The developer behind a significant life sciences project in London’s King’s Cross has vowed to complete the 180,000-square-foot Belgrove House building despite the withdrawal of global pharmaceutical giant Merck from the scheme. Precis Advisory, owned by the Lalji family, is pushing forward with the development even as Merck, which had planned to occupy the building alongside its corporate and research functions, stated it will not take up the space due to concerns over the UK’s competitiveness in the pharmaceutical sector.

Merck’s decision, announced in September 2025, is part of a wider global cutback on research and real estate by the company, influenced by challenges such as the impact of US tariffs and a general pullback in life sciences investment. Specifically, Merck cited the UK’s “uncompetitive” environment for pharmaceuticals, highlighting issues including the undervaluation of innovative medicines and insufficient government support. The company is also vacating existing lab space at nearby institutions like the Francis Crick Institute, resulting in the elimination of approximately 125 jobs, mostly scientists. Although Merck has a contractual lease on Belgrove House, the company confirmed it will not occupy the building, and talks between Precis Advisory and Merck are ongoing regarding future lease terms.

Belgrove House, originally an Access Self Storage site, was converted into a state-of-the-art life sciences facility with offices and laboratories designed to accommodate Merck’s dual functions. Construction began in 2023 with a £150 million shell and core contract awarded to Mace, and a £125 million fit-out contract given to Sisk to equip the interior. The overall investment was estimated at £1 billion once Merck’s specialized equipment and additional costs were included. With Merck stepping back, the fit-out contract is now on hold, leaving Precis with a large, high-quality space to fill in a prime London location renowned for life sciences.

This development reflects broader challenges faced by the UK’s pharmaceutical sector. Merck’s move follows similar decisions by AstraZeneca, which recently abandoned plans for a £450 million vaccine plant expansion due to reduced government subsidies. Industry experts and government officials highlight a decline in the UK’s attractiveness for pharmaceutical investment, illustrated by the country’s fall from second to seventh place in foreign direct investment rankings for pharma between 2017 and 2023.

The UK government has defended its record, pointing to ongoing support schemes, including a £520 million fund designed to stimulate private investment. A Deloitte survey also ranks the UK as a top investment destination in life sciences. However, unresolved disputes over drug pricing and reimbursement policies, especially the rising clawback tax imposed by the NHS—currently hitting 23% of drug sales—continue to fuel industry frustrations. Health officials are seeking renewed negotiations with pharmaceutical companies to find a resolution that might revive investment confidence and secure the UK's future standing in this critical sector.

Merck’s strategic reorientation involves consolidating its research activities primarily in the United States, where it is investing billions in new facilities, including a $1 billion biologics plant in Delaware expected to create over 4,500 jobs, alongside expansions in North Carolina and Kansas. This realignment underscores the competitive pressures and regulatory challenges UK policymakers must address to retain global pharmaceutical firms and maintain London’s status as a life sciences hub.

For Precis Advisory and other local property owners, Merck’s departure casts uncertainty over the short-term demand for high-spec life sciences space. The company must now seek new tenants amid a slow-down in life sciences take-up linked to reduced venture capital investment in the industry. Moreover, the absence of a high-profile anchor tenant like Merck may affect leasing in neighbouring developments, posing wider implications for King’s Cross as a leading life sciences cluster.

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Source: Noah Wire Services