Big Pharma Investment Freeze Puts UK Life Sciences Sector Under Strain

Published: 16 September ‘2025. The English Chronicle Desk

The United Kingdom’s life sciences sector is facing a serious setback as major pharmaceutical companies have paused or abandoned nearly £2 billion in planned investments this year, raising concerns about the potential impact on patients and the broader health ecosystem. The investment freeze comes at a critical moment as the government prepares for high-level discussions with US President Donald Trump amid a growing transatlantic debate over drug pricing and innovation incentives.

The disruption began last week when US pharmaceutical giant MSD, known as Merck in the United States, unexpectedly announced it would scrap its £1 billion research and development centre in London. The decision immediately drew attention to the fragile state of the UK’s pharmaceutical environment. Within days, AstraZeneca revealed it was halting a £200 million expansion of its Cambridge research facilities. Both moves follow earlier project cancellations, including AstraZeneca’s £450 million vaccine site expansion in Liverpool and Eli Lilly’s shelved London Gateway lab, resulting in more than 1,700 jobs affected and a cumulative loss exceeding £1.7 billion in planned investments for 2025 alone.

Industry leaders have cited a lack of sufficient government incentives and investment in new medicines as key factors driving the decisions. The companies argue that the current environment offers little encouragement for innovation or for conducting research in the UK, particularly given the stringent pricing and reimbursement rules that significantly reduce profitability compared with other global markets. The voluntary scheme for branded medicines pricing, which requires pharmaceutical companies to repay a portion of UK revenues to the NHS, has been described by industry insiders as “unsustainable,” with minimum clawback rates for new medicines reaching 23.5%, far higher than comparable European nations.

The controversy is expected to intensify this week during hearings of the Science, Innovation and Technology Committee, where MPs will question MSD UK & Ireland managing director Ben Lucas, alongside AstraZeneca UK president Tom Keith-Roach, ABPI chief executive Richard Torbett, and representatives of the government, including Science Minister Lord Vallance. The discussions will focus on the reasoning behind the investment withdrawals, the implications for patients, and the broader challenges facing the UK’s life sciences strategy.

Government officials face mounting pressure to address the sector’s concerns. Reports suggest that the US ambassador to the UK, Warren Stephens, privately urged Chancellor Rachel Reeves to offer pharmaceutical companies more favourable terms on pricing, ahead of President Trump’s state visit. The American president has repeatedly criticised foreign governments for “freeloading” on US pharmaceutical innovation, with the implication that the UK’s current policies may jeopardise future collaboration and investment.

Commenting on the human impact of stalled investment, Guy Oliver, UK head of Bristol Myers Squibb, highlighted the direct consequences for patients: “Chronic underinvestment in medicines has real human costs. Patients are suffering, and have been suffering for many years. The impact is tangible, immediate, and deeply concerning.”

The pause in investment not only affects planned research centres but also jeopardises partnerships and collaborations across the NHS. MSD’s decision, for example, will lead to the closure of research activities at the Francis Crick Institute and the London BioScience Innovation Centre, affecting 125 scientists. Eli Lilly has similarly placed its £279 million London Gateway lab project on hold, citing the need for greater clarity around the UK life sciences environment. AstraZeneca’s halted expansion in Liverpool underscores the difficulty of securing state support even for companies with a strong track record, including their vital contributions to Covid-19 vaccine development during the pandemic.

Other pharmaceutical leaders have expressed growing concern. Sanofi’s UK head of market access, Paul Naish, warned that “substantial investment is on hold,” a situation that risks harming patients who rely on timely access to innovative treatments. Novartis, another global player, has also delayed plans for manufacturing and research in the UK, following a 16-year trend of scaling back operations from seven sites and over 4,000 employees to a single site in London with 1,200 staff.

Despite the industry-wide caution, some collaborations remain on track. Germany’s BioNTech continues its £1 billion, 10-year partnership with the UK government, focusing on accelerated cancer immunotherapy trials and planning additional research centres in London and Cambridge. Meanwhile, US biotech Moderna opened a new vaccine manufacturing facility in Harwell, Oxfordshire, in May, signalling that selective investment continues under favourable conditions.

The unfolding investment pause highlights the fragility of the UK’s life sciences strategy and the urgent need for government action to reassure both domestic and international pharmaceutical companies. With the state visit of President Trump imminent and high-level discussions on trade and innovation pending, the sector’s leaders are urging swift reforms to preserve the UK’s reputation as a hub for medical research and development, and to ensure that patients do not bear the brunt of policy uncertainty.