Merck scraps £1bn London research centre, says UK 'not internationally competitive'

Merck has cancelled plans for a £1 billion research centre in London, saying the United Kingdom is "not internationally competitive" and that the decision reflects a broader failure to improve the operating environment for life sciences companies.

The American drugmaker, which operates in the UK as MSD, said the planned King's Cross facility — due to open in 2027 — will be mothballed, with about 125 scientists and support staff to be laid off. Merck told the Financial Times it will move the research activity planned for the London centre to the United States.

In a statement, Merck said the decision "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 added that "unless a change is made to the operating environment... more companies will be making these sorts of decisions." The company did not set out a timetable for the layoffs.

The announcement coincides with a damning industry report that warned the UK risks becoming "uninvestable" for pharmaceutical firms. The report, produced by the Association of the British Pharmaceutical Industry (ABPI) with PwC, said foreign investment into the UK's life sciences sector fell by 58% between 2017 and 2023, and that the UK's international ranking as a location for medical research and investment slid from second to seventh.

The ABPI report highlighted a disparity in healthcare spending on medicines, saying only 9% of UK healthcare spending was allocated to developing medicines, compared with 20% in Japan and 15% in the United States. It also said access to new drugs in the UK was poor relative to other countries.

Industry executives and trade bodies have pointed to a controversial NHS rebate scheme as a factor discouraging investment. Under the scheme, drugs companies must repay 23.5% of the money they make selling medicines to the National Health Service. Rippon Ubhi of Sanofi said the UK is "increasingly being viewed as 'uninvestable' in global boardrooms due to unprecedented clawback rates and restrictive patient access to medicines."

ABPI chief executive Richard Torbett said Merck's decision was "a real blow to the UK's life sciences ambitions," adding that the development "must be used as an opportunity to reflect on what factors are driving companies to make such difficult decisions." The ABPI and PwC report called for policy changes to restore competitiveness and investor confidence.

The cancellation is the latest in a series of high-profile business decisions that industry representatives say reflect a deteriorating investment climate in Britain. In recent days, Ineos, the chemicals group led by Sir Jim Ratcliffe, said it would give up on further investment in the UK, and former Marks & Spencer chief Stuart Rose warned that economic policy had pushed the country "to the edge of a crisis," comments reported in the British press.

Merck's move is likely to intensify pressure on the government to address concerns from the life sciences sector, which has long been a major source of research and education in the UK. The sector argues that regulatory, fiscal and pricing arrangements influence where companies locate research and development operations and how quickly new products reach patients.

The ABPI-PwC analysis said that despite the UK's historic strengths in biomedical research and academic excellence, the combination of falling foreign direct investment, constrained access to new products and high levels of rebate risk had damaged the country's appeal to multinational pharmaceutical companies.

The government and Merck did not immediately provide detailed responses to requests for comment beyond the company's statement and the ABPI report. The cancellation of the King's Cross centre is expected to prompt renewed discussion among policymakers and industry leaders on measures to support investment in UK life sciences, including potential adjustments to pricing and reimbursement frameworks and incentives for research and development.

As companies reassess where to site major R&D projects, the sector faces competing priorities: securing public health value and access to medicines while attracting private capital for innovation. The outcome of that balancing act will influence the UK's position in global rankings for medical research and investment in the years ahead.