Investment in UK life sciences sector faces increasing risks

Investment in Britain’s vital life sciences sector is under threat due to a deteriorating commercial environment. Senior executives from major pharmaceutical companies, including Johnson & Johnson, are voicing concerns that the UK has become a challenging market for recognising innovation. This caution comes as the industry engages in heated negotiations with the British government regarding pricing policies and rebate schemes.

Kris Sterkens, chairman of innovative medicines for Johnson & Johnson in Europe the Middle East and Africa, indicated that the company’s investment in UK research and development has diminished over the past decade compared to the previous one. He highlighted that the UK, once viewed as a strategic market for innovation, is now falling behind its European counterparts in this regard.

Recent lobbying efforts by the pharmaceutical sector have focused on the excessive NHS sales rebate known as the Voluntary Scheme for Branded Medicines Pricing Access and Growth. This arrangement, implemented in 2023, includes a sales cap on branded medicines which compels companies to repay the NHS for sales that exceed the threshold. Sterkens emphasised that these financial pressures are making the UK market increasingly unsustainable for big pharma.

Despite these challenges, Sterkens acknowledged the potential of the UK’s robust biotech industry and esteemed universities. However, unless the reward for innovation improves, companies will struggle to justify substantial investments. The pain points identified by industry leaders resonate with findings from the Association of the British Pharmaceutical Industry which showed that the rebate rate for newer medicines is poised to reach a record high.

The government remains adamant that this voluntary scheme is essential for maintaining sustainability in the NHS’s medicines budget while ensuring quicker access to new treatments for patients. Nevertheless, the ongoing tensions between the pharmaceutical industry and government showcase the complexities of balancing financial constraints with the necessity for innovation in healthcare.

With increasing scrutiny on the NHS’s policies, the future investment landscape for life sciences in the UK continues to look precarious. Industry leaders will undoubtedly be keeping a close eye on the developments in negotiations to determine whether the UK can regain its competitive edge and attract the investment needed for future growth.