US pharmaceutical giant Merck has cancelled a planned £1bn expansion of its UK operations. The company said the government is failing to invest enough in the life sciences sector.
The multinational firm, known as MSD in Europe, will move research to the US and cut UK jobs. Executives accused successive governments of undervaluing innovative medicines and vaccines.
Industry experts warned that the move could push other global pharmaceutical companies to turn away from Britain.
Government defends record but admits shortcomings
A government spokesperson defended investments in research but admitted more must be done. Officials pointed to recent initiatives but accepted global competition is intense.
Pharmaceutical companies have been steering investment towards the US. They face pressure from Donald Trump’s administration, including the threat of high tariffs on imported medicines.
Merck halts London projects and cuts jobs
Merck had already started building a site in King’s Cross, scheduled for completion in 2027. The company now says it will not occupy the facility.
It will also vacate its laboratories in the London Bioscience Innovation Centre and the Francis Crick Institute. This decision will lead to 125 job losses by the end of the year.
A company spokesperson said the UK had failed to address chronic underinvestment in life sciences. The spokesperson added that successive governments had undervalued medicines and vaccines.
Industry fears wider withdrawal
Sir John Bell, emeritus professor of medicine at Oxford University, said he had spoken with several global executives. They all expressed reluctance to invest further in the UK.
He criticised the sharp decline in NHS spending on pharmaceuticals. Ten years ago, 15% of the budget went to medicines. Today the figure stands at 9%, while other nations spend between 14% and 20%.
Bell warned that companies will invest elsewhere if the UK does not buy their products.
A wake-up call for policymakers
Richard Torbett, head of the Association of the British Pharmaceutical Industry, called the decision an “incredible blow.” He urged leaders to understand why companies are leaving and to reverse the trend.
He said Britain’s lack of competitiveness drove the decision. Systematic underinvestment, he added, weakens the ability to turn innovation into marketable products.
Merck joins a list of companies reducing UK commitments. Earlier this year, AstraZeneca abandoned a £450m plan to expand a Merseyside plant, citing reduced government support.
Britain’s competitiveness under threat
Last month, another pharmaceutical executive warned that NHS patients risk losing access to cutting-edge treatments. 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 declining competitiveness of the market.
In 2023, AstraZeneca chose Ireland over Britain for a new factory. The company said high UK tax rates discouraged investment in north-west England.
Industry insiders said King’s Cross had attracted major investment in the overlap of life sciences and AI. They rejected claims that Merck’s exit was driven only by disputes over drug pricing.
US pressures reshaping investment strategies
Drug makers face pressure from Washington to cut prices for American patients. In exchange, they are being urged to increase US-based investment.
In August, Trump threatened tariffs of up to 250% on imported pharmaceuticals. That followed an executive order designed to reduce drug prices in America.
Dr David Roblin, chief executive of Relation Therapeutics in London, said Britain still offers excellent research foundations. He praised the academic sector, the NHS as a research platform, and the UK Biobank’s global appeal.
But he added that the US remains the world’s largest pharmaceutical market. Political changes there, he warned, force global companies to adapt.
Government and Labour outline next steps
A spokesperson for the Department of Industry, Science and Technology said the UK remains a leading investment hub. However, the official admitted more must be done and promised support for affected staff.
Labour’s manifesto includes a new life sciences plan. It proposes an NHS innovation and adoption strategy, with faster approvals for medicines and technology.
The party also pledged clearer procurement routes for companies and reformed incentives to encourage innovation.
