MSD is scrapping a £1 billion ($1.35 billion) expansion of its UK operations – including a facility already under construction in London – saying the country does not value innovative medicines.
The decision to abandon work on the R&D facility in King’s Cross and lay off 125 scientists and administrative staff is another body blow to the UK’s efforts to position itself as a major force in life sciences.
It comes just a few months after AstraZeneca ditched a £450 million investment in a vaccine manufacturing plant in the UK, and follows a breakdown in acrimonious talks between the pharma industry and the government on NHS drug pricing.
MSD – known as Merck & Co in the US, its home market – said it will also vacate R&D facilities in the London Bioscience Innovation Centre and the Francis Crick Institute by the end of the year.
It will shift its investment plans to the US, where drugmakers have come under pressure to locate new facilities by the threat of high tariffs on medicine imports by the Trump administration.
The company said the decision was a consequence of a failure by the UK to address “the lack of investment in the life sciences industry and the overall undervaluation of innovative medicines and vaccines by successive UK governments.”
News of MSD’s retreat from the UK market came as the Association of the British Pharmaceutical Industry (ABPI) warned that the country is falling from favour as a location for investment by the sector in a new report on competitiveness (see our article here).
MSD first announced plans for the £1 billion investment in 2017, breaking ground on the King’s Cross site in 2023. Even as the diggers moved in, the company was warning that the UK is at risk of losing out to other countries for such large-scale investment projects.
While the London site was viewed as ideal for its proximity to academics working in biomedical research and early-stage discovery, other factors were making the UK less attractive, particularly difficulties in running clinical trials and clawback taxes that keep the prices that pharma companies can charge for medicines very low.
While efforts have been made to improve the environment for clinical research, the clawback rate – through the so-called voluntary and statutory rebate schemes – remains a massive source of disagreement between the industry and government, and talks to resolve the impasse broke down last month.
Richard Torbett, chief executive of the ABPI, told the BBC that MSD’s decision was “an incredible blow” and a result of “systematic under-investment in the products that come out of the end of innovation.”
