's AI correspondent, Melissa Heikkila, is here to tell us.
Hi, Melissa.
Hi.
All right.
So let's start with Mistral.
Does its announcement offer any relief to those concerned that Europe is falling behind the US and China in AI development?
So to some extent, yes.
What we have to remember is that the game is still very much on.
The race is still wide open.
We don't have any clear winners or losers.
And so what Mistral is doing?
They released these powerful models that can be used in different languages and also handle things like images, audio text.
And that gives them an edge, right?
Because a lot of these leading language models are in English.
So if you're a European player, maybe an Asian player, you can use Mistral's models instead and get much better results.
And what Mistral has also done is that they've released smaller models which can run offline on devices.
And that could be a big game changer if you're running something secure like defense drones, for example.
Now, as I mentioned earlier, Sam Altman...
OpenAI's CEO is really feeling the heat here from some of his competition.
What does his code red mean for the company?
So for the longest time OpenAI had this massive moat, because they were the first ones to kind of kickstart this boom.
And for, you know, three years, they've been leading the race.
They've had the best, most powerful models.
But now their lead isn't that clear anymore.
Just a few weeks ago, Google launched Gemini 3, which is their most powerful model, which leapfrogged OpenAI's GPT-5 in several key benchmarks.
And so OpenAI is under immense, immense pressure.
They have to show that they have something new up their sleeves, that they actually still have this edge, and they're racing to roll it out.
Yeah, and now?
Not only are they getting competition from these big tech companies like Google, they're also getting them from even smaller companies like Mistral.
How meaningful is that to OpenAI?
Very meaningful.
I mean, what you have to remember, everyone is talking about the AI bubble right now.
Whether the trillions of dollars we pour into this technology will actually lead to anything meaningful.
Will we see a return on investment?
And so there's also that immense pressure, not only competing on the frontier, whether you have the most powerful models, whether you get to artificial general intelligence first, but also are your models useful?
Do they get adopted?
Where are we going to see the return on investment?
And I think they have to grapple with those both.
So Melissa, obviously things in the world of AI move very fast.
You're very busy these days.
What are you watching as we head into the new year?
The race for search dominance is definitely one of the things to look out for next year.
When OpenAI first introduced ChatGPT, people were using it as a search engine and it was very much seen as a threat to Google's search dominance.
And now Google has flipped that because they have an existing massive user base and they can integrate these AI models into these products directly.
And so that's a big advantage OpenAI just doesn't have.
One big thing I'll be looking at is the sort of geopolitical race surrounding AI.
The US is extremely anxious.
They want to be the world leaders.
But China's right up there.
China has incredible talent.
And now they've been pushing open source models really aggressively.
And so having the model that everyone uses will be a massive, massive fight next year.
Melissa Hekula is the FT's AI correspondent in London.
Thanks, Melissa.
Thank you.
Eurozone inflation unexpectedly ticked Up last month.
Figures out yesterday showed that it was at 22 in November.
Economists predicted that it would hold steady at 2.1%.
Services inflation increased for a third month in a row, but core inflation, which strips out food and energy prices, stayed the same.
The European Central Bank meets later this month and it's expected to keep interest rates on hold at 2 for the fourth consecutive time.
Seems like yesterday's inflation report didn't change that.
Market expectations for rate cuts stayed about the same.
Five years ago, China's biopharmaceutical sector couldn't produce an effective COVID-19 vaccine.
But now record investment is pouring into the country's industry, and Western pharmaceutical executives are worried that their companies could lose their lead to China.
I'm joined by the FT's Eleanor Alcott to talk about this.
Hi, Eleanor.
Hi.
So Eleanor, what has the Chinese biopharma sector looked like over the past couple of decades?
We saw the first initial rise of the Chinese drug industry in about the late 1990s, with a number of generic drug makers producing off patent drugs for the Chinese market.
And in the early 2000s we then saw the evolution of outsourcing companies that would be doing research and manufacturing on behalf of foreign biotechs.
And slowly over time, these clinical research organizations and clinical contract manufacturing organizations accumulated more and more knowledge.
And those people started to go off and start their own companies.
They started to hire from the foreign pharmaceuticals.
They started to attract Chinese talent that had been trained overseas.
And suddenly you have this confluence of factors that is contributing to the evolution of indigenous innovation.
And why are China's biotech startups continuing to do so well?
It's really simple.
It's just down to speed.
From the very beginning.
You're having to do a lot of lab work in order to iterate and figure out what the right recipes are for your drugs.
China is able to cut that down just by the sheer volume of lab workers and researchers they have working on this.
And this goes through right up until the time that they're testing the drugs, which can be very, very lengthy and is the most expensive.
Part of drug development is the clinical trials.
And here, China has a really distinct advantage.
It's got a massive population that is online and is underserved in terms of their medical coverage.
So that means you have a lot of sick patients who have ready access to information about clinical trials, who are willing and able to kind of volunteer for this.
So it's just a really great place to run clinical trials.
And for biotechs that are wanting to test out their ideas, this really is a goldmine.
And how has the government in Beijing supported this?
Is it seen as a strategic sector?
Biotech is absolutely seen as a strategic sector for two reasons.
First of all, the policymakers have outlined biotech as a future growth engine for the economy, along with AI and manufacturing.
But secondly, they also think that China has become overly reliant on imported medicines.
And that's bad because they want medicines that are tailored for the ethnic Chinese population.
So in the mid-2010s they introduced a number of reforms to make it easier for biotechs to raise money and also to pursue drug innovation and development.
And really what we're seeing today is the fruits of those policies and investments bearing out.
So what do you think, Eleanor?
Does the industry have any interest in growing beyond China and maybe... going global?
So 2025 has been a time where all of the major pharmaceutical companies have been doing their shopping in China.
A record number of deals of Chinese biotechs selling assets to these companies has been struck.
But I think the next big question is whether or not some of these Chinese biotechs can actually strike out on their own and not have to go into the foreign markets via these international partnerships, but actually become the Pfizer's, become the Eli Lilly's, become the AstraZeneca's of tomorrow.
This is still very much an open question.
If you look at the list of the top global pharmaceutical companies by market capitalization, There are no Chinese companies in the top 20.
So they obviously have a long way to go in order to compete with some of these players.
Eleanor Alcott is the FT's China Technology Correspondent.
Thanks, Eleanor.
Thank you.
Before we go if you're hoping for news about the next chair of the Federal Reserve, you are going to have to wait a little longer.
U.S.
President Donald Trump said yesterday that he'll announce Jay Powell's replacement early next year.
Powell's term as chair ends in May.
Senior administration officials are expected to interview candidates for the next Fed chair over the next couple of weeks.
Those officials will include Trump and Vice President J.D.
Vance.
The president hinted in two separate public appearances yesterday that the next chair could be Kevin Hassett, director of the National Economic Council.
You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT News briefing.
Check back tomorrow for the latest business news.
