UK plummets in global rankings for pharma investment, says report

The UK is ‘losing the race for investment’ in pharmaceutical research and development (R&D), according to a new report by the Association of the British Pharmaceutical Industry (ABPI).

Since 2018, UK pharmaceutical R&D investment has underperformed against global trends, slowing down considerably in 2020 when UK growth fell by 1.9% and falling by almost £100m in 2023.

Life sciences foreign investment into the UK fell by 58% between 2021 and 2023, meaning that the UK lost out on £1.3bn of extra R&D investment in 2023 alone.

‘Creating the Conditions for Investment and Growth’, produced by ABPI in partnership with PwC, outlines the factors that drive international competitiveness and ranks the UK among its peers.

It found that, despite the UK being ‘home to one of the world’s leading life sciences ecosystems’, underinvestment in medicines and high clawback rates on pharmaceutical companies have meant that it is ‘increasingly being ruled out as a viable location for pharmaceutical investment’, the report said.

Richard Torbett, chief executive of ABPI, said: ‘The UK has a world-class science base and the potential to lead globally in developing the next generation of medicines and vaccines. But without a more competitive environment for investment, we risk losing out to other countries making bold moves to attract internationally mobile investment.

‘First and foremost, we need to create a commercial environment that rewards pharmaceutical innovation fairly and brings its benefits rapidly to UK patients.’

‘Competitive strengths’

The report highlighted the UK’s competitive strengths.

The country has 16 of the world’s top 100 universities for life sciences and medicines, providing a ‘deep pool’ of expertise. It also has a strong research infrastructure with companies like the UK Biobank, the Francis Crick Institute, and the laboratory of Molecular Biology.

The UK ranked second for share of government spending on health R&D and joint third for charitable R&D funding.

It also has ‘robust protections for intellectual property’ and a ‘rich ecosystem’ of biotech companies.

‘Competitive weaknesses’

However, various weaknesses are impacting the UK’s ability to climb global rankings for pharma investment and research.

The first weakness identified by the report was the UK’s low investment in medicine – around 9% of its healthcare spend as opposed to 20% in Japan, 17% in Spain, and 14% in Germany.

It found that patient access to medicines is also poor in the UK, with only 37% of new medicines made fully available for their licensed indications.

High clawback rates on pharmaceutical companies’ revenues (at 23.5% on newer medicines) have also resulted in reluctance from investors the country has poor clinical trial delivery.

The ABPI and the UK government are currently at an impasse over NHS medicine pricing because the ABPI rejected the government’s latest proposals as ‘unsustainable’.

‘Areas of unrealised potential’

ABPI identified three areas of unrealised potential in its report. These were:

• Health data and AI;
• Advanced therapies;
• Pharmaceutical regulation.

‘There is a clear opportunity to enhance the UK’s attractiveness to investors by building on these positive initial steps, particularly through the integration of digital and AI tools to further reduce friction,’ said the report.

Industry reaction to the report

Several major pharmaceutical companies have responded to ABPI’s report.

AbbVie UK vice president and general manager, Steve Hopkinson, said the UK’s strengths were being ‘undermined’ by ‘longstanding underinvestment in innovative medicines and high clawback rates which continue to erode confidence in the UK’.

Boehringer Ingelheim UK & Ireland managing director and head of human pharma Vani Manja, and Johnson & Johnson managing director for the UK & Ireland Roz Bekker, both echoed the warning and urged the government for reform.

Pfizer UK president and managing director John McGinley, said: ‘We are at a crossroads. This new framework makes a compelling call to action.

‘Without a commercial environment for medicines that rewards innovation fairly and brings benefits rapidly to patients, our ambitions to deliver growth as a leading life sciences economy are in danger.’

President of AstraZeneca UK, Tom Keith-Roach, added that investing in new, innovative medicines is essential to British economic growth and the delivery of the NHS 10 year plan.

And Nico Reynders, general manager for UCB UK & Ireland said: ‘It is clear from this report that the UK is losing its edge as an attractive place to invest in biopharmaceutical research.’