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The British pharmaceutical sector is facing a new funding crisis.
Long established as a global leader in research, development, and innovation, the British pharmaceutical industry is now facing a funding crisis that threatens to turn the sector on its head.
So far in 2025, major companies have paused (or ditched, altogether) funding for over £2bn worth of projects. Recent announcements that giants such as Eli Lilly, AstraZeneca, and MSD were pulling the plug on major investments have sent ministers scrambling in Whitehall in search of a response.
But why has the money dried up? Is the UK pharmaceutical sector beset by structural and commercial weaknesses, or is something else afoot? In this article, we’ll examine the causes of this crisis and ask what it means for businesses moving forward.
Same strengths but growing weaknesses
The Association of the British Pharmaceutical Industry (ABPI) has posted a series of revealing insights into the state of the sector. Its recent competitiveness survey found the UK “has underperformed against global trends” since 2018, with R&D contracting during the pandemic years as the world averaged nearly 7% growth.
The commercial environment is a recurrent theme in industry reports. Not only does the NHS spend little on medicines when compared to its continental counterparts, many of the drugs it offers are available only to a section of patients. More adults in the UK are seeking private healthcare, however, less than 13% of the population had private cover as of 2024.
Britain retains its eminence in academic sciences and pre-clinical trials. But the window to make up for its cumbersome marketplace is closing. According to the ABPI, the UK will miss out on over £11bn of investment over the next decade, with companies forced to operate almost exclusively in the smaller, private market.
A political tussle
With the right kind of eye, the timing of recent announcements has just a hint of political skulduggery. It’s hard to ignore the fact that US President Donald Trump is in the country this week for his second state visit. Some government insiders have suggested that pharmaceutical companies have coordinated their announcements to exert maximum pressure on Sir Keir Starmer’s embattled team.
The American ambassador to the United Kingdom privately requested more competitive pricing on drugs at a meeting with Chancellor Rachel Reeves, those in the know say. The suggestion is that the Trump administration is using pharmaceuticals as the clincher that would persuade them drop tariffs on other key sectors, such as steel and spirits. In the past, Trump has accused foreign nations of “freeloading on US innovation”.
But even if you view the current issues with a political lens, it would be hard to argue there aren’t clear issues with the medicine business in this country. AstraZeneca’s UK chief highlighted the issue of access in a parliamentary committe meeting: “The UK is an increasingly challenging place actually to bring forward that innovation, to get through the front door of [the National Institute for Health and Care Excellence], into the NHS, [and] to bring forward innovation to patients”.
Getting back to basics
It’s clear that the sector needs an injection of impetus. The drastic reduction in current and planned projects has a very real impact on jobs and the British companies that offer them, clouding decision making processes and making it next to impossible to plan for the future.
Smart Currency Business offers a range of solutions tailored to the pharmaceuticals sector. Whatever the risks your business faces, you can rely on us to provide comprehensive assistance throughout the risk management cycle.
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