Merck scraps £1bn London expansion as report warns UK drugs sector ‘losing out’

Pharmaceutical bosses have said research and development (R&D) in the UK sector risks “losing out to other countries” as US giant Merck scrapped plans for a £1 billion London centre in a major blow to the industry.

Merck, known as MSD in the UK and Europe, is moving its life sciences operation to the US in a move that will impact around 125 British jobs.

It had been planning to open a research centre in London’s King’s Cross, which was already under construction and due to open in 2027.

Merck blamed the Government for paying too little for medicines and not investing enough in the sector.

It came as research indicated the UK has lost ground against other countries regarding investment in pharmaceuticals and life sciences.

A study from PwC and the Association of the British Pharmaceutical Industry (ABPI) pointed towards weaker investment in recent years, with a particular fall in foreign funding.

The research indicated UK pharmaceutical investment has underperformed against global trends since 2018.

Latest figures showed that investment in R&D in the sector fell by nearly £100 million in 2023.

It also showed direct foreign investment into UK life science fell by 58% to £795 million from 2017 to 2023.

The data showed the UK ranked second for foreign investment in 2017 and 2021 compared with other countries, but fell to seventh by 2023.

ABPI chief executive Richard Torbett said the Government and industry need to work together to “remove existing barriers” in order to help the sector.

He said: “The UK has a world-class science base and the potential to lead globally in developing the next generation of medicines and vaccines.

“But without a more competitive environment for investment, we risk losing out to other countries making bold moves to attract internationally mobile investment.

“I believe UK has the potential to unlock billions in additional investment in early-stage R&D, ensure patients and the NHS can benefit from access to cutting-edge clinical trials and attract major capital investment in R&D and medicines manufacturing facilities, all of which directly support the Government’s health and growth missions.”

AstraZeneca UK president Tom Keith-Roach said: “New and innovative medicines are essential to improving patient outcomes and have huge potential to boost British economic growth and support delivery of the NHS 10-year plan.

“The competitiveness framework underscores the importance of investing in the next generation of medicines and pulling them through to the patients who can benefit.”

A Government spokesman said Merck’s decision to pull the plug on its UK expansion and shift life sciences operations out of Britain was “concerning news for MSD employees and the Government stands ready to support those affected”.

He added: “The UK has become the most attractive place to invest in the world, but we know there is more work to do.

“Through our life sciences sector plan, we’re taking decisive action to further unlock innovation, drive investment and boost growth.”