Resilience and renewal: unlocking UK-US life sciences potential
Over the past 12 months, the UK Government has committed significant investment as part of its initiative to advance the pharmaceutical sector and life sciences industry. This commitment has opened the door for greater cross-border collaboration, including significant investments from large US pharmaceutical companies that have announced plans to expand operations into the UK.
However, in recent months, several of these large pharmaceutical companies have announced they are backing out of or reconsidering their investment in the UK, largely citing concerns over pharmaceutical pricing and reimbursement policies, as well as a mandatory levy on drug revenues.
Despite these concerns, can US life sciences companies still find opportunities to expand their operations into the UK and foster a symbiotic relationship between the two countries? We dive into what’s happening and what’s to come.
Restoring confidence
In recent years, the UK’s appeal as a destination for life sciences investment has come under pressure. A new competitiveness framework published by the Association of the British Pharmaceutical Industry shows the UK’s ranking for foreign direct investment in life sciences slipped from second in 2017 to seventh in 2023, with foreign direct investment in the sector dropping by around 58% (from around £1.9 billion to around £0.8 billion) over that period.
Meanwhile, industry announcements of paused investment this year total nearly £2 billion worth of projects. Pharmaceutical companies have pointed to the UK’s pricing regime (notably high rebates to the National Health Service (NHS)), slow trial setup and scale-up barriers as reasons to reassess investment.
The UK Government’s stated ambition to become a “life sciences superpower” has also been tempered by practical barriers. Delays in clinical trial approvals and declining patient enrollment—exacerbated by capacity constraints within the NHS—have made the UK somewhat less attractive as a testing ground, driving a decline in clinical trial enrollment.