Merck Scraps London Research Center, Citing Competitiveness Concerns

Merck & Co. (MRK) is facing investor scrutiny following its decision to abandon plans for a £1 billion research facility in London, a move that will result in the loss of over 100 scientific jobs. The pharmaceutical giant will consolidate its research activities primarily within the United States, citing concerns over the UK's global competitiveness.

Merck's decision to scrap the London research center, initially slated to open in 2027, stems from perceived deficiencies in the UK’s investment incentives and overall competitiveness. While the company will maintain a presence of 1,600 staff in the UK for clinical trials and regulatory functions, the withdrawal represents a setback for the UK's ambitions in the life sciences sector.

This development is part of a broader restructuring effort at Merck, which includes a global workforce reduction of approximately 6,000 positions, representing around 8% of its employees. This cost-cutting initiative aims to achieve $3 billion in annual savings by 2027, targeting administrative, sales, and R&D roles. The savings are intended to support new product launches and streamline operations.

Further cost-cutting measures include the planned closure of Merck's Cherokee manufacturing plant in Pennsylvania by 2026, resulting in 163 job losses. The plant, which has been producing active pharmaceutical ingredients for antibiotics since the 1950s, is being shuttered as part of Merck's strategy to optimize its manufacturing network and reduce excess capacity.

However, Merck is also making significant investments in its future. The company is investing $1 billion in a new manufacturing facility in Delaware, dedicated to producing Keytruda, its leading cancer drug, and other biologic treatments. This facility is expected to be fully operational by 2028 and will create at least 500 permanent jobs, signaling a commitment to bolstering domestic production.

In April 2025, Merck expanded its oncology portfolio through the acquisition of SpringWorks Therapeutics for $3.9 billion. This acquisition provides Merck with approved treatments for rare tumors and strengthens its presence in the rare disease and cancer treatment markets, with the potential to boost oncology revenue and earnings per share by 2027.

However, Merck is also facing challenges in its vaccine segment. Sales of its HPV vaccine, Gardasil, declined by 55% year-over-year in Q2 2025, falling to $1.1 billion. This decline is attributed to weak demand in China, leading Merck to extend its pause on Gardasil shipments to the country until at least the end of 2025.

Analysts are closely watching how Merck navigates these strategic shifts. The cancellation of the London research center and the global workforce reduction raise concerns about potential impacts on innovation and employee morale. However, the investment in the Delaware manufacturing facility and the acquisition of SpringWorks Therapeutics suggest a commitment to long-term growth and market leadership.