The UK government’s response to Merck’s recent decision to abandon its £1 billion research center in King’s Cross, London, highlights a divergence of opinions regarding the attractiveness of the UK for pharmaceutical investments. The Department for Science, Technology and Innovation stated that “The UK has become the most attractive place to invest in the world,” despite Merck’s claim that it views the UK as lacking in international competitiveness.
Sir John Bell, a respected figure in the UK life sciences sector, asserted that discussions with multiple pharmaceutical executives indicate a common reluctance to invest further in the UK market. This raises questions about the current investment climate, particularly regarding the UK’s spending on medicines compared to other European countries. The UK allocates 9% of its healthcare budget to pharmaceuticals, whereas Germany, Italy, and France spend significantly higher percentages. Additionally, the “clawback” mechanism for NHS spending on medicines resulted in a 23% recoupment figure for firms last year, while similar European schemes typically involve single-digit percentages.
Despite criticisms of government efforts to negotiate drug prices, some argue that the UK retains strong research and development infrastructure, potentially offering a separate value from pricing disputes. However, the current geopolitical landscape complicates matters, as US pharmaceutical companies face pressure to reduce drug prices, which may deter them from investing in regions like the UK that have historically maintained lower pricing.
Merck, a long-established presence in the UK, continues to maintain 1,600 jobs and conduct clinical trials in the country, yet the abandonment of its research center reflects a broader trend regarding future investments. The health secretary, Wes Streeting, has inherited longstanding tensions complicated by existing budget constraints and outdated value-for-money criteria for new medicines.
In summary, while the UK government asserts its attractiveness for pharmaceutical investment, industry leaders caution that significant challenges and perceptions may undermine this claim.
Source: https://www.theguardian.com/business/nils-pratley-on-finance/2025/sep/11/uk-government-must-heed-warns-over-big-pharma-investment