Pharmaceutical companies have lost confidence in investing in Britain following a decision by the government to scrap a 50-year-old drug pricing mechanism, according to a survey released on Thursday.

Three-quarters of more than 100 drugmakers with British operations said they had little confidence in the current market environment and 83 percent expect the position to deteriorate in the coming 12 months.

"I don't think the government is aware of the depth of concern," Richard Barker, director general of the Association of the British Pharmaceutical Industry (ABPI), told reporters. "I hope this will be a bit of a wake-up call."

More than a third of companies expect to cut investment in research and development in Britain and a similar number will reduce investment in buildings and other tangible assets over the coming year.

The number of clinical trials is expected to drop at 46 percent of companies.

The unprecedented survey, which was conducted by independent researchers on behalf of the ABPI and the Confederation of British Industry (CBI), shows feelings are running high in the current stand-off with government.

Ministers announced plans in August to renegotiate the Pharmaceutical Price Regulation Scheme (PPRS), covering the price paid by the state health service for branded medicines, and last month gave notice that the current arrangement would end on September 1. It had been due to run until 2010.

JOB CUTS

The government, which is under pressure like others around the world to rein in runaway healthcare, says it wants to ensure value for money by revamping the existing price scheme.

But drugmakers fear its action will end the country's position as an island of investment stability.

The clash comes at a difficult time for the global drugs industry, which faces a marked slowdown in sales growth and is already cutting jobs. Barker estimated some 8,000 jobs had gone or been announced to go in Britain in the last two or three years, out of a total workforce of around 70,000.

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

Britain also punches above its weight globally, accounting for 9 percent of worldwide R&D into new drugs, despite making up less than 3.5 percent of the world market.

But Nigel Brooksby, UK head of French drugs firm Sanofi-Aventis and president of the ABPI, said new investment was not guaranteed.

"Like any industry, we want to invest where we are going to get recognition and be rewarded for innovation," he said. "One of the things that has helped sustain that investment and that rich vein of discovery has been the PPRS."