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Merck Discards New Research Center in Britain Amongst Turmoil in Pharmaceutical Industry Investments
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Key Takeaways
- Merck and AstraZeneca have abandoned UK investments, citing insufficient government support and undervaluation of innovative medicines.
- The UK government claims attractiveness for investment but acknowledges the need for improvement, committing $703 million to manufacturing funds.
Merck withdraws from its London research facility, highlighting growing concerns over the UK's life sciences investment climate and industry competitiveness.
Britain defended its ability and history of attracting pharmaceutical investments following Merck’s decision.
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Merck announced it is abandoning its new research facility in London following controversy over Britain’s life sciences sector in which many organizations and investment groups have raised concerns over the lack of investment into the sector, according to a report from Reuters. Merck’s new laboratories located near Kings Cross in central London were previously anticipated to open in 2027 following construction, yet the company elected to walk away from the site.
Merck touched on its decision in a statement, saying, "Our decision reflects the challenges of the U.K. not making meaningful progress towards addressing the lack of investment in the life science industry and the overall undervaluation of innovative medicines and vaccines by successive U.K. governments.”1
Is it time for Britain’s life sciences sector to panic?
Back in January this year, Britain’s largest drug manufacturer AstraZeneca discarded its plan to invest $558 million in its own vaccine manufacturing plant in northern England, claiming a cut in support from the British government as the reason for the investment’s abandonment.Along with multiple pharmaceutical organizations abandoning investment properties in the country, Britain faces the threat of tariffs and other various pressures from the U.S. following President Trump’s urge to return manufacturing to the U.S. In July, Britain launched an industrial strategy focusing on eight sectors including life sciences, which welcomed proposals aimed at boosting research and development, yet warned of the potential of failing to keep firms competitive barring a deal on drug pricing.
A British government spokesperson cited a Deloitte survey while making a statement on the status of the sector, saying, “The U.K. has become the most attractive place to invest in the world, but we know there is more work to do.”1 The spokesperson continued to add that the British government committed $703 million to manufacturing funds, unlocking billions in private investments, saying “We recognize that this will be concerning new for Merck employees.”1
Negotiations between drug companies and the British government have been ongoing for an extended period, with the holdup surrounding how much revenue from U.K. based firms must return to the country’s National Health Service with discussions dissolving in August without coming to a resolution.
The Association of the British Pharmaceutical Industry touched on Britain's ranking for FDI in the life sciences sector, citing a fall from second in 2017 to seventh in 2023, saying, "The UK is increasingly being ruled out of consideration as a viable location for pharmaceutical investment."1
Pressure from across the pond
Britain and the European Union are facing pressure from U.S. president Trump to increase spending on U.S.-based drugs along with the administration continuing to mull over pharmaceutical tariffs, with both countries reaching an agreement on select tariffs with “preferential treatment.” President Trump is set to visit Britain next week with Britain committing to “improving the overall environment” for the life sciences sector.
Sources
- Britain defends investment record as Merck scraps labs over pharma environment Reuters September 11, 2025 https://www.reuters.com/business/healthcare-pharmaceuticals/britain-defends-investment-record-merck-scraps-labs-over-pharma-environment-2025-09-11/
- AstraZeneca ditches UK investment over cut in state support Reuters January 31, 2025 https://www.reuters.com/business/healthcare-pharmaceuticals/astrazeneca-terminates-plan-build-558-mln-uk-vaccine-plant-2025-01-31/
- Britain's life sciences plan gets mixed reception from pharma industry Reuters July 16, 2025 https://www.reuters.com/business/healthcare-pharmaceuticals/britains-life-sciences-plan-gets-mixed-reception-pharma-industry-2025-07-16/
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