Losing the Competitive Edge
Several big players within the bio/pharma industry are pulling back their investments from the United Kingdom amid fears over the security of the country’s life sciences environment.
At just over halfway through, September is already proving to be a tough month for the United Kingdom’s government — with resignations, controversial appointments, and the rising popularity of the far right to name just a few of the issues facing the cabinet. A recent addition to these woes has been the breakdown of negotiations between the government and a crucial industry for the U.K.’s economy, the bio/pharmaceutical industry (1), leading to big companies pulling back from their investment plans into the country.
VPAG Talks Abandoned
In August 2025, a mid-scheme review of the controversial Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG) ended without an agreement being reached by the U.K. government and industry. However, as the VPAG payment rates are increasing to unprecedented levels — bio/pharma companies are now being expected to make record payments of between 23.5% and 35.6% from the sales of their branded medicines to the NHS, much higher than rates in other European countries — the lack of a mutually acceptable resolution has left industry in a difficult position.
“While this review has concluded without reaching agreement, the issues it was set up to resolve remain unaddressed and continue to demand urgent action,” explained Richard Torbett, Chief Executive of the Association of the British Pharmaceutical Industry (ABPI), in a press release (1). “We need to reach a solution that improves patient access to future innovation, allows the sector to fulfil its growth potential, and does not require industry to pay back nearly three times as much of its revenues as is required in other European countries. Together with global industry leaders, we want to continue constructive dialogue with government to find that solution.”
Since the talks over the VPAG broke down, there have already been several announcements from large bio/pharmaceutical companies, revealing that they will be pausing or dropping their investment plans in the U.K. (2–4). Key decisions include Merck scrapping its planned GBP 1 billion (USD 1.4 billion) U.K. expansion and moving research to the U.S. (2); Eli Lilly pausing work on its U.K. biotech incubator (Gateway Labs) (3); and AstraZeneca stalling its GBP 200 million expansion of its Cambridge site (4).
No Longer Internationally Competitive
As a result of the drug pricing and market access issues facing bio/pharma companies in the U.K., the country is no longer considered to internationally competitive — something that majorly contributes to companies deciding to invest elsewhere. In fact, according to a recent ABPI report (5), despite the U.K. having an impressive scientific base and robust intellectual property protections, long-term underinvestment into medicines and high clawback rates on bio/pharma companies’ revenues are proving to be insurmountable challenges for future industry investment.
“While high clawback rates have acted as a drag on investment in the UK for several years, the unpredictability and scale of the 2025 rate increase has escalated this issue to a critical point. In many global boardrooms, the UK is now viewed as a contagion risk with practices that, if adopted by other markets, would threaten the sector’s ability to invest and innovate globally. As a result, the UK is increasingly being ruled out of consideration as a viable location for pharmaceutical investment,” specified ABPI in the report (5).
References
ABPI. Accelerated Review of VPAG Concludes Without Agreement. Press Release, Aug. 22, 2025.
Jack, S.; Masud, F.; Clun, R. Blow for UK Drugs Sector as Merck Scraps £1Bn Expansion. BBC, Business News, Sept. 10, 2025.
Robertson, J. Eli Lilly Pausing Investment in UK as Report Warns Against ‘Limited’ NHS Uptake of New Drugs. The Pharmaceutical Journal, Industry News, Sept. 11, 2025.
Goodley, S.; Kollewe, J. AstraZeneca Pauses £200M Investment in Cambridge Research Site. The Guardian, Business News, Sept. 12, 2025.
ABPI. Creating the Conditions for Investment and Growth. Report, Sept. 10, 2025.