Britain’s pharmaceutical sector is at a crossroads, with government ministers warning that an increase in the price the National Health Service (NHS) pays for medicines is now all but inevitable if the country hopes to keep major drug companies investing on UK soil. Science minister Lord Patrick Vallance, speaking on September 25, 2025, made it clear that without a shift in pricing policy, the exodus of pharmaceutical investment from the UK will continue—a prospect that could have far-reaching consequences for jobs, patient access to medicines, and the broader economy.
“Price increases are going to be a necessary part of what we need to do to get to a solution which will benefit patients,” Lord Vallance told the BBC, underscoring the urgency of the situation. He added, “Where the additional money would come from to pay higher prices is a matter for the department of health and the Treasury to figure out.” The science minister, who is no stranger to the industry thanks to his former role as president of research and development at GSK, spoke at the opening of US vaccine giant Moderna’s new innovation and technology centre in Oxfordshire—a rare bright spot in a landscape increasingly marked by investment withdrawals and uncertainty.
In just the past month, two of the world’s largest drug companies have either paused or scrapped major UK projects. Merck’s decision to abandon its planned £1 billion site in London’s Kings Cross, a facility that would have created around 125 jobs, sent shockwaves through the sector. The company cited the UK government’s unwillingness to pay higher prices for medicines and a lack of investment in the sector as key reasons for its retreat. Hot on the heels of Merck’s announcement, AstraZeneca hit the brakes on a planned £200 million investment at its Cambridge research site, further fueling concerns about the UK’s competitiveness.
Industry leaders have not minced words about the state of play. Eli Lilly described the UK as “probably the worst country in Europe” for drug prices, according to reporting by Financial Times. Novartis, another pharmaceutical heavyweight, warned in August that NHS patients could lose access to cutting-edge treatments if the current pricing environment persists. The company said it was no longer considering the UK for major new investments in manufacturing, research, or advanced technology due to what it called “systemic barriers.”
These developments come against a backdrop of declining UK spending on medicines. Over the past decade, the share of the NHS budget allocated to pharmaceuticals has fallen from 15% to just 9%, while other developed nations typically spend between 14% and 20%. The squeeze on prices has, according to industry critics, made Britain a less attractive destination for investment compared to countries like the United States.
Lord Vallance acknowledged the international dimension of the crisis, pointing to what he called “the Trump factor” as a significant driver of change. “It is the case that drug prices are very much higher in the US than anywhere else in the world,” he told the BBC. He explained that a substantial portion of pharmaceutical companies’ profits are generated in the US market, which in turn funds global research and development. “The UK is something like 2% or less of the profit of companies globally,” he noted, highlighting Britain’s relatively small role in the global pharmaceutical profit pool.
The pressure from across the Atlantic is not merely theoretical. During a recent state visit to the UK, former US President Donald Trump made it clear that the US is actively courting pharmaceutical companies to relocate their investments. “Car companies are moving in, AI is moving in, everybody’s coming in… The drug companies are coming back, they all want to be there – they sort of have to be there – but they all want to be there,” Trump said, as reported by PA Media. His administration has pushed for lower drug prices domestically, while simultaneously encouraging companies to invest more heavily in the US.
The impact of these transatlantic dynamics is already being felt. At the start of Trump’s visit, British pharmaceutical giant GSK announced plans to invest nearly £22 billion in US research, development, and manufacturing over the next five years—a move the UK government said would “strengthen UK-US life sciences ties.” Yet, for many in the sector, it raised uncomfortable questions about the UK’s ability to compete for future investment.
Health Secretary Wes Streeting, who joined Lord Vallance at the opening of Moderna’s new Oxfordshire centre, acknowledged the complex web of interests at play. “There’s an intersection between the growth ambitions of the government, the health ambitions of the government, the trade ambitions of the government and bilateral relations with the US,” he told the BBC. Streeting emphasized that discussions with the pharmaceutical industry are ongoing, both domestically and internationally, and insisted that the government is striving to find a solution that balances the needs of taxpayers, patients, and the broader economy.
Streeting’s tone has shifted in recent weeks. While he previously insisted he would not allow pharma companies to “rip off” taxpayers and described their approach as “short-sighted,” he now describes the situation as “a live conversation – not just domestically with the industry but internationally with the US as well.”
Despite the challenging environment, there are glimmers of hope. Moderna’s new manufacturing base at the Harwell Science and Innovation Campus is the UK’s first facility to produce mRNA vaccines onshore. The centre can manufacture up to 100 million doses per year and ramp up to 250 million in a pandemic, creating around 150 highly skilled jobs. The government has hailed the facility as a “next pivotal moment in boosting our nation’s health, innovation and economy.” Moderna’s commitment—a £1 billion investment over a decade—stands in stark contrast to the recent pullbacks by other industry giants.
Still, the broader outlook remains uncertain. Ministers and industry leaders are engaged in “day by day” discussions to strike a deal that is “right for innovation, right for getting companies into the UK, and right for patients in the NHS,” as Lord Vallance put it. “I think it’s inevitable – we must end up with a deal of some sort and we have to, because it’s in the interest of the economy, it’s in the interest of patients, and we need to get that right to make sure that patients here get rapid access to the best medicines, and to do that in a way that’s fair and equitable across the country.”
As the UK weighs its next steps, the stakes could hardly be higher. The outcome of these negotiations will determine not only the future of pharmaceutical investment in Britain but also the speed and fairness with which NHS patients gain access to life-saving medicines. For now, all eyes are on Whitehall—and the boardrooms of the world’s pharmaceutical giants—as the search for a sustainable solution continues.
