Merck places £1B bet on R&D in post-Brexit Britain

Merck’s commitment is one of a series of investments unveiled by biopharma companies since the Brexit vote.

Merck is set to invest about £1 billion ($1.3 billion) to open a drug discovery facility in London. The decision (PDF) is a vote of confidence in the United Kingdom at a time when it is struggling to convince companies they will thrive in the country after Brexit.

In total, the site will employ 950 people, although only 150 of the positions will be new research roles. The remaining 800 staff will perform tasks handled today at existing Merck buildings in the U.K.—which the Big Pharma is leasing, having sold the site to the CRO Pharmaron—and functions aimed at the domestic market.

Even with those caveats, the commitment still represents a major boost for the U.K. government. The life science sector, like all other industries, has become increasingly fretful in recent months as perceptions of the government’s handling of Brexit have soured. 

BD&L Summit

Deal-Making Insights for the Life Sciences Industry

Bringing together key deal-makers and serving as an open forum for cross-functional business development and legal teams to share valuable insights and actionable strategies on successfully managing alliances, licensing agreements, and M&A deals.

AstraZeneca has spoken of losing out on job candidates because of Brexit. And the politician who represents a region in which GlaxoSmithKline runs a production plant said pharmaceutical industry representatives she met “are desperate for some clarification on future trading relations and regulation” and will delay investments or make them outside the U.K. unless the government gives them clarity.

Such clarity is yet to arrive and is dependent on the U.K. reaching agreements with the rest of the European Union. But officials have sought—and, in the case of Merck, seemingly succeeded—to calm nerves by committing to help drug companies as part of a sector deal expected to be signed in the coming weeks.

Roger Perlmutter, M.D., Ph.D., president of MSD Research Laboratories, once said Brexit would make life “challenging” for the company’s scientists as they “benefited from a world where they receive grants from the European Union.” Today, Perlmutter adopted a different position, saying in a statement that the London site will provide “access for more collaborations within the European life science ecosystem.”

RELATED: Brexit: Why U.K. life science is optimistic in the face of threats to R&D, funding

Whatever prompted the shift in position has emboldened Merck to advance plans to open a discovery center in London. Merck is currently scouting out locations with a view to opening the site in 2020. In the interim, Merck plans to set up a temporary research center and is recruiting scientists. Merck’s job board lists six London-based positions. 

Merck’s commitment is one of a series of investments unveiled by biopharma companies since the Brexit vote, although the other moves predate the triggering of Article 50 and mounting concerns that negotiations with the EU will break down. 

Coupled to the size of Merck’s investment—which the Financial Times puts at £1 billion—the timing of the news makes it arguably more critical for the government and perceptions of the future of U.K. life sciences than facilities planned by firms including Alnylam and Novo Nordisk.