US biopharmaceuticals company Merck has dropped plans for a £1 billion investment in a major new London life sciences lab, warning that the UK undervalues innovation in medicines and vaccines.
Merck – known as MSD in Europe - said the change in plans follows an evaluation of its global discovery research capabilities, but also said the move “reflects the challenges of the UK 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 UK governments.”
The company was due to occupy its under-development £1 billion London headquarters in 2027. The 25,000 square metre facility, in London’s Kings Cross, was planned to host a state-of-the-art laboratory and office, and would be home 800 employees, including 180 scientists, alongside staff in business development, regulatory affairs, clinical and business roles.
Only in September last year Merck announced the opening of its new lab at the Francis Crick Institute, signing a three-year agreement to lease the Crick’s “Skylab” facility. Merck said this would accommodate 50 MSD researchers who would join its London-based team of over 100 scientists with expertise spanning chemistry, pharmacology, neuroscience and immunology.
Now Merck has said that, as part of the shift in strategy, it plans to vacate laboratories it is using at the London Bioscience Innovation Centre and the Francis Crick Institute by the end of 2025, impacting approximately 125 positions.
“MSD continues discovery research at other sites in its research and development network,” it said.
The announcement is another blow to the science sector in the UK, which has struggled in recent years and tumbled down the international rankings when it comes to R&D investment and clinical trials. In January, AstraZeneca dropped £450 million plans to expand vaccine manufacturing in Merseyside.
The government has identified life sciences as a major pillar of its recently published industrial strategy. However, life sciences businesses are increasingly seen by many governments as a way to boost their economies. The UK and Europe have both recently published new policies aimed at growing their life sciences industries, while the White House has been using tariffs as a way to encourage companies to move their operations to the US.
“The growing exodus of large-scale businesses from the UK is immensely alarming,” said SCI chief executive Sharon Todd.
“Science based businesses such as pharmaceutical and chemical companies have not only a rich, proud heritage in Britain, but are critical to driving growth in the economy and building our national resilience. “We have seen an increasing number of industrial plants shutting down due to the UK’s high energy prices, resulting in loss of jobs and competencies. The loss of Merck together with statements from AstraZeneca this summer that it is considering relisting in the US are major markers of the lack of competitiveness in the UK should be setting off alarm bells in government.”
The UK’s life science sector has been missing out on £15 billion a year over the last decade as it has fallen behind international rivals in competitiveness, according to research published by SCI earlier this year. It found that the UK’s life sciences sector faces challenges in an increasingly competitive global environment, and this is costing the UK economy at least £15 billion per year.
At its peak, in 2017, the UK ranked as the world’s second largest destination for life sciences foreign direct investment. It has now fallen to eighth place, trailing behind the US, Germany, France, India, China, Ireland and Singapore. This loss of competitiveness costs the UK an estimated to be £1.1 billion every year in foreign direct investment. The decline in clinical trials has resulted in an incremental gross value added of £2.6bn every year, the SCI report Unlocking Value in Life Sciences calculated. Life sciences employment in the UK has been flat in the UK for the last decade while the UK’s share of global pharmaceutical exports stood at 5.4% in 2018 but had dropped to 3.8% by 2023. By SCI’s calculations, returning to the 2018 export levels could drive incremental GVA to the UK of £10.8 billion every year.
Todd added: “The recent string of industrial plants shutting due to high energy prices - and the decisions by Merck and INEOS to move sizeable investments elsewhere - is not only an economic issue. As well as being key drivers of growth, revenue and jobs for the UK, these science-based businesses are critical for national resilience.
“This is yet another clear signal that the UK's competitiveness on the world stage is sorely lacking, and government must act now to stem this exodus of investment, jobs and capabilities. Without bold measures to reassure business and secure investment, talk of an industrial strategy will become ever more empty.”
A separate report published by the Association of the British Pharmaceuticals Industry has also warned that the UK is ‘losing the race’ for investment in R&D, clinical trials, and foreign direct investment. It said that without a more competitive environment for investment, the UK will lose out to other countries making bold moves to attract internationally mobile investment.
Read more on pharma R&D
- Pharma R&D: Why the UK is losing the investment race
- AstraZeneca plans $50 billion medicines manufacturing investment for US
- Life Sciences leadership: The UK and the EU set out plans for sector growth and investment
- SCI research: UK life sciences missing out on billions through competitiveness gap
- Plant-based vaccines: A growing industry [Premium C&I content]
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