Big Pharma executives highlighted an “increasingly challenging” environment for life sciences innovation in the U.K. during a grilling by lawmakers about their companies’ recent decisions to halt R&D investments in the country.
Politicians scrambled to arrange the committee hearing at the U.K.’s seat of government this afternoon after a string of Big Pharmas announced moves last week to close R&D sites or pause future funding decisions. Merck & Co. was the first mover, revealing that it is cancelling R&D operations in the country, including plans for a 1 billion pound sterling ($1.31 billion) R&D center in London.
Ben Lucas, Managing Director of Merck & Co.’s U.K. and Ireland operations, told lawmakers that the pharma had “respectfully” informed the prime minister’s office on Monday, Sept. 8, about its decision to halt work on the R&D center, noting that it was located in Prime Minister Keir Starmer’s own central London constituency.
Lucas also confirmed that Merck’s R&D work at London’s Francis Crick Institute will be shut down.
“In no way was this a reflection on the science that was being done at the Crick … or with our scientists here,” he explained.
At the heart of the current dispute is the government’s move to increase the proportion of sales of newer branded medicines that pharmas must pay back to the U.K.’s National Health Service from 15.5% to 31.3%.
“The U.K. commercial operating environment does need to be addressed … and that is in complete end-to-end, from our development all the way through to commercialization of our medicines,” Lucas told lawmakers.
Last week also saw U.K.-headquartered AstraZeneca pause a 200 million pound sterling ($271 million) investment in its Cambridge, England, research site. Tom Keith-Roach, President of AstraZeneca UK, said that the leaking of AstraZeneca’s decision to the media had been “disappointing and devastating.”
“This is very sensitive right now within our organization,” he said at the hearing.
“One of the challenges that I think we've had as an industry—and it's not a recent one, this has been building and accumulating over the last 20 years—is that the U.K. is an increasingly challenging place, actually, to bring forward innovation,” Keith-Roach said.
“In the current global environment, what we are increasingly seeing is discretionary investment and new investment in R&D and in capital manufacturing is flowing into countries who are seen to value innovation,” he said.
There was a glimmer of hope that all is not lost, with Richard Torbett, Chief Executive of the Association of the British Pharmaceutical Industry, telling lawmakers that the sector’s request to the government “would be to restart talks with us in order to try and find a solution.”
It was a similar message from AstraZeneca’s Keith-Roach, who said the industry is “willing to accept some pain in the current environment.”
But this needs to occur “in the context of a clear, shared long-term plan which addresses long-standing issues” like how much money the NHS is willing to pay for medicines, alongside a “risk-managed step up [for] U.K. investment in innovative medicines,” he added.
While Merck and AstraZeneca were the only pharmas represented at the hearing, other drugmakers made similar strategic decisions in recent days. They included Eli Lilly, which is pausing its plan for a biotech incubator site while it awaits “more clarity around the U.K. life sciences environment," a spokesperson said Friday.