UK Losing Foreign Investment in Life Sciences Sector Amid Pharmas Warning

The United Kingdom is facing a stark decline in its attractiveness to global investors in the life sciences and pharmaceutical industries, with industry leaders warning the nation is falling behind key rivals. A critical industry report, compiled in partnership with PwC, reveals that foreign direct investment (FDI) into UK life sciences dropped by 58 per cent in 2023, falling to £795 million from a high of £1.9 billion in 2017. The UK, once ranked as the second most attractive destination for such investment, now finds itself relegated to seventh place among comparator countries.

This negative shift is underscored by recent announcements from major international firms. Merck, the US pharmaceutical giant, has scrapped plans for a £1 billion research centre in London, halting discovery research operations and resulting in the loss of about 125 jobs. Eli Lilly has also placed its planned investment in the Lilly Gateway Labs biotech innovation hub on hold while demanding greater clarity on the UK’s operating environment. The concerns extend beyond these companies, with Sanofi describing the UK as increasingly ‘uninvestable’ in global decision-making circles. AstraZeneca, the nation’s most valuable publicly listed company, abandoned a £450 million expansion at its Liverpool vaccines site, blaming governmental delays and funding cuts.

Industry executives attribute the decline to an uncompetitive operating environment, unpredictable NHS clawbacks, and inadequate support for research and development. The voluntary NHS levy scheme, designed to cap drug expenditure while fostering innovation, has been criticised for creating uncertainty and deterring investment. Since 2018, UK pharmaceutical R&D growth has lagged global trends, with annual growth slowing to just 1.9 per cent compared to a global average of 6.6 per cent from 2020 onwards.

The sector boasts world-class academic institutions and renowned research infrastructure, including the UK Biobank and the Francis Crick Institute. Britain’s biotech ecosystem ranks third globally, supported by strong intellectual property protections. Nevertheless, these strengths are being undermined by insufficient investment in medicines and barriers to patient access to new innovative treatments.

Government representatives maintain that the UK, via its life sciences sector plan, remains the most attractive place in the world for industry investment and have affirmed their willingness to collaborate with pharmaceutical firms. Yet, with global competition rising and, reportedly, additional pressure from foreign governments such as the Trump administration in the US, the outlook remains challenging.

Industry leaders are now calling for urgent and substantive action to restore the UK’s competitive edge in the race for life sciences investment, warning that failure to address current shortcomings may risk long-term damage to one of the country’s most critical growth sectors.