US pharmaceutical giant Merck has scrapped a planned £1bn expansion of its UK operations. The company said the government is not investing enough in the life sciences sector.
The multinational business, known as MSD in Europe, will move its research to the US and cut UK jobs. Executives blamed successive governments for undervaluing innovative medicines and vaccines.
Industry experts warned that the decision could discourage other global pharmaceutical companies from investing in Britain.
Government defends record but admits challenges
A government spokesperson defended investments in science and research but admitted more work remains to be done. Officials highlighted recent programmes but stressed that global competition is fierce.
Pharmaceutical companies have been shifting investments to the US. They face pressure from Donald Trump’s administration, including threats of steep tariffs on imported drugs.
Merck halts London projects and cuts jobs
Merck had already begun construction on a site in King’s Cross, due for completion in 2027. The company now says it will not occupy the facility.
It will also leave its laboratories in the London Bioscience Innovation Centre and the Francis Crick Institute. The exit will result in 125 job losses by the end of the year.
A company spokesperson said the decision reflects the UK’s failure to address underinvestment in life sciences. Successive governments, the statement added, have undervalued innovative medicines and vaccines.
Experts warn of wider retreat
Sir John Bell, emeritus professor of medicine at Oxford University, said he had spoken to several global drug company leaders. They all shared the same position: they are not planning further UK investments.
He criticised the falling share of NHS spending on medicines. A decade ago, the NHS spent 15% of its budget on pharmaceuticals. That figure has now dropped to 9%. Comparable countries spend between 14% and 20%.
Bell warned that companies will go elsewhere if they cannot sell products in the UK.
Industry leaders call it a wake-up call
Richard Torbett, head of the Association of the British Pharmaceutical Industry, described the decision as an “incredible blow.” He urged policymakers to understand what drives such corporate exits and act to reverse the trend.
He said the lack of competitiveness is the key factor. Systematic underinvestment, he added, damages the commercialisation of innovation.
MSD is the latest drug maker to reduce UK investment. Earlier this year, AstraZeneca abandoned plans to expand a Merseyside plant, citing weak government support.
Britain losing ground in global race
Last month, another major pharmaceutical boss warned that NHS patients risk losing access to cutting-edge treatments. He described the UK as “largely uninvestable.”
Novartis executive Johan Kahlstrom said the firm had already been unable to launch several medicines in Britain. He blamed the country’s declining competitiveness.
In 2023, AstraZeneca chose Ireland over the UK for a new factory. The company cited discouraging tax rates in England as the reason for building in Dublin.
Industry insiders said the King’s Cross hub had been attracting major funding at the intersection of life sciences and AI. They rejected claims that Merck’s decision was linked solely to disputes over drug pricing.
Pressure from the US reshaping strategies
Drug companies face pressure from Washington to cut prices for American consumers. In return, they are being pushed to invest more in the US.
In August, Trump warned that tariffs on imported drugs could reach 250%. That followed an executive order aimed at lowering domestic drug prices.
Dr David Roblin, chief executive of Relation Therapeutics in London, said the UK still offers strong research fundamentals. He praised the academic environment, the NHS as a research platform, and the UK Biobank’s global role.
But he noted that the US remains the largest pharmaceutical market in the world. Political shifts there, he added, force global companies to adjust.
Government and Labour respond
A spokesperson for the Department of Industry, Science and Technology insisted the UK remains attractive for investors. However, the official acknowledged more must be done and pledged support for affected staff.
Labour’s manifesto promises a new life sciences plan. It pledges an NHS innovation and adoption strategy in England, including faster approval for new technologies and medicines.
The party also promised clearer procurement routes for companies and reformed incentive structures to encourage innovation.
