The UK is at risk of losing its world-leading life sciences status due to investment being captured elsewhere on the international stage, according to trade body Association of the British Pharmaceutical Industry (ABPI).
In its latest ‘Creating the conditions for investment and growth’ report, the ABPI detailed the alarming drops in foreign direct investment (FDI) and R&D funding. The body states that this means the UK is lagging in the global race for investment, with significant economic consequences.
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The pharmaceutical industry is critical to the UK Government’s long-term plans to boost the life science sector, contributing £17.6bn in direct gross value added (GVA) annually to the economy. However, the ABPI called on ministers and the pharma industry to share an aligned view about the factors driving investment. This view has often diverged, creating an uncertain life sciences scene in the country between the government and key pharma players.
“In a changing and fiercely competitive international landscape, ensuring that there is a shared understanding between industry and government about the factors which influence investment has never been more critical,” said ABPI’s chief executive Dr Richard Torbett in a foreword of the report.
ABPI’s investment report based its analysis on a competitiveness framework between the UK and 12 comparator countries: Belgium, Canada, China, France, Germany, Ireland, Italy, Japan, Singapore, Spain, Switzerland and the US.
Life sciences foreign direct investment into the UK fell by 58% from £1.9bn in 2021 to £795m in 2023. It comes as no surprise that the UK’s rank in inward life sciences FDI amongst comparator countries dropped from second in 2021 to seventh in 2023.
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By GlobalDataR&D investment also suffered, falling nearly £100m to £8.7bn in 2023. Had the UK kept pace with these global trends, it would have received an additional £1.3bn of R&D investment in 2023 alone, ABPI analysis shows.
The report identifies the UK falling behind in global growth trends for several years amid fierce international competition to attract and retain globally mobile investment.
The report points to a few sources of investment drying up. The UK has the highest clawback rates among peer countries that use the scheme. Amid pressure from US President Donald Trump on the UK and European Union to spend more on drugs from US companies and tariffs, the 2025 clawback rate of 22.9% has escalated this issue to a “critical point”, the report says. It goes on to say that the rates are so undesirable that the UK is increasingly being ruled out of consideration as a viable location for pharmaceutical investment.
There is then the weakening of the clinical trial landscape in the country, an area that directly impacts pipelines of innovative drugs coming to market. The UK has longer trial set-up times than other European countries, including Spain, France, and Germany. Prime Minister Kier Starmer has pledged to reduce trial set-up times to an average of 150 days, though ABPI says that more systemic fixes to investment attraction also need to be addressed.
The UK ranks first in Europe for cell and gene therapy trials, for example, though not all therapies make it onto the NHS due to reimbursement challenges.
Just hours before the report was published, US big pharma company MSD (Merck & Co) announced it had scrapped a £1bn expansion plan in the UK. The drugmaker, which is also vacating laboratories in London, said the decision was due to the challenging life science investment scene in the country and undervaluation of medicines by successive UK governments.
AstraZeneca, one of the largest UK companies by market cap and a critical pillar of the country’s pharma industry, had outlined $50bn of investment into US operations by 2030. The big pharma company also axed a £450m vaccine manufacturing site project in Liverpool in January after discussions with the government on a financial contribution broke down.
In July, AstraZeneca’s CEO Pascal Soriot said the company was even considering moving its public listing to the US – a damning indictment on the state of the British life sciences sector.
Torbett commented: “The government’s ambition is to make the UK the number one life sciences hub in Europe by 2030, while also transforming health outcomes and building an NHS fit for the future. Achieving that goal is only possible if the UK doubles down on its strengths, urgently addresses systemic weaknesses, and capitalises on areas of unrealised potential.”
