Humiliation For Britain: US Pharma Giant Merck Axes £1 Billion London Lab, Brands UK 'Uninvestable'

In a devastating blow to Britain's life sciences ambitions, US pharmaceutical giant Merck has abandoned plans for its £1 billion ($1.53 billion) London research centre, branding the UK 'uninvestable' due to insufficient government support.

The decision, announced on 10 September 2025, will see 125 scientists and staff lose their jobs, raising alarm about the UK's declining competitiveness in global research. This move underscores mounting concerns over NHS drug pricing policies and underinvestment in innovation, threatening Britain's economic growth.

Merck's £1 Billion U-Turn Shocks Industry

Merck, known as MSD outside the US, had planned to open the London Discovery Research Centre in King's Cross by 2027, creating 800 jobs. Construction began in October 2023, but the company will now vacate its labs at the Francis Crick Institute and London Bioscience Innovation Centre by 31 December 2025.

The decision follows Merck's claim that successive UK governments have undervalued innovative medicines, making the nation 'not internationally competitive'. The Association of the British Pharmaceutical Industry (ABPI) called the move a 'real blow', with chief executive Richard Torbett urging policymakers to reflect on what is driving such exits.

A post on X from @FierceBiotech on 11 September 2025, highlighted Merck's exit, citing an 'unwelcoming business environment'. Industry leaders warn this could deter future investment in UK life sciences.

NHS Pricing Policies Cripple Investment

Merck's withdrawal aligns with broader industry frustration over the UK's Voluntary Scheme for Branded Medicines Pricing and Access (VPAG). In 2025, the VPAG rebate rate soared to 22.9%, far exceeding the anticipated 15.3%, forcing companies to pay back nearly a quarter of NHS sales revenue.

Doina Ionescu, Merck's UK healthcare general manager, stated, 'The 2025 VPAG rate of 22.9% deters investment and hampers our ability to deliver innovative medicines'. This rebate, triple Germany's 7% rate, has led global pharma giants like Novartis to also label the UK 'largely uninvestable'.

A 2025 ABPI-PwC report revealed UK R&D investment growth slowed to 1.9% annually since 2020, trailing the global 6.6% average, dropping Britain from second to seventh in global rankings. The report noted foreign life sciences investment fell 58% from £1.9 billion ($2.91 billion) in 2017 to £795 million ($1.22 billion) in 2023.

UK's Life Sciences Ambitions Falter

The UK government aims to lead Europe's life sciences by 2030, but Merck's exit signals deep-rooted challenges. Health Secretary Wes Streeting has vowed to prevent pharmaceutical companies from 'rip off' tactics, defending investments such as £600 million ($920.5 million) in the Health Data Research Service.

Yet, industry sources argue these efforts fall short, especially as US pressure from President Donald Trump pushes companies like Merck to redirect investments stateside. Merck's US focus includes a £650 million ($998 million) Delaware facility for its cancer drug Keytruda, set to create 4,500 jobs by 2028.

In contrast, the UK's high clawback rates and restrictive drug access policies risk alienating global firms. Rippon Ubhi of Sanofi warned, 'The UK is increasingly seen as "uninvestable" in global boardrooms'. The government insists it supports innovation, citing £520 million ($797.8 million) for the Life Sciences Innovative Manufacturing Fund.

However, with companies like Ineos also abandoning UK investments for the US, Britain faces a critical moment to restore its reputation. Without urgent reforms to NHS pricing and investment incentives, the UK risks losing its status as a global leader in life sciences.