US pharmaceutical giant Merck, known as MSD in Europe, has scrapped plans for a £1 billion research headquarters in London, delivering a major setback to the government’s vision of making Britain a global hub for life sciences.
The company confirmed it would halt construction of the 25,000 sq ft facility in the capital’s Knowledge Quarter, a flagship project announced in 2022 and scheduled to open in 2027. The decision also means the closure of its UK discovery research operations, with 125 jobs set to be cut.
Merck said its withdrawal reflected “the lack of investment in the life sciences industry and the overall undervaluation of innovative medicines and vaccines” by successive UK governments. It cited in particular the NHS’s restrictive approach to adopting new treatments, which companies argue has made the market less commercially attractive.
The announcement comes against the backdrop of failed talks between ministers and the industry over reforming the voluntary branded medicines pricing scheme, which caps NHS spending on innovative drugs. Industry groups have long warned that the scheme discourages investment and limits patient access to cutting-edge treatments.
The timing is striking. Just days ago, the Association of the British Pharmaceutical Industry (ABPI), in partnership with PwC, issued a report warning that the UK is falling behind its international peers in attracting foreign direct investment and clinical trials.
Merck is not the only global drugmaker voicing frustration. Eli Lilly recently paused part of its UK investment pending clarity on government policy, while AstraZeneca and GSK are also expected to increase pressure on ministers for reforms.
The standoff comes as Prime Minister Rishi Sunak’s government is attempting to showcase Britain as a leader in science and innovation ahead of US President Donald Trump’s upcoming state visit. Trump has already made clear that Washington will no longer “subsidise the healthcare of foreign countries,” putting additional pressure on UK policymakers.
Government officials have sought to downplay the impact of Merck’s decision, insisting that Britain remains one of the most attractive destinations for life sciences investment. But industry leaders warn that without urgent reforms to drug pricing and regulatory frameworks, the UK risks losing ground to the US and Europe in the competition for innovation and capital.
“The fundamentals that once made the UK a magnet for life sciences remain strong,” one senior industry figure said. “But the policy environment has become increasingly uncompetitive, and unless that changes, investment will continue to flow elsewhere.”
Merck’s withdrawal underlines the challenges Britain faces as it tries to balance cost pressures on the NHS with the need to attract and retain world-class pharmaceutical research and development.
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