Pharmaceutical giants including Merck, AstraZeneca, and Eli Lilly have withdrawn or suspended approximately £2 billion in UK investment, citing disputes with the government over NHS drug pricing. The move threatens jobs, research, and patient access to new medicines.
Oct 1, 2025
Source:
Chemistry World
Investment Freeze Hits UK Life Sciences
The UK’s life sciences sector is facing a crisis as major pharmaceutical companies halt a combined £2 billion in planned investments. This has sparked concerns about the country's future as a hub for scientific innovation.
Industry leaders have pointed directly to the government's drug pricing policies as the primary cause for the exodus.
Key Companies Pulling Back
Merck (MSD): The American giant has scrapped its planned £1 billion research hub in London and is cutting UK staff.
AstraZeneca: The British-Swedish firm has paused a £450 million vaccine lab project and is reconsidering its UK research footprint.
Bristol Myers Squibb (BMS): Has cancelled dozens of NHS partnerships and threatened to withhold a new schizophrenia drug over pricing disputes.
Eli Lilly, Sanofi, and Novartis: These companies have also put major UK investments "on hold," with some shutting down labs and reducing clinical trials.
The trend represents a significant blow, with foreign investment in UK life sciences having already dropped nearly 60% since 2020.
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Source:
World Economic Forum: Publications
The Core Dispute: Drug Pricing and Public Spending
The conflict centres on how much the National Health Service (NHS) is willing to pay for new medicines. Pharmaceutical companies argue that the prices are too low to justify further investment in the UK.
Escalating Tensions
The situation worsened in 2024 when the government increased the rebate on pharma revenues from 15% to 24%, a move the industry described as a major deterrent.
This comes as UK spending on medicines as a percentage of total healthcare expenditure has fallen from 15% to just 9% over the last decade. Reversing this decline would require an estimated £12 billion in additional annual spending.
A Convenient Pretext?
While the industry blames UK policy, some independent analysts offer a different perspective. "Richard Sullivan of King’s College London argues that global pharma is using the UK’s pricing regime as a convenient pretext for broader, necessary corporate cutbacks," reflecting global cost pressures and a shift to localize production in other key markets like the US.
This suggests the withdrawals may be part of a larger global strategy, not just a reaction to UK-specific issues.
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