The U.K.-based AstraZeneca Plc ( AZN ) paused a planned 200 million pounds ($271.26 million) investment in its Cambridge research site.

AstraZeneca ( AZN ) spokesperson told Reuters the company regularly reviews investment priorities and can confirm that the Cambridge expansion is on hold.

The news deals a setback to Prime Minister Keir Starmer’s government just days before U.S. President Donald Trump’s state visit. Trump has slammed Britain and Europe for underpaying for drugs, while pharma companies warn that the UK’s long-standing undervaluation of medicines and innovation is deterring investment.

Also Read: Merck’s Exit Highlights UK Risks Losing Pharma Investment Amid Rising Costs

After AstraZeneca ( AZN ) scrapped its vaccine plant expansion, CEO Pascal Soriot called on the U.K. to create a more business-friendly environment to attract capital.

Earlier this year, AstraZeneca ( AZN ) abandoned plans for a vaccine manufacturing facility in the U.K. for $554.32 million (450 million pounds) following disagreements with government officials over state support.

In a report on Thursday, the Association of the British Pharmaceutical Industry said the U.K. is losing the race for investment in R&D, clinical trial delivery, and foreign direct investment, due to increasing drags on competitiveness.

Since 2018, U.K. pharmaceutical R&D investment has lagged behind global growth, with a sharp slowdown from 2020 when annual growth dropped to 1.9%, compared to the global average of 6.6%. In 2023, R&D spending declined by nearly 100 million pounds.

Additionally, life sciences foreign direct investment into the U.K. plunged by 58% from 1.89 billion pounds in 2017 to 795 million pounds in 2023, causing the U.K.’s ranking to slide from 2nd to 7th among peer nations.

Paul Naish, the U.K. head of market access for French drug maker Sanofi SA ( SNY ) , told the Guardian, Britain was “at a critical point”. Britain is “not a good place” to develop or sell drugs.

Sanofi ( SNY ), which allocates 35 million pounds annually to the U.K. R&D from its 6.7 billion pounds global budget, has conducted 50% fewer clinical trials in the U.K. over the past two years, even with a robust drug pipeline.

Last Thursday, the Pharmaceutical Journal reported that Eli Lilly and Co. ( LLY ) paused work on its U.K. biotech incubator, Gateway Labs.

Christopher Stokes, president and general manager of Eli Lilly ( LLY ) in the U.K., Ireland, and Northern Europe, told the company had recently paused a potential investment in the U.K. while it awaited “more clarity on the UK environment”.

Price Action: AZN stock is trading lower by 2.46% to $77.60 at last check Monday.

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