UK ‘difficult’ operating environment says Merck boss after £1bn London site axed

The UK boss of drugs giant Merck has said the UK operating environment for pharmaceutical firms is “difficult” and “needs to be addressed”, a week after it axed plans for a £1 billion site in London.

Ben Lucas, VP managing director UK and Ireland for MSD, Merck’s business in the UK and Europe, told MPs at the science, innovation and technology committee that its “ability to do end-to-end business” in the UK contributed to its decision.

Last week, MSD said it will move its life sciences operation to the US in a move that will impact around 125 British jobs.

It had been planning to open a research centre in London’s King’s Cross, which was already under construction and due to open in 2027.

Days later, rival AstraZeneca announced it paused plans to invest £200 million at a Cambridge research site in the latest major blow for the sector.

Bosses for both firms told MPs on Tuesday that there have been constructive talks with Government but that more is needed to address the environment for investment and innovation in the UK.

Mr Lucas said the withdrawal from the London plans had “has been a fair while in the making” and was linked to a wider group restructuring.

But he added that the operating environment in the UK was also a factor.

He said: “My research lab colleagues have made the decision that in terms of their early lab discovery research, they would no longer pursue what had been a long-in-the-making investment here in London and on that basis, we will see and put at risk nearly 125 of our scientists.

“Our plan had been to build up 200 scientists and occupy this new facility.

“But at this moment in time, the decision both strategically from a company perspective and where we find the UK in terms of just an ability to end-to-end business here, from a life sciences side of things, were both influential in this decision.”

The pharmaceuticals boss stressed that its decision was not simply driven by a current shake-up of the drugs sector in the US, with President Trump recently calling for European countries to pay more for medication.

“It would be unfortunate for any of these decisions to be explained away as simply a function of what’s going on in the US,” Mr Lucas said.

“The UK commercial operating environment does need to be addressed and we find that difficult.”

Meanwhile, Tom Keith-Roach, the UK president of drugs-maker AstraZeneca, told MPs the UK is an “increasingly challenging” environment for innovation.

Mr Keith-Roach said the company faces particular challenges in bringing innovation in medicine through the Nice (National Institute for Health and Care Excellence) and into the NHS.

He added: “There have been an increasing number of site closures, research and development withdrawals and investments that are put on pause.

“I think that is simply a response to the economic gravity of reward for innovation in other jurisdictions compared with headwinds here.”