The Budget is the next test of the government's life sciences ambitions, says the ABPI

The tentative recovery in UK pharmaceutical investment can become a lasting trend if the government continues to back its life sciences ambitions in the Budget.

The government has set out bold targets for the UK’s life sciences sector. By 2030, it wants the UK to lead Europe in commercial research and development (R&D) investment, scale-up finance and life sciences Foreign Direct Investment (FDI), and by 2035 to top the global rankings behind only the United States and China [1].

The Association of the British Pharmaceutical Industry (ABPI) shares the government’s ambitions, but argues in its pre-Budget submission that further growth will rely on rapidly demonstrating delivery progress on funding commitments and broader objective measures of improvement in areas like access to health data for research, regulatory capacity, research and manufacturing incentives and VAT rules [2].

The government is on the right path to achieving its goals. By committing to putting the UK among the top three fastest countries in Europe for patient access to new medicines and medical technologies, and to doubling spending on innovative medicines as a proportion of GDP, from 0.3 to 0.6 per cent, over the next ten years, the UK is already seeing a return on investment.

The pharmaceutical industry already invests £9.3 billion a year in research and development, supports 125,000 jobs in every UK nation and region, and delivers £20.4 billion in direct economic contribution to the British economy [3].

Since September 2025, the pharmaceutical industry has committed an additional £2 billion of investment into the UK [4]. If investment and growth accelerate, it could create as many as 81,300 new jobs by 2035, expanding the pharmaceutical workforce to around 200,000 people and generating £33.4 billion of direct Gross Value Added each year, up from £20.4 billion today.

The ABPI’s submission sets out six key recommendations for the Budget to maintain this progress:

1. Fully fund the recently announced medicine evaluation and adoption pilots. Ensure the pilots testing new ways to speed up patient access to innovative medicines, covering regional medicines budgets, NICE assessments, managed access pathways and the Budget Impact Test, are backed with the resources to deliver them in full. This is an essential prerequisite for the success of wider long-term reforms and sustaining industry investment.

2. Maintain existing investment incentives and extend the R&D tax credit to capital expenditure. Protect the Patent Box, R&D tax credits and full capital expensing, and close the gap with Ireland (35 per cent) and Japan (40 per cent) by making capital expenditure eligible for UK R&D tax credit claims.

3. Better allocate funding to unlock the potential of health data. Ensure funding supports the long-term financial sustainability of health data infrastructure, not just individual projects, and bring clarity to what the £600 million already committed to the Service will fund, at no additional cost to the Exchequer

4. Adequately fund the MHRA’s regulatory capacity. Move away from a funding model that relies almost entirely on fees charged to industry and give the regulator multi-year certainty to build capacity and expertise ahead of demand.

5. Deliver a comprehensive, straightforward and enduring VAT relief for free of charge medicines. Ensure any reform of the VAT deemed-supply rules covers the full range of early access, compassionate use and post-trial programmes that give patients access to new treatments – including those involving intermediaries and independent providers. This should be simple for companies to use without additional information capture requirements.

6. Simplify reliefs on imports of goods for testing. Modernise Customs Duty and import VAT relief for pharmaceutical companies and contract researchers that import materials into the UK for testing and analysis.

Together, these measures will continue to strengthen the partnership between government and industry that has started to turn a trend of UK disinvestment into one of green shoots, improve access to medicines, and broad-based economic growth.

Richard Torbett, Chief Executive of the ABPI, said: “We have started to see real signs of recovery in UK pharmaceutical investment, and the Budget is the government’s next opportunity to show it is serious about turning growing confidence into a lasting trend. Targeted, well-designed measures on R&D incentives, health data, and the funding behind the medicines pricing and adoption reforms already underway would support further long-term investment. We look forward to continuing to work with HM Treasury to deliver the government’s own ambitions for this sector.”