International investors abandon UK life sciences

UK financial markets

International investors are abandoning UK life sciences as excessive revenue clawback rates start to bite, according to the latest Life Sciences Competitiveness Indicators published by the government1.

The UK saw a substantial drop in the estimated value of inward life sciences foreign direct investment (FDI) in 2022 compared to 2021, falling to £1.9 billion ($2.5 billion), a drop of 47%.

This drop resulted in the UK falling to ninth out of 18 comparator countries in 2022, down from second in 2021, with key beneficiary countries including Ireland, India, Singapore, and Belgium.

The UK also saw a substantial drop in equity finance raised in 2022 to £3.3 ($4.3) billion down from £7.2 ($9.4) billion in 2021.

Substantial drops were also recorded in both the number of initial public offerings (IPOs), and the associated amount raised. In 2022, the UK had £7.1 ($9.3) million raised through three IPOs compared to £751.5 ($984.3) million over 11 IPOs in 2021.

While this drop is in part due to the pandemic related spike in life sciences investment in 2020 and 2021, the £7.1 million raised in the UK for 2022 is the lowest amount seen since 2018.

Uncompetitive rebate rates

The collapse in UK life science investment comes as the clawback rates that manufacturers of branded medicines must pay on their UK revenues (not profits) rocket to 23.6% in 2023, up from 15% in 2022. The average rebate rate between 2014-2021 was 6.88%.

Richard Torbett, Chief Executive, Association of the British Pharmaceutical Industry, said: “When international markets turn away from you, it can be tough to turn things around. The industry has repeatedly warned that unless the UK addresses the excessive and internationally uncompetitive rebate rates, it cannot expect companies and investors to base themselves here.”


  1. Office for Life Sciences, Department of Health and Social Care, Department for Science, Innovation and Technology, Life sciences competitiveness indicators 2023, 13 July 2023

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