Investing

US drugmaker scraps plans for £1bn UK research centre


One of America’s largest drug companies has ditched plans to open a £1bn research centre in London amid a growing row with the Government over surging NHS charges.

Merck, which makes cancer drugs, said it would no longer open a new research hub in King’s Cross and would quit its labs in the Francis Crick Institute by the end of the year leading to 125 job losses.

The firm, known as MSD in Europe, said the decision to end research in Britain reflected “the challenges of the UK not making meaningful progress towards addressing the lack of investment in the life science industry”.

It also pointed to “the overall undervaluation of innovative medicines and vaccines by successive UK governments”.

The move is a major blow to Sir Keir Starmer, who has already faced criticism for failing to secure a £450m investment from British giant AstraZeneca. It pulled its plans for a UK vaccine plant in February after failing to secure the necessary financial support from the Government.

Merck’s decision to scrap its hub, which was already under construction, raises questions over the future of Britain’s life sciences industry.

‘Uninvestable’

On Wednesday, global drug chiefs said the UK was becoming “uninvestable” amid criticism over the NHS drug pricing system.

Eli Lilly, a US obesity drug specialist, said ministers had to take “bolder action” to help encourage spending again. It recently paused a potential investment in the UK.

French pharma company Sanofi also said that roadblocks to getting medicines into the NHS, as well as surging drug clawbacks, meant “the UK is increasingly being viewed as ‘uninvestable’ in global boardrooms”.

“While other countries are actively investing in innovative medicines for patients, the UK is falling behind,” said Rippon Ubhi, the UK chief.

Over the summer, Labour set out a sweeping strategy to attract more pharmaceutical investment to Britain.

In July, the Government published its long-awaited “life sciences sector plan” which included targets for reducing red tape and helping get drugs out to patients more quickly.

Peter Kyle, then science secretary, said at the time that the sector was “one of the crown jewels of the UK economy”, claiming that Labour’s new strategy would “unlock its full potential”.

However, the Government has since been plunged into a row with drug chiefs over the size of NHS clawbacks, throwing its life sciences ambitions into doubt.

UK has become less attractive

Already, figures have suggested that the UK has become a much less attractive place to invest in recent years.

According to a new report from the Association of the British Pharmaceutical Industry (ABPI), foreign investment by pharma giants into Britain has fallen 58pc between 2017 and 2023.

Wes Streeting, the Health Secretary, last month sparked anger from pharmaceutical bosses after he walked away from talks over lowering their NHS bills following a review into the rebate scheme.

The scheme is designed to keep a lid on NHS medicine prices by requiring companies to pay back rebates to the health service if its drug bill rises too quickly.

However, pharma companies have become increasingly concerned over the steep rate at which the clawbacks have been rising, after the pandemic sparked more spending on medicines.

Companies paid the NHS £3bn in rebates last year compared to a total of £2.8bn between 2014 and 2018.

The Government ended a review into the clawback scheme last month after failing to reach an agreement with the drug sector. Mr Streeting at the time vowed he would not let pharma companies “rip off” taxpayers.

The ABPI said the unpredictability of the rate and the sharp rise in recent years meant the UK was now “increasingly being ruled out of consideration as a viable location for pharmaceutical investment”.

Trump urged to intervene

The row threatens to prompt an intervention from the US president later this month during his UK state visit. Drug companies are understood to have urged Donald Trump to intervene to demand Britain deliver on an earlier pledge to pay more for American medicines.

Under the US-UK trade deal agreed in May, the Government agreed to review the health service’s drug pricing to take into account “the concerns of the president” and said it would “endeavour to improve the overall environment for pharmaceutical companies operating in the UK”.

Ministers are understood to be “very anxious” that the recent row with global drug giants could trigger a stand-off between Mr Trump and Sir Keir during the president’s UK visit.

A government spokesman said: “This Government is open to working collaboratively with the pharmaceutical industry.”

Responding to Merck’s decision, he said: “The UK has become the most attractive place to invest in the world but we know there is more work to do.

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

Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.



Source link

Leave a Reply