Merck scraps £1bn London headquarters citing government hurdles and undervaluation of innovative medicines

Merck, the renowned US pharmaceuticals giant known as MSD across Europe, has abandoned plans for a £1 billion research centre in London—a significant blow for the UK life sciences sector. The company was developing a 25,000 sq ft headquarters within the Knowledge Quarter at King’s Cross. Construction had commenced following an initial announcement two years ago with the facility expected to open in 2027.

In a direct response to persistent concerns about drug pricing policies and a lack of government support for innovation, Merck will also discontinue its discovery research operations in the UK, resulting in the loss of 125 jobs. The decision comes amid mounting criticism from leading industry players that the UK’s approach to valuing innovative medicines and vaccines falls short of expectations. Merck stated its withdrawal from the project “reflects the challenges of the UK not making meaningful progress towards addressing the lack of investment in the life science industry and the overall undervaluation of innovative medicines and vaccines by successive UK governments.”

This development presents a challenge for ministers who have prioritised life sciences as a key pillar in their industrial strategy. However, tension remains unresolved over reforms to NHS drug pricing, with recent talks between government and industry reaching an impasse. Notably, the Association of the British Pharmaceutical Industry in partnership with PwC will publish a critical report highlighting the UK’s declining rank in attracting global investment and clinical trial activity. Eli Lilly, another pharmaceutical heavyweight, has also paused part of its investment while awaiting more clarity on the UK regulatory landscape.

The government’s industrial strategy sets out ambitions for the UK to become Europe’s leading life sciences economy by 2030 and the third most significant globally by 2035. However, the outlook is complicated by global developments. Recent efforts from the Trump administration aim to encourage pharmaceutical investment and manufacturing within the United States, putting further competitive pressure on the UK and Europe. President Trump’s message is clear—the US will no longer subsidise healthcare costs for other countries.

Amid these challenges, British officials are working to convene high-level meetings between the health secretary, senior figures from AstraZeneca and GSK, and industry stakeholders to address the impasse. The government maintains that Britain has become the most attractive destination for investment globally, highlighting recent commitments such as up to £600 million invested into Health Data Research Service and up to £520 million into the Life Sciences Innovative Manufacturing Fund, unlocking billions in private investment. Ministers underscore their willingness to work collaboratively with the industry, citing a new voluntary scheme for branded medicines worth an estimated £1 billion over three years as a strong signal of intent.

Attention now turns to whether these initiatives and ongoing dialogue can reinvigorate investor confidence and secure the UK’s future as a leading hub for pharmaceutical innovation and research.