Merck slams UK as it scraps £1bn London drug research centre

Original from: Financial Times

US drugmaker Merck has scrapped a £1bn London research centre and will lay off more than 100 scientific staff, as the industry accuses ministers of making the UK uncompetitive and paying too little for medicines.

Merck, known as MSD in Europe, told the Financial Times it would move the research activity to existing sites, mainly in the US, where the Trump administration is pressuring pharmaceutical companies to invest more.

“Simply put, the UK is not internationally competitive,” the company said.

The move to scrap the research centre in King’s Cross — which was already under construction and due to open in 2027 — and lay off 125 scientists and support staff is a blow to Sir Keir Starmer’s government.

Ministers are seeking to boost economic growth and attract investment, with life sciences named as one of eight “growth-driving” sectors in their flagship industrial strategy this summer.

The decision by MSD also comes after a drawn-out battle between drugmakers and UK health secretary Wes Streeting over medicines’ prices. 

Streeting walked away from tense talks with the sector late last month after its lobby group refused to accept an offer for an NHS drug pricing deal that the government put forward in June.

Drugmakers had warned that fewer medicines could be launched in the UK after a clawback tax unexpectedly soared this year, forcing companies to pay back 22.9 per cent of their British sales to the state-run health system — above the 15 per cent expected. 

MSD said its decision to scrap the London research centre was not related to the acrimonious end to recent drug-pricing negotiations with the government.

But the company, one of the largest US drugmakers, said its message to the government was that the UK would lag behind European peers in the share of the health budget spent on drugs unless it worked better to attract and retain investment.

“Unless a change is made to the operating environment, the undervaluation is corrected, and the investment is put back in the right places, more and more companies will be making these sorts of decisions,” it added.  

Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, said MSD’s decision was a “real blow” to the UK’s life sciences ambitions. 

“This news must be used as an opportunity to reflect on what factors are driving companies to make such difficult decisions, and what this country can do to ensure it is attracting the high-quality investment we need and not driving it away,” the lobby group’s chief said. 

The Department for Science, Innovation and Technology said the UK had “become the most attractive place to invest in the world, but we know there is more work to do” and that it was “taking decisive action to further unlock innovation”.

It added: “We recognise that this will be concerning news for MSD employees and the government stands ready to support those affected.”

Foreign direct investment in UK life sciences fell about 58 per cent to £795mn between 2017 and 2023, according to ABPI research.

The withdrawal by MSD comes months after Anglo-Swedish drugmaker AstraZeneca ditched a £450mn expansion plan for a vaccine plant in Speke, northern England.

The company, which is the largest in the UK by market capitalisation, blamed the government for reducing the offer of a subsidy for the site outside Liverpool. 

The lay-offs by MSD, which has been in the UK for almost 100 years, come as global pharma companies fight the Trump administration over drug prices.

The US government has proposed pegging US drug prices to the lower prices charged in other developed countries. MSD is one of 17 companies confronting a September 29 deadline to cut the costs of medicines. 

MSD made the commitment to the new King’s Cross research centre focused on neuroscience, inflammation and immunology, as part of a new UK headquarters, in 2017. Construction began in 2023.

The scientists and support staff losing their jobs had been working on early discovery efforts at other sites in King’s Cross: the Francis Crick Institute and the London Bioscience Innovation Centre.

MSD had intended to hire more scientists for the new centre, bringing the total up to 200.

The company will continue running clinical trials in the UK, and will still have about 1,600 staff working on these development programmes and other areas such as regulatory and business development.

Source: Merck slams UK as it scraps £1bn London drug research centre