UK-US Pharma Deal Boosts Drug Spending as Industry Sees M&A Surge, Regulatory Reforms

The UK and US announced a pharmaceuticals agreement in December 2025 featuring 0% tariffs for UK pharmaceutical exports to the US for three years, plus preferential terms for UK medtech. The UK committed to increase net spending on innovative medicines by approximately 25%, achieved by raising NICE's baseline cost-effectiveness threshold from £20–30k to £25–35k per quality adjusted life year and lower VPAG rebates for newer medicines in 2026.

Several blockbuster pharma deals have completed or been agreed recently. Pfizer completed its up to $10 billion acquisition of Metsera following a high-profile bidding war with Novo Nordisk, adding obesity assets at different stages of development to its portfolio. Merck completed the acquisition of Cidara Therapeutics for $9.2 billion, following its $10 billion acquisition of Verona Pharma, further strengthening its immunology revenue stream. GSK recently agreed to acquire RAPT Therapeutics for $2.2 billion, expanding its respiratory, immunology and inflammation pipeline. Danaher will acquire Masimo for $9.9 billion to expand its presence in patient monitoring and hospital technologies, strengthening its diagnostics portfolio.

Biopharma funding continues to rebound in 2025, though investors remain selective and focused on high-quality assets. Venture activity reflects a more disciplined market, with capital flowing to later-stage companies and differentiated pipelines rather than speculative bets.

The UK has confirmed that the most significant update to its clinical trials framework in two decades will go live in April 2026. A new fast-track notification route for lower-risk studies is being introduced, which expects to capture around 20% of trials. Legal requirements around the reporting and publishing of clinical trial results are being bulked up.

The EU's revised framework includes 8 years of regulatory data protection plus 1 year of market protection, a reduction from the current 8+2 model, with up to 11 years' protection available for orphan drugs. Authorization timelines are being shortened and there will be simplified requirements for "low intervention" trials, with projects of strategic value identified for receiving enhanced support and accelerated approvals.

In an interview, the U.S. Food and Drug Administration commissioner indicated most medications should be over-the-counter unless they pose safety or monitoring risks, with regulatory changes expected this year. Some members of the pharmaceutical industry have pushed back on the proposed changes as many over-the-counter drugs are not covered by insurance and may be potentially less affordable for patients.

Almost half of UK pharma executives indicated they offshored research and development in the prior year. The leaders cited collaboration opportunities and geographic proximity to new markets and customers as the primary drivers of offshoring.

The British Chambers of Commerce, alongside government bodies and partners, has launched a six-month Singapore Life Sciences Trade Accelerator to help UK life sciences middle market access and scale in the Southeast Asian market. The pilot aims to boost export performance amid declining export orders, using Singapore as a gateway to broader Indo-Pacific markets and informing future global trade support initiatives for UK firms.

Novo Nordisk's CagriSema injection is seen as a potential successor to Wegovy. Eli Lilly also has a new product in the works for 2026, Orforglipron, which comes in tablet form.