US pharmaceutical giant Merck has cancelled its planned £1bn UK expansion. The company said the government is not providing enough support for the life sciences sector.
The multinational, known in Europe as MSD, will move research to the US and cut jobs in Britain. Executives accused successive governments of undervaluing vaccines and innovative medicines.
Industry experts warned the decision could deter other major companies from investing in the UK.
Government highlights initiatives but admits challenges
A government spokesperson defended current science and research spending but acknowledged more needs to be done. Officials pointed to new programmes but recognised growing international competition.
Pharmaceutical companies have already shifted investment to the US. They face pressure from Donald Trump’s administration, which has threatened high tariffs on imported drugs.
London projects halted and staff impacted
Merck had begun construction of a King’s Cross facility, due for completion in 2027. The company confirmed it will not occupy the building.
It will also exit the London Bioscience Innovation Centre and the Francis Crick Institute. These moves will result in 125 job losses by the end of the year.
A Merck spokesperson said the decision reflects Britain’s continued underinvestment in life sciences. They added that governments have consistently undervalued medical innovation.
Experts warn of broader implications
Sir John Bell, emeritus professor of medicine at Oxford University, said he spoke with executives of major pharmaceutical firms. They all indicated they do not plan to expand in the UK.
He criticised falling NHS spending on medicines. Ten years ago, pharmaceuticals made up 15% of health budgets. Today it is 9%, while other countries spend between 14% and 20%.
Bell warned companies will invest abroad if Britain does not purchase their products.
Industry calls for urgent action
Richard Torbett, head of the Association of the British Pharmaceutical Industry, called the decision a “serious blow.” He urged ministers to act quickly to restore competitiveness.
He said weak competitiveness is the core issue. Long-term underinvestment, he added, has weakened the ability to turn research into market-ready products.
Merck follows other firms scaling back UK projects. Earlier this year, AstraZeneca abandoned a £450m expansion in Merseyside, citing insufficient government support.
UK market seen as less attractive
Last month, another executive warned NHS patients risk losing access to cutting-edge medicines. He described Britain as “largely uninvestable.”
Novartis executive Johan Kahlstrom said the company had already failed to launch several medicines in the UK. He blamed the market’s declining competitiveness.
In 2023, AstraZeneca chose Ireland for a new factory instead of Britain. High UK tax rates, the company said, discouraged investment in north-west England.
Industry insiders said King’s Cross had become a hub for life sciences and AI. They dismissed claims Merck’s exit was solely linked to pricing disputes.
US pressures reshape investment strategy
Drug makers face pressure from Washington to lower prices for American patients. At the same time, they are urged to increase US-based investment.
In August, Trump warned tariffs on imported drugs could reach 250%. The warning followed an executive order designed to reduce domestic drug costs.
Dr David Roblin, chief executive of Relation Therapeutics in London, said Britain still offers strong research conditions. He praised universities, the NHS research platform, and the UK Biobank.
But he stressed the US remains the world’s largest pharmaceutical market. Political changes there, he added, are forcing global companies to adapt.
Political reaction
A spokesperson for the Department of Industry, Science and Technology said Britain remains a strong destination for investment. But the official admitted challenges persist and pledged support for affected staff.
Labour’s manifesto sets out a new life sciences plan. It promises an NHS innovation and adoption strategy with faster approval of medicines and technologies.
The party also pledged clearer procurement routes and incentives to encourage innovation.
