Politics and Patent Cliffs - UK Life Sciences Outlook – Autumn 2025

In a nutshell:

• It remains a mixed picture for the sector in the UK with geopolitical pressures weighing heavily;
• Investment in the UK has been a little muted but there is a potential dealmaking surge on the horizon.

US Policy and Medicine Pricing

Currently, US policy is reverberating across the Atlantic. President Donald Trump has made a priority of lowering medicine prices in the USA. In May, he introduced a Most- Favoured- Nation drug pricing policy and since then he has struck deals with several big industry players.

As part of this push, Trump is putting significant pressure on the UK to raise the prices that it pays for medicines. Currently, the UK pays relatively little for its medicine supply and, additionally, the clawbacks to the NHS that are levied on sales are high when compared to similar schemes in mainland Europe.

With the American market considerably larger than the UK, industry concerns in the UK have been growing that a combination of US and domestic UK policy could make the UK critically uncompetitive and potentially result in medicine suppliers leaving the UK. There have been suggestions that the UK government is considering allocating a greater share of its health budget to medicine supply to try and mitigate against these concerns. But this is not straightforward either; the tight fiscal picture in the UK means that a greater slice of the pie for medicines will probably mean cutbacks elsewhere. With the UK budget imminent, this is a tricky political balance to strike.

The Rise of China

China’s ever growing economic firepower is increasingly focused on the life sciences. Chinese investment in the sector has grown considerably in recent years and there is now a thriving research ecosystem which rivals other major economies.

Clinical trials can also be completed quicker and with relatively low cost in China compared to other nations, which has driven a notable increase in the volume of trials being undertaken. As a result, Chinese businesses are selling more to overseas buyers with the sector continuing to grow. 

The UK investment picture

The investment climate epitomises the mixed picture in the UK life sciences sector at present. 

On the positive side, the UK is still doing reasonably well when it comes to academic research translating into spinouts for commercialisation. Research from Beauhurst and Palkwalk indicates that, across all sectors of the UK economy, equity funding raised by spinouts remains at a competitive level (£709m was raised in the first half of 2025) and that the life-sciences are the powerhouse behind that. 

However, venture capital activity in UK life sciences has been quieter. Money and early-stage funding is available, but founders and management teams are in a tough competition to prove that their business is the right one to be backed. This speaks to the difficulties that spinouts and startups face in continue to fund the business until they reach the point that they have a product on the market which generates a regular income stream. Access to finance is also then crucial for scaling up the business to be able to capitalise on the opportunity in the market and to make the business viable.

It has also been a difficult few months from a UK perspective at the top end of the market with Merck and AstraZeneca retreating from significant projects in the UK. This is inexorably tied to the medicine pricing issue and in AstraZeneca’s case it clearly symbolises their pivot towards the USA. 

An M&A boom incoming?

There is, however, the prospect of an upcoming surge in dealmaking activity and buyers competing against each other, in particular for therapeutics of strategic value. The Financial Times has reported how 2028 will see a record spike in the volume of global pharmaceutical revenue which is exposed to patent expiry, eclipsing the previous high in 2021.

In that timescale, mitigating against the potential drop in sales associated with the loss of exclusivity is tricky to manage internally. That points to big pharma and other strategic buyers turning to M&A as a means of securing replacement revenue streams which could potentially trigger bidding wars for the most attractive assets. It is also possible that investors could pay closer attention to generics pharmaceutical businesses that are ready to bring competing products into the market.

As much as ever, shareholders and directors in the middle market (and especially growing biotechs) should be on alert and prepared to execute on exit strategies if the right offer comes along.

The battle for weight loss supremacy 

One of the most hotly contested battle grounds in the pharmaceutical industry is that of weight loss treatments. Eli Lilly in the USA and Novo Nordisk in Denmark have been at the heart of this battle. 

Currently, it’s Lily which is winning the war with its Zepbound and Mounjaro injection products. However, the battle has intensified in recent weeks with a fight between Novo Nordisk and Pfizer for US biotech, Metsara. After competing bids and Pfizer filing a lawsuit which protested against Novo’s proposed acquisition structure, Pfizer has emerged victorious and is set to acquire Metsara for up to $10bn.

It's worth noting that Metsara was only founded in 2022. This whole unusual and contentious episode underscores just how lucrative the weight loss market is seen as being.

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