Pharma investment paused or redirected as industry warns UK life‑sciences competitiveness at risk

Major pharmaceutical companies have paused or put under review a series of planned investments in the United Kingdom, industry executives and analysts said, raising questions about the future competitiveness of Britain’s life‑sciences sector and its capacity to develop vaccines and cutting‑edge treatments.

AstraZeneca has said it is pausing planned investment in its Cambridge research facilities and has signalled a large expansion of spending in the United States, while Eli Lilly, Merck, Novartis and GlaxoSmithKline have announced delays, suspensions or reviews of UK projects. Industry representatives blame increased charges on drug sales to the National Health Service, changes to government support for vaccines and what they describe as growing regulatory and policy uncertainty.

The industry reaction follows a series of policy moves by the Labour government, including an increase this year in the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) rebate on NHS prescriptions. The rebate was raised from 15% to 23%, and the sector says further increases are planned. Industry calculations cited in media reports estimate the higher charges could amount to roughly £13.5 billion being returned to the Treasury, a figure company representatives say will reduce funds available for research and development.

Drugmakers and trade groups have also pointed to the cancellation or downgrading of public support for particular vaccine facilities and to decisions by the National Institute for Health and Care Excellence (NICE) that, they say, restrict access to some new treatments. Officials in Whitehall and departments responsible for health and industrial strategy have described their actions as efforts to control public spending and to prioritise wider public investment, including in infrastructure and green industries.

AstraZeneca, which partnered with the University of Oxford to develop the Oxford–AstraZeneca COVID‑19 vaccine, told investors and staff it was reassessing its UK investment plans and would direct significant new funding to the US market. Company statements and media reports indicate the US programme could amount to tens of billions of dollars in coming years. AstraZeneca also said it was pausing some activity in Cambridge while it evaluates the policy environment.

Eli Lilly has put on hold a planned £279 million commitment to Gateway Labs, a London biotech hub launched last year, pending further clarity from UK authorities. Germany’s Merck said it was suspending development of a proposed £1 billion research centre in London. Swiss Novartis and Britain’s GlaxoSmithKline have said they are reviewing or “rethinking” planned UK spending; GSK has indicated substantial planned US spending in the coming years in statements to investors.

Company executives and industry lobby groups have linked the investment decisions to the rise in the VPAG rebate, saying the measure effectively reduces net returns on UK sales and that in turn diminishes funds available for local R&D and capital projects. They argue that predictable, supportive policy settings are important for long‑term R&D commitments, which often require multiyear, multibillion‑pound investment decisions.

Government figures show Labour added substantial funding to the NHS in 2025–26. Ministers have also defended the use of purchasing power and price controls to limit public expenditure on medicines and said cost containment frees up money for other priorities. Officials have pointed to continuing collaborations between industry and the NHS, including trials and vaccine research, as evidence of ongoing cooperation.

Observers note that Britain’s universities and research institutions — including Oxford, Cambridge, Imperial College London and University College London — are globally regarded for biomedical research and were central to the rapid development and testing of COVID‑19 vaccines. That ecosystem, analysts say, has been a key reason international drug companies established research and production facilities in the UK.

But industry figures and analysts warn that a combination of fiscal measures, shifting public support and perceived regulatory hurdles could erode those advantages. Comparative data cited by analysts show that the UK spends a smaller share of its health budget on medicines than some other high‑income countries; a lower share of medicines spending can affect both domestic availability of new treatments and the commercial case for local investment.

NICE, the health technology assessment body that advises on the cost‑effectiveness of treatments for NHS use, has also drawn criticism from some industry sources who say its decisions and processes can impede access to new therapies. NICE officials say their role is to ensure that NHS resources are used effectively and that they work within statutory responsibilities to evaluate clinical benefits and costs.

Industry groups have called for clearer long‑term engagement between ministers, regulators and companies to restore investor confidence. They argue that predictable incentives, streamlined regulatory pathways and targeted public support for manufacturing and platform technologies would help retain and attract R&D investment to the UK.

Ministers face competing objectives: controlling public spending on medicines while supporting industrial strategy goals, such as green manufacturing and defence supply chains, which also command public funds. Officials have defended recent policy choices as part of a broader agenda that includes additional NHS funding and public investment in other strategic sectors.

Analysts say the immediate commercial impact will depend on whether companies convert paused projects into permanent relocations of R&D and manufacturing capacity, or whether clarifications and negotiations with government lead to a restoration of investment. Longer‑term implications for the UK’s ability to accelerate and commercialise biomedical research will hinge on policy stability, the cost of doing business and the availability of public and private funding for translational science.

The sector’s developments follow a period in which the UK sought to capitalise on faster clinical trial approvals and regulatory independence after Brexit to become a more attractive place for drug development. Industry moves to delay or redirect capital illustrate the sensitivity of life‑sciences investment to fiscal incentives, regulatory certainty and public‑private collaboration, according to analysts and trade bodies.