Merck’s withdrawal exposes UK’s slow pace in attracting pharma investments amid policy concerns

Merck’s decision to abandon a £1 billion drug research centre in London highlights the widening gap between the UK and its global competitors, raising urgent questions about government support and industry policy reforms necessary to revive Britain’s standing in global healthcare innovation.

American pharmaceutical giant Merck has decisively withdrawn plans for a £1 billion drug research centre in London’s King’s Cross, citing that Britain is “not internationally competitive.” This cancellation, announced recently, marks a significant setback for the UK’s life sciences ambitions and will result in the loss of around 125 scientific and support jobs. Merck, operating in the UK under the name MSD, indicated that its decision stems from the UK government’s failure to adequately invest in the life sciences sector and to properly value innovative medicines and vaccines, choosing instead to relocate this research activity to the United States.

The decision underscores broader concerns within the British pharmaceutical industry about the country’s shrinking appeal for foreign investment. The Association of the British Pharmaceutical Industry (ABPI), which released a critical report alongside consultancy PwC, highlights that Britain has plummeted in global rankings for medical research investment—from second place in 2017 down to seventh in 2023. Despite being a world leader in research and education, the UK allocates just 9% of its healthcare spending to medicine development, lagging significantly behind countries like Japan and the US, where the figures stand at 20% and 15% respectively.

This downward trend in investment is aggravated by fraught relations between drug manufacturers and the UK government over the National Health Service’s (NHS) rebate scheme. Under this scheme, pharmaceutical companies must return 23.5% of revenue generated from NHS drug sales—an unusually high “clawback” rate that industry executives argue is pricing the UK out of the market in global boardrooms. Sanofi’s Rippon Ubhi expressed in a statement that this high clawback rate, coupled with restrictive patient access to new drugs, is causing the UK to be viewed as “uninvestable.”

Merck’s announcement to scrap the London centre was further described as reflecting a broader U.S. investment strategy rather than being directly linked to recent NHS drug-pricing negotiations, although tensions remain elevated. The firm warned that unless the UK improves its operating environment—including government support and valuation of innovative medicines—more companies are likely to make similar decisions to withdraw or scale back investments.

The government’s ambitions to develop the UK as a life sciences powerhouse by 2030 and beyond now face a stark challenge. The ABPI cautions that without substantial commitment to increased investment in new medicines, these goals will remain out of reach. The sector’s struggles are reflected in the UK losing an estimated £15 billion a year to more attractive overseas markets, with significant declines in the UK’s share of the global clinical trials market.

This development compounds recent signals of waning confidence from major British and international industries. It follows similar announcements, such as Sir Jim Ratcliffe’s Ineos chemicals firm halting further investment in the UK, and comments from former Marks & Spencer boss Stuart Rose warning that the country’s economic trajectory is nearing a crisis point under the current administration.

In response to Merck’s latest move, ABPI chief executive Richard Torbett described it as “a real blow to the UK’s life sciences ambitions” but urged that it should serve as a crucial moment to reflect on what is driving companies away. The pharmaceutical sector’s warning highlights the urgent need for policy reforms if the UK is to maintain its historical leadership in science and innovation and remain an attractive destination for global pharmaceutical investment.

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Source: Noah Wire Services

Noah Fact Check Pro

The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.

Freshness check

Score:
10

Notes:
The narrative is fresh, with the earliest known publication date being September 10, 2025. The Financial Times and Reuters reported on Merck’s decision to cancel the £1 billion London research centre on the same day. ([ft.com](https://www.ft.com/content/5ace49a8-47ab-409d-8909-6edb107ce71a?utm_source=openai))

Quotes check

Score:
10

Notes:
Direct quotes from Merck and the Association of the British Pharmaceutical Industry (ABPI) are consistent across reputable sources, indicating originality. For example, Merck’s statement that “the UK is not internationally competitive” is reported by both the Financial Times and Reuters. ([ft.com](https://www.ft.com/content/5ace49a8-47ab-409d-8909-6edb107ce71a?utm_source=openai))

Source reliability

Score:
10

Notes:
The narrative originates from reputable organisations: the Financial Times and Reuters, both known for their journalistic integrity and thorough reporting. The Financial Times, in particular, provides an in-depth analysis of the situation, including the impact on the UK’s life sciences sector. ([ft.com](https://www.ft.com/content/5ace49a8-47ab-409d-8909-6edb107ce71a?utm_source=openai))

Plausability check

Score:
10

Notes:
The claims are plausible and corroborated by multiple reputable sources. Merck’s decision aligns with broader concerns about the UK’s competitiveness in the life sciences sector, as highlighted by the ABPI. The Financial Times notes that Merck’s move “is a blow to Sir Keir Starmer’s government,” reflecting the broader implications for the UK’s economic strategy. ([ft.com](https://www.ft.com/content/5ace49a8-47ab-409d-8909-6edb107ce71a?utm_source=openai))

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary:
The narrative is fresh, with consistent and original quotes from reputable sources. The information is corroborated by multiple reliable organisations, and the claims are plausible and well-supported by evidence. The Financial Times and Reuters provide comprehensive coverage of Merck’s decision, its implications for the UK’s life sciences sector, and the broader economic context. ([ft.com](https://www.ft.com/content/5ace49a8-47ab-409d-8909-6edb107ce71a?utm_source=openai))