The UK risks undervaluing life sciences manufacturing investment

The official methods used by the UK government to assess the value of innovative life sciences manufacturing may lead the UK to miss out on strategic investments and the jobs and productivity growth they can bring to all regions across the UK.

A new, detailed analysis of the application and design of the HM Treasury Green Book [1,2] has found that the UK is likely to undervalue the economic and social benefits of investment in innovative medicines manufacturing. 

Left unaddressed, this could undermine the UK’s ability to land internationally mobile investments amid fierce global competition.

The new report, produced by Cambridge Economic Policy Associates (CEPA) on behalf of the Association of the British Pharmaceutical Industry (ABPI), found that, as a consequence of the Green Book’s design and application, the major benefits of investing in innovative life sciences manufacturing are not fully captured within the current appraisal process of the Life Sciences Innovative Manufacturing Fund (LSIMF) – a capital grants scheme designed to attract these investments to the UK. 

In part, this is because the scheme places a disproportionate focus on benefits that can be readily monetised (primarily, short-term job creation) and included in benefit-cost ratios (BCRs). 

It is not straightforward to quantify, monetise, or systematically assess the various categories of benefits that new manufacturing investment could bring. These include increased productivity, international competitiveness, and export growth, as well as agglomeration effects and spillovers, environmental sustainability, more evenly distributed growth across the UK, and – to an extent – national health resilience. 

As a result, the ABPI is calling on the government to continue its existing work to improve the tools it uses to assess such capital incentives, and use the 2025 Green Book Review [3] as an opportunity to address these issues.

Richard Torbett, Chief Executive, ABPI said: “We have a long and proud history of researching and manufacturing medicines in this country. From Wrexham in Wales, Macclesfield and Barnard Castle in England, Craigavon in Northern Ireland and Montrose in Scotland. Our sector provides highly skilled and well-paid jobs right across the UK. 

“During the pandemic, we saw just how critical these skills, resources and deep expertise were to underpin our national health and economic security. However, the pandemic taught other countries the same lesson, and now competition to secure such investments has never been fiercer.

“This is why we urge the government to use its existing review of how it values investment as an opportunity to improve how this country values and attracts future life sciences manufacturing. We’ve already seen the government introduce welcome improvements to the capital grants programme, but we must go further and faster. Doing so is critical to delivering the regional growth and high-productivity jobs needed to grow our economy and support greater investment in our public services.”

In June 2025, the government released its Modern Industrial Strategy [4], followed by the Life Sciences Sector Plan in July [5], reaffirming life sciences and advanced manufacturing as national priorities and highlighting the LSIMF as a key vehicle, with up to £520 million earmarked to attract globally mobile manufacturing investments and strengthen domestic supply chain resilience.

The LSIMF and its predecessor schemes have been major and positive additions to the UK’s pitch to global investors, and the government has demonstrated a continued commitment to evolving the scheme to enhance its attractiveness. 

Rapid advancements in technology and integration of automation to drive productivity and increase output mean that the way we assess the value of major manufacturing investments must evolve with the pace of innovation. 

The 2025 Green Book Review, commissioned by the government, calls for a clearer appraisal of transformational change, place-based benefits, and non-monetary impacts. These findings closely align with those of CEPA. 

In light of the government's ambitions for advanced manufacturing and life sciences, there is a unique opportunity to consider refinements to the LSIMF and Green Book.

The recommendations from CEPA and ABPI include:

• Introduce a more comprehensive appraisal framework to reduce over-reliance on Benefit Cost Ratios and to strengthen non-monetary benefits within decision-making
• Increase the predictability and transparency of the LSIMF process
• Ensure proportionality and timeliness of the LSIMF process

David Jones, Director, CEPA, said: “The UK government has an unequivocal economic growth mission, and has identified advanced manufacturing and the life sciences as two sectors with the 'greatest growth potential over the next decade'. As such, in line with HM Treasury's recent review of the Green Book, we recommend that appraisals for LSIMF capital grants seek to be as comprehensive, systematic and transparent as possible when assessing the range of benefits from investments in innovative life sciences manufacturing. This will ensure that the LSIMF - which is already viewed as a valuable form of support by industry - leverages its full potential as a tool for attracting investment and stimulating UK competitiveness.”