EVIDENCE that animal rights extremists are driving drug companies out of Britain emerged yesterday, with figures revealing a collapse in investment in new laboratories and the first fall in research spending in the UK for 15 years.

Capital spending in 2003 fell by nearly a fifth to £753 million — the steepest decline in more than a decade. Spending on research fell by £100 million to £3.2 billion — the first fall since records began in 1990, according to the Association of the British Pharmaceutical Industry (ABPI).

The new data, which cover 2003, come as a Bill targeting animal rights extremists is listed for its third reading in the House of Lords today.

The legislation, the Serious Organised Crime and Police Bill, will outlaw “unwarranted targeting” of people involved in the drugs industry, as well as “economic harassment” of businesses or institutions with links to pharmaceuticals companies.

Extremists face a five-year prison sentence if convicted under the new law, expected to receive the Royal Assent by tomorrow.

The pharmaceutical industry association said that instances of abusive or threatening phone calls from extremists had risen fourfold over the past two years to more than 100, while cases in which campaigners had inflicted damage to personal or company property had almost tripled to 177 between 2002 and 2004.

Vincent Lawton, president of the trade body, said that Britain’s traditionally strong position in pharmaceuticals was being threatened by violent animal rights campaigners. “It is clear that the continuing threat posed by animal extremists is a contributory factor,” he said.

The British investment figures are at odds with estimates for global research and development spending. According to Pharmaceutical Research and Manufacturers of America, the US trade association, global spending surged 11 per cent to $34.4 billlion (£18.3 billion) in 2003.

Mr Lawton said that growing rivalry from China, India and Eastern Europe and mounting red tape were also discouraging drug companies from investing in Britain.

The British association criticised recommendations by the Commons Health Select Committee that call for rules to limit the way that medicines are marketed to doctors and prescribed to patients.

Mr Lawton said that the proposals would limit patient choice and erect “new hurdles for new medicines”, further harming Britain’s reputation as an attractive place for drug companies to do business. “Anything that results in more regulatory hurdles will be a disincentive for research and development,” he said.

Mr Lawton said Britain’s leadership in drug development was increasingly being challenged by new centres of research in emerging markets, where companies often enjoy significant tax breaks.

“I hope that these figures indicate just a temporary blip, but the dangers of the UK losing out to other countries are very real,” he said.

A quarter of the world’s top 100 medicines were discovered in Britain, but the country accounts for only 3 per cent of the world drugs market.