US pharmaceutical giant Merck has cancelled a £1bn expansion in the UK. The company said the government is not giving enough backing to the life sciences sector.
The multinational, known as MSD in Europe, will move research to the US and cut jobs in Britain. Executives accused successive governments of undervaluing vaccines and innovative medicines.
Industry experts warned that the move could trigger further investment withdrawals from the UK.
Government defends record but admits gaps
A government spokesperson defended spending on science and research but admitted more work is needed. Officials highlighted recent initiatives but acknowledged tough global competition.
Drug makers have been shifting investment to the US. They face pressure from Donald Trump’s administration, which has threatened high tariffs on imported medicines.
London projects scrapped and jobs at risk
Merck had already begun construction of a King’s Cross site, planned for completion in 2027. The company has now confirmed it will not occupy 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 Britain’s failure to tackle underinvestment in life sciences. The spokesperson added that governments have undervalued medical innovation.
Experts warn of wider retreat
Sir John Bell, emeritus professor of medicine at Oxford University, said he had spoken with senior pharmaceutical executives. They all confirmed they will not increase UK investment.
He criticised the decline in NHS spending on medicines. Ten years ago, pharmaceuticals made up 15% of the budget. Today the share is 9%, while other countries spend between 14% and 20%.
Bell warned companies will turn elsewhere if they cannot sell products in Britain.
Industry calls for urgent action
Richard Torbett, head of the Association of the British Pharmaceutical Industry, described the decision as a “serious setback.” He urged politicians to act quickly to prevent further corporate withdrawals.
He said Britain’s competitiveness is the central problem. Long-term underinvestment, he added, has weakened the ability to turn innovation into products.
Merck joins other companies scaling back UK plans. Earlier this year, AstraZeneca abandoned a £450m expansion in Merseyside, blaming limited government support.
UK market losing appeal
Last month, another executive warned that NHS patients risk losing access to new treatments. He called Britain “largely uninvestable.”
Novartis executive Johan Kahlstrom said the company had already failed to launch several medicines in the UK. He blamed the market’s falling competitiveness.
In 2023, AstraZeneca chose Ireland for a new factory rather than Britain. High UK tax rates, the company said, discouraged investment in north-west England.
Industry sources said King’s Cross had attracted significant funding in life sciences and AI. They rejected suggestions that Merck’s decision was linked only to disputes over pricing.
US politics driving investment shifts
Drug companies are under pressure from Washington to cut prices for American patients. At the same time, they are encouraged to expand US-based investment.
In August, Trump warned tariffs on imported medicines could reach 250%. The warning followed an executive order aimed at reducing drug prices.
Dr David Roblin, chief executive of Relation Therapeutics in London, said Britain still offers excellent research foundations. He praised its universities, the NHS research platform, and the UK Biobank.
But he stressed the US remains the largest pharmaceutical market. Political changes there, he added, are forcing global companies to adapt.
Political response
A spokesperson for the Department of Industry, Science and Technology said Britain remains a strong global destination for investment. But the official admitted more must be done and promised support for affected staff.
Labour’s manifesto outlines a new life sciences plan. It includes an NHS innovation and adoption strategy with faster approval of medicines and technologies.
The party also pledged clearer procurement routes and fresh incentives to boost innovation.
