Sanofi has become the latest Big Pharma to freeze R&D investment decisions in the U.K., while Roche confirmed it is staying put—for now.
The news that Sanofi won’t consider “any substantial investment” in medicines R&D in the U.K. for the time being continues the fallout from tricky drug pricing negotiations that saw the nation’s health minister walk away from talks with the industry body late last month. It wasn’t long before Merck & Co. became the first pharma to reveal plans to pull its R&D operations out of the country, announcing last week that it was canceling plans for a 1 billion pound sterling ($1.31 billion) R&D center in London.
Eli Lilly soon followed Merck’s lead, pausing its plan for a biotech incubator site while it awaits “more clarity around the U.K. life sciences environment.” Even U.K.-based AstraZeneca made the same call, pausing a 200 million pound sterling ($271 million) investment in its Cambridge, England research site.
This morning, French pharma Sanofi told Fierce that it is taking a similar stance.
“The U.K. is a world-class hub for science, and we are always looking at opportunities to work more closely with world-leading universities, scientists and clinicians to research and develop tomorrow’s medicines,” a Sanofi spokesperson said.
“However, we need to see tangible improvements in the current commercial environment and appropriate recognition of the value of innovation before we consider any substantial investment into U.K. R&D,” the spokesperson added.
Despite the timing of the string of Big Pharma announcements, various individuals with direct knowledge of the situation have insisted to Fierce that the decisions have not been coordinated.
The Association of the British Pharmaceutical Industry (ABPI)—which negotiates a drug price rebate scheme with the government—has been sounding the alarm for some time. Back in June, the trade body published the results of a survey that suggested that around one in five of the U.K.’s “most prominent life sciences companies” planned to reduce their R&D investment as a result of this year’s drug pricing rate.
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%. At the time of the June announcement, ABPI pointed out that this rate was three times higher than the equivalent rate in Germany and four times above France.
ABPI CEO Richard Torbett told Fierce in a statement that “there are many warning lights flashing red for the U.K.’s life sciences sector right now.”
“The government must take urgent action to address these issues, which have been growing worse for well over a decade,” Torbett added. “This means getting back around the table with industry to find a way to reduce clawback rates to internationally competitive levels, improving the way [England’s drug pricing body] values new medicines and charting a clear path to increase investment in medicines by 2030.”
Last week, the ABPI published a report criticizing “increasing drags on competitiveness” in the U.K., including claims that foreign direct investment into U.K. life sciences, and the country’s global ranking for commercial clinical trial placement, have been in decline since the late 2010s.
Not all pharmas are ready to shake up their U.K. plans—at least not yet. Roche told Fierce this morning that it “has no current plans for disinvestment in the UK.”
“However, recent news highlights the precarious position of the UK as a destination for global investment in life sciences,” the Swiss pharma added. “We believe the significant structural barriers holding the country back are fixable, but that requires the government to prioritize investment in the sector to unlock growth.”
BioNTech also confirmed to Fierce last week that its plans announced in May to invest approximately $1.3 billion in the U.K. over the next decade—including building two new research centers in the country and a headquarters in London—remain “on track.”
When contacted by Fierce, Novartis pointed out that its U.K. footprint has shrunk over the past two decades, meaning the U.K. is now one of the few “major” European countries without a Novartis manufacturing site. The Swiss pharma’s only presence in the U.K. is a London location that houses around 1,200 employees.
In a similar vein, Bristol Myers Squibb has been reducing the size of its U.K. organization over the last four years due to the country's commercial and policy environment, a spokesperson told Fierce.
"Bristol Myers Squibb agrees with the U.S. administration that the U.K. pays too little for medicines," the spokesperson said, adding that the New Jersey-based pharma continues to assess its investment level for the region.
“We’ve actively engaged in conversations with the U.K. government and have underscored that policies must ensure that the price the U.K. pays for medicines reflects the investment it takes to deliver medicines to patients and the overall value to healthcare systems," the BMS spokesperson said.
Meanwhile, Pfizer declined to comment on its own U.K. strategy. Fierce also reached out to AbbVie and Johnson & Johnson for an update on their U.K. plans, but hadn’t received a response at the time of publication.
Editor's note: This article was updated at 3:45 p.m. ET on Sept. 15 to include a statement from BMS.