Drugmakers pause or review UK investments amid dispute over rebates and support for vaccines

Several major pharmaceutical companies have paused or put under review planned investments in the United Kingdom, industry reports said, amid tensions over increased rebates on medicines supplied to the National Health Service and cuts to government-backed vaccine programmes.

AstraZeneca, Eli Lilly, Merck, Novartis and GlaxoSmithKline are among firms reported to be reassessing or halting projects in the UK, according to press accounts and industry sources. The moves come as the government has raised the proportion of drug revenue returned to the Exchequer through the sector-wide rebate scheme and scaled back some public support for vaccine manufacturing.

AstraZeneca told the press it was pausing some investment in its Cambridge campus while announcing large new spending in the United States. Reports said the company would invest about $50 billion in the US market; AstraZeneca has previously been credited with rapid development and manufacture of a Covid-19 vaccine developed with the University of Oxford. The company has also been linked to plans to reconsider a London listing in addition to its existing presence on the London Stock Exchange.

Other companies have publicly or privately placed UK projects under review. US-based Eli Lilly was reported to have put on hold a planned £279 million investment in Gateway Labs, a London start-up. Germany’s Merck was reported to have suspended plans for a £1 billion research centre in London. Swiss Novartis and Britain’s GlaxoSmithKline were reported to be reassessing investment plans, with GlaxoSmithKline said to be committing larger sums to the US in the coming years.

Industry critics and commentators pointed to an increase this year in the proportion of branded medicine revenue rebated to the Treasury under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAS). The rebate rate was reported to have risen from about 15% to 23%, and industry calculations cited in the press estimated that the move could channel roughly £13.5 billion back to the government. Representatives of pharmaceutical companies have described the higher levy as a disincentive to investing in UK research and development.

The companies’ concerns also included the reported withdrawal of government support for a proposed vaccine manufacturing facility near Liverpool and what industry executives described as increasingly difficult processes for bringing new treatments to market in the UK. Those claims were detailed in recent press coverage and have been raised by trade groups representing the sector.

The developments come as the Labour government has pledged increased NHS funding and positioned economic growth as a central objective. The party’s leadership has defended measures designed to control drug spending and contain long-term pressures on public finances. Officials have argued that rebate arrangements help manage costs for the NHS while supporting access to medicines.

Analysts and commentators have pointed to the importance of Britain’s universities and research institutions — including Oxford, Cambridge, UCL and Imperial — in attracting pharmaceutical research and foreign investment. In that context, a number of observers said the reported investment pauses risk undermining the UK’s comparative advantage in life sciences and biomedical innovation that has been cited since the Covid-19 pandemic.

Data cited in press coverage compared Britain's spending on medicines as a share of total health budgets with other wealthy countries, reporting the UK at about 9%, Germany about 18% and the United States about 17%. Those figures were put forward to illustrate how medicine spending priorities differ across health systems and to explain industry unease about the UK policy stance.

Brexit-era regulatory change was also discussed in industry commentary. The UK’s Medicines and Healthcare products Regulatory Agency (MHRA) took on additional responsibilities after the UK left the European Medicines Agency system, creating an opportunity for faster domestic approvals and trials that supporters argued could benefit the life sciences sector. Some company representatives said that opportunity was being eroded if investment incentives and regulatory pathways are perceived as less favourable.

Company decisions and industry complaints were spotlighted amid wider debate over government priorities, with commentators noting large public investments in other sectors such as green steel. Proponents of the current policies have argued for balancing public investment across multiple strategic industries.

Industry groups and executives have called for greater clarity from ministers on policy, rebate arrangements and public support for manufacturing and vaccine infrastructure, according to press reports. Government departments responsible for health and business have previously said they engage with the life sciences sector and review policy to support public health objectives and economic growth.

The reported pauses and reviews by multinational drugmakers come as the UK seeks to maintain its role in global biomedical research and to manage rising costs within the NHS. How the government and industry resolve disputes over rebates, public support and regulatory arrangements will shape investment decisions and could have implications for research capacity, job creation and access to new therapies in the years ahead.