Less than two years after breaking ground on a ballyhooed 1 billion pound sterling ($1.31 billion) R&D center and future U.K. headquarters in London, Merck & Co. is not only bailing on the project but is discontinuing all of its research operations in Britain, citing an unwelcoming business environment for drugmakers.
The decision “reflects the challenges of the U.K. 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 U.K. governments,” Merck said in a statement to Fierce.
As part of the decision, Merck said that it will vacate laboratories at the London Bioscience Innovation Centre and the Francis Crick Institute by the end of 2025, impacting approximately 125 positions. The pharma said it will be moving the U.K.-based R&D operations to the U.S.
Just a year ago, Merck touted the opening of a new “Skylab,” in the top floor of the Crick Institute, which would accommodate 50 Merck researchers.
Merck added that its U.K. departure also “follows an evaluation of our company’s global discovery research capabilities as part of our multiyear optimization."
Six weeks ago, the company said it was undergoing a cost-cutting plan that would reduce its head count by 6,000, or roughly 8%, in an effort to save $3 billion annually by the end of 2027. Additionally, in its second-quarter financial release, the company said it was planning to “reduce its global real estate footprint.”
Along with its cost-cutting, Merck is investing heavily in the U.S., touting a plan to spend $9 billion over the next four years, bolstering its manufacturing and research capabilities.
In April, the company kicked off construction of a $1 billion plant in Delaware that will produce megablockbuster cancer drug Keytruda. Earlier this year, Merck opened another $1 billion facility in North Carolina, which will manufacture bulk substance for its HPV vaccine Gardasil.
Merck’s move out of the U.K. is reflective of how companies in the industry—most notably AstraZeneca—view their business opportunities in the country. AZ, which has the highest market cap of any company in the nation, has jousted with U.K. regulators over taxes and drug policies.
Last week, a report from the Cambridge Economic Policy Associates indicated that the U.K. is losing business opportunities in the life sciences sector because the government undervalues the economic and social benefits of investing in the manufacturing of innovative medicines.
The dismay with the business opportunities in the U.K. has ramped up quickly. Less than two years ago, at a groundbreaking ceremony in London, Merck touted its future R&D facility and U.K. headquarters as a “high-profile site” and an “impactful addition to our growing network of research facilities.”
The planned facility, located opposite King’s Cross Station in the heart of London’s Knowledge Quarter, was due for completion in 2027 and was set to become the company’s first early-stage R&D center outside of the U.S. Dubbed the London Discovery Research Centre, it was expected to house 800 employees.