US pharmaceutical giant Merck has dropped plans for a £1bn expansion in the UK. The company said the government is failing to invest enough in the life sciences sector.
The multinational, known as MSD in Europe, will shift research to the US and cut jobs in Britain. Company leaders accused successive governments of undervaluing vaccines and innovative medicines.
Industry figures warned that Merck’s move could trigger a wider pullback of pharmaceutical investment from the UK.
Government highlights efforts but accepts challenges
A government spokesperson defended current spending on research but admitted more action is needed. Officials pointed to new initiatives but stressed that international competition is fierce.
Pharmaceutical companies have increasingly directed investment to the US. They face pressure from Donald Trump’s administration, including threats of punitive tariffs on imported drugs.
London projects cancelled and jobs at risk
Merck had already begun building a major site in King’s Cross, due to finish in 2027. The company has now confirmed it will not use the facility.
It will also leave the London Bioscience Innovation Centre and the Francis Crick Institute. These closures will cut 125 jobs by the end of the year.
A Merck spokesperson said the decision reflects the UK’s failure to address underinvestment in life sciences. The spokesperson added that governments have repeatedly undervalued medical innovation.
Experts warn of industry retreat
Sir John Bell, emeritus professor of medicine at Oxford University, said he had spoken with global drug company leaders. They all indicated they are not planning new UK investments.
He criticised the NHS for reducing its pharmaceutical spending. Ten years ago, 15% of the budget went to medicines. Today the figure stands at 9%, while other countries spend between 14% and 20%.
Bell warned that companies will look elsewhere if they cannot sell their products in the UK.
Industry leaders call for urgent response
Richard Torbett, head of the Association of the British Pharmaceutical Industry, described the decision as a “major blow.” He urged policymakers to respond quickly to prevent further losses.
He said the UK’s lack of competitiveness is the key issue. Long-term underinvestment, he added, has weakened the path from innovation to market.
Merck joins a growing list of companies scaling back UK projects. Earlier this year, AstraZeneca abandoned a £450m expansion in Merseyside, blaming weak government support.
Declining appeal of the UK market
Last month, another pharmaceutical executive warned that NHS patients risk losing access to new treatments. He described the UK as “largely uninvestable.”
Novartis executive Johan Kahlstrom said the company had already failed to launch several medicines in Britain. He cited declining competitiveness as the reason.
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 sources said King’s Cross had become a key hub for investment in life sciences and AI. They rejected claims that Merck’s exit was caused only by disputes over pricing.
US pressures changing global strategies
Drug makers face demands from Washington to lower costs for American patients. At the same time, they are being urged to invest more heavily in the US.
In August, Trump warned that tariffs on imported pharmaceuticals could reach 250%. That threat followed an executive order designed to reduce drug costs.
Dr David Roblin, chief executive of Relation Therapeutics in London, said the UK still offers strong research opportunities. He praised its academics, the NHS research platform, and the UK Biobank.
But he added that the US remains the largest pharmaceutical market. Political changes there, he warned, force global companies to adapt their strategies.
Political reactions
A spokesperson for the Department of Industry, Science and Technology said the UK remains a strong investment destination. But the official admitted further action is required and promised support for affected workers.
Labour’s manifesto sets out a new life sciences plan. It pledges an NHS innovation and adoption strategy, with faster approvals for medicines and technologies.
The party also promised clearer procurement routes and new incentives to encourage innovation.
