Merck Ditches $1 Billion London R&D Project

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--U.S. pharmaceutical major Merck & Co. (Rathway, New Jersey) has scrapped a planned US$1 billion expansion of its U.K. operations, blaming the government for failing to invest in the sector.

The company, known as MSD in Europe, has already started work on its planned U.K. Discovery Center at a site in Belgrove near King's Cross station in London which was due to be completed by 2027, but the company has said it will not occupy it. It would have been the company's new headquarters and its first early-stage research and development (R&D) center outside of the U.S., housing 800 employees. In addition, it will discontinue all of its research operations in the U.K. and move its R&D to the U.S. As part of that decision, the company announced 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 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," read a company statement to Fierce Pharma. It added: "[This] follows an evaluation of our company's global discovery research capabilities as part of our multiyear optimization." At the end of July, the company announced severe cost-cutting plans that would see the shedding of 6,000 jobs--roughly 8% of its global workforce--in an effort to save US$3 billion annually by the end of 2027. It also stated that it wanted to reduce its global real estate footprint. Industrial Info is tracking 300 U.K. pharmaceutical projects worth more than US$14 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.

A U.K. government spokesperson defended its investment record and in a statement to Reuters said: "The U.K. has become the most attractive place to invest in the world [citing a Deloitte survey], but we know there is more work to do. We recognise that this will be concerning news for (Merck) employees".

The news comes as the country's leading pharma body, the Association of the British Pharmaceutical Industry (ABPI), revealed that the U.K. has tumbled down global rankings for pharma investment and research. It noted a steady decline since 2018 in pharma R&D investment while life sciences foreign direct investment into the U.K. was around 58% lower in 2023 - £795 million (US$1.1 billion) compared to £1.9 billion (US$2.6 billion) in 2017. The country's ranking among comparator countries fell from a high of second position in 2017 to seventh in 2023 according to the ABPI's new Competitiveness Framework. Richard Torbett, ABPI Chief Executive, said: "The U.K. has a world-class science base and the potential to lead globally in developing the next generation of medicines and vaccines. But without a more competitive environment for investment, we risk losing out to other countries making bold moves to attract internationally mobile investment. First and foremost, we need to create a commercial environment that rewards pharmaceutical innovation fairly and brings its benefits rapidly to U.K. patients."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).