US pharmaceutical group Merck has pulled out of a planned £1bn UK expansion. The company said the government is not providing enough backing for the life sciences industry.
The multinational, known as MSD in Europe, will shift research work to the US and cut jobs in Britain. Executives accused successive governments of undervaluing innovative medicines and vaccines.
Industry observers warned the move could accelerate an exodus of investment from the UK.
Government defends record but admits challenges
A government spokesperson defended current science spending but acknowledged that more work is needed. Officials pointed to new initiatives but conceded that international competition is fierce.
Pharmaceutical firms have already increased focus on the US. They face pressure from Donald Trump’s administration, which has threatened heavy tariffs on imported medicines.
London projects halted and staff losses
Merck had started building a site in King’s Cross, due for completion in 2027. The company confirmed it will no longer move in.
It will also leave the London Bioscience Innovation Centre and the Francis Crick Institute. These exits will result in 125 job losses by the end of the year.
A Merck spokesperson said the decision reflects Britain’s continued failure to invest in life sciences. They added that governments have undervalued pharmaceutical innovation for years.
Experts warn of wider retreat
Sir John Bell, emeritus professor of medicine at Oxford University, said he has spoken with leaders of major pharmaceutical firms. They all indicated they will not expand investment in the UK.
He criticised reduced NHS spending on medicines. A decade ago, 15% of health budgets went on pharmaceuticals. Now it stands at 9%, while other nations spend between 14% and 20%.
Bell warned that companies will look elsewhere if Britain does not purchase their products.
Industry leaders call for urgent action
Richard Torbett, head of the Association of the British Pharmaceutical Industry, described Merck’s move as a “major blow.” He urged ministers to act fast to restore competitiveness.
He said poor competitiveness is the key issue. Years of underinvestment, he added, have weakened the ability to bring innovations to market.
Merck is the latest company to step back. Earlier this year, AstraZeneca cancelled a £450m expansion in Merseyside, blaming limited government support.
UK seen as less attractive
Last month, another pharmaceutical executive warned NHS patients risk losing access to advanced medicines. He said Britain is now “largely uninvestable.”
Novartis executive Johan Kahlstrom said the company had already failed to launch several drugs in the UK. He blamed a sharp decline in competitiveness.
In 2023, AstraZeneca opted to build a new plant in Ireland instead of Britain. The company said high UK tax rates had discouraged investment in north-west England.
Industry insiders said King’s Cross had become a strong hub for life sciences and AI. They rejected suggestions Merck’s decision was driven solely by drug pricing disputes.
US politics driving change
Drug makers are under pressure from Washington to cut prices for American patients. At the same time, they are urged to grow investment in the US.
In August, Trump threatened tariffs of up to 250% on imported drugs. The warning followed an executive order to cut prices for US consumers.
Dr David Roblin, chief executive of Relation Therapeutics in London, said Britain still offers excellent research conditions. He praised the strength of universities, the NHS research platform, and the UK Biobank.
But he stressed the US remains the biggest pharmaceutical market worldwide. Political shifts there, he added, are forcing companies to adjust strategies.
Political response
A spokesperson for the Department of Industry, Science and Technology said Britain remains a top investment destination. But the official admitted challenges remain and pledged support for affected workers.
Labour’s manifesto promises a new life sciences plan. It sets out an NHS innovation and adoption strategy with faster approval for medicines and technology.
The party also pledged clearer procurement routes and fresh incentives to boost innovation.
