Drug firms question investment in UK

LONDON (Reuters) - Global drugmakers have started to question their investment in Britain, following a government decision to scrap a 50-year-old drug pricing scheme, the outgoing head of the country's industry body said on Thursday.

Nigel Brooksby, president of the Association of the British Pharmaceutical Industry (ABPI), said the industry was "at a crossroads", and maintaining Britain's leading position in medicines depended on restoring relations with government.

"The government's decision dented business confidence, and the reaction from our global head offices moved the matter beyond the UK, as they began to question the integrity of the UK investment environment," he wrote in the ABPI's annual report.

Brooksby heads up French drugmaker Sanofi-Aventis's British operations.

Traditionally, the pharmaceuticals sector has been an economic bright spot for Britain, accounting for 25 percent of all private sector R&D.

But companies argue a recent government decision to renegotiate the Pharmaceutical Price Regulation Scheme (PPRS), covering the price paid by the state health service for branded medicines, threatens its reputation as an attractive location.

Ironically, the row over the PPRS comes as the European Union pushes ahead with a 2 billion euro (1.57 billion pounds) scheme to promote drug discovery.

Britain currently accounts for 9 percent of worldwide R&D into new drugs, despite making up less than 3.5 percent of the world market. But a survey in March found three-quarters of more than 100 drugmakers with British operations had little confidence in the current UK market environment.

(Reporting by Ben Hirschler, editing by Will Waterman)