Merck, Eli Lilly and AstraZeneca have similarly suspended or outright canceled investments in the U.K. in the past week after a sizeable increase in a mandatory levy in the region.
Sanofi is suspending investments in the U.K. amid what it says is an unfriendly business environment for pharma innovation.
“We need to see tangible improvements in the current commercial environment,” a spokesperson for Sanofi, who confirmed the news with Fierce Biotech, said on Monday. The pharma is also looking for “appropriate recognition of the value of innovation” before it makes any “substantial investment” in the U.K.
This move follows other high-profile pharma back-outs in Britain in recent days. Merck last week announced that it would no longer push through with its planned $1.3-billion R&D facility in London, a move that left 125 of its European employees jobless. Merck is also completely pulling the plug on its R&D operations in the U.K., which it expects to complete by the end of the year.
A few days later, Eli Lilly said it was reconsidering its plans to bring its Gateway Labs project to the U.K. as it looks for “more clarity” on the pharma environment in the country, according to reporting from Endpoints News at the time. The U.K. plan was announced in October 2024 and would have given the country’s life sciences industry a “£279 million boost,” according to a government release at the time.
Then, on Saturday, AstraZeneca also suspended its pending investment in the U.K., which would have been worth approximately $271 million. The pharma in January also canceled a previously planned vaccines R&D and manufacturing plant in the country, citing the “timing and reduction of the final offer compared to the previous government’s proposal,” Reuters reported at the time.
This string of scale-backs in the U.K. has been looming for months now. In June, The Association of the British Pharmaceutical Industry, a trade group, published a report indicating that 19% of the country’s “most prominent life sciences companies” were plotting a reduction in their R&D investments this year.
The problem, according to the report, is the recent change in a government scheme that caps a company’s total sales to the National Health Service. Drugmakers that go past this ceiling have to pay a mandatory levy. The goal of this policy, as per the report, is to “control the cost of branded medicine purchases,” and its intended effect is that excess government spending for “newer, more innovative medicines is repaid to the government,” essentially lowering the amount of money NHS pays to pharmaceutical companies on sales in the U.K.
This year, the size of this mandatory levy was increased to 23.5%, a rate that according to the Association “grew beyond expectations.” Such a high rate makes the U.K. an “outlier” in Europe as it maintains a “hard cap on the medicines market.” Other European countries, as per the report, share the risk of R&D “between government and industry.”
