UK’s Economic Headwinds Batter Life Sciences Sector

The UK’s life sciences sector is being battered by severe economic headwinds, with companies citing high costs and poor returns as key reasons for a dramatic pullback in investment. The country’s reputation as an expensive place to operate is now being compounded by a market that fails to reward innovation, creating a perfect storm for the industry.
This difficult economic reality was highlighted by Sanofi’s Paul Naish, who pointed to the high expense of doing business in Britain. When this is combined with the low prices the NHS is willing to pay for new drugs, the business case for major investment simply collapses.
The result of this economic pressure is a flight of capital. MSD’s cancellation of its £1bn London research center is a prime example of a company deciding that the UK’s economic equation no longer adds up. The investment freezes by Eli Lilly and Sanofi further underscore this trend.
To calm these stormy waters, the government must address the market-side of the equation. While it cannot control all operating costs, it can reform the pricing and reimbursement system to ensure that the UK is a commercially viable place to launch new medicines, thus justifying the high cost of R&D investment.