Merck, the American pharmaceuticals group known as MSD in Europe, has dealt a significant blow to the government’s ambitions to build a world-leading life sciences economy by scrapping its £1 billion plan for a new London headquarters.
The company confirmed it will halt construction of its 25,000 sq ft research centre in the capital’s Knowledge Quarter, a flagship project announced only two years ago and scheduled to open in 2027.
The decision, which includes shutting down discovery research operations in the UK with the loss of 125 jobs, underscores growing unease among global drugmakers about Britain’s regulatory and pricing environment. Merck said successive governments had failed to address “the lack of investment in the life sciences industry and the overall undervaluation of innovative medicines and vaccines”, citing in particular the NHS’s restrictive approach to new treatments.
Its withdrawal follows the collapse of talks between ministers and the industry over reforming the voluntary branded medicines pricing scheme, which limits NHS spending on innovative drugs. The timing is also notable: the Association of the British Pharmaceutical Industry has published a report, produced with PwC, warning that the UK is slipping behind international rivals in attracting foreign direct investment and commercial clinical trials.
Merck is not alone in its frustration. Eli Lilly has recently paused part of its UK investment pending greater clarity on government policy, while AstraZeneca and GSK are also expected to press ministers for reforms. The stand-off comes just as ministers seek to showcase Britain as a life sciences leader ahead of a state visit by US president Donald Trump, who has warned Washington will no longer “subsidise the healthcare of foreign countries”.
Although officials insist the UK remains one of the most attractive global investment destinations, industry figures say that without meaningful policy change, Britain risks losing out to the US and Europe in the competition for pharmaceutical innovation and capital.