*

Pharma industry halting UK investments

*

Science minister 'deeply concerned' by declining medicine

spend

*

Industry says UK undervalues new drug innovation

By Alistair Smout

LONDON, Sept 16 (Reuters) - Britain needs to reverse its

declining spend on medicines, science minister Patrick Vallance

said on Tuesday, after two major pharmaceutical firms cancelled

or paused investments and the industry warned of a difficult

operating environment.

U.S. drugmaker Merck & Co ( MRK ), known as MSD in Europe,

last week said it was scrapping research operations in London,

while Reuters reported that AstraZeneca ( AZN ) had paused a 200

million pound ($273 million) investment in Cambridge.

The pharmaceutical industry has been outspoken about what it

says is Britain's underinvestment in life sciences, criticising

its system for valuing medicines, known as NICE.

Its talks with the government over how much revenue from

drug sales must be returned to the country's National Health

Service have also stalled.

Vallance, who worked at GlaxoSmithKline before

serving as Britain's Chief Scientific Adviser during the COVID

pandemic, told a parliamentary committee hearing that

appropriate access and payment for medicines was a "crunch

issue" which "was causing an environment which the industry is

finding difficult in the UK".

"I think there will be an increased percentage of NHS spend

on medicines," he told lawmakers, adding he was "deeply

concerned that there's been a 10-year decrease in the investment

and support for a vital industry".

"The reason that I think we need to reverse that direction

is not just price ... It's about saying we need to make sure

that we get rapid uptake with the best new medicines."

On Tuesday, U.S. drugmaker Bristol Myers Squibb ( BMY ) said

that a "challenging access environment" in Britain had led it to

halve the size of its local operation over the last four years.

Ben Lucas, VP Managing Director UK and Ireland at MSD, told

the committee that the "commercial operating environment does

need to be addressed", while AstraZeneca UK President Tom

Keith-Roach said that the current dispute over drug pricing was

a symptom rather than a cause of the problem.

"In the long term, this needs to be a country which is

committed to investing in innovation, to making innovation

available to patients and providing a front door through to the

NHS through which innovative medicines can pass," he said.

($1 = 0.7324 pounds)