The UK's impressive record in the field of life sciences and its strategic position in the European market are the main reasons cited for the move.
More than 450 companies have a significant R&D or manufacturing presence in the UK, where 224 new drugs were developed in clinical trials in 2003, accounting for at least 40 per cent of the European total.
Along with the USA and Japan, the country ranks as one of the world's top three centres for pharmaceutical research, attracting £3.5 billion (€5.2 billion) in investment for R&D and manufacturing in 2003.
The new Hertfordshire site, occupying 14.6 acres of land, will integrate Eisai's research, clinical development and manufacturing activities along with its central business hub, eventually creating 500 new jobs, with 300 of those in R&D and manufacturing.
The firm believes such consolidation will result in a "seamless value chain", improving quality, efficiency and productivity.
Construction is due to commence in 2006, with the production and research facilities scheduled to begin operation in 2008.
An Eisai spokeswoman told In-Pharmatechonologist.com the company's research at University College London (UCL) will remain there, but their existing clinical research activities in Hammersmith will move to Hatfield Business Park to merge with a new manufacturing facility there.
The company already has well-known brands in the European market, including Aricept, used in the treatment of Alzheimer's disease, Pariet, a PPI used in the treatment of gastro-intestinal disorders, and Zonegran, for the treatment of epilepsy.
It is confident the new hub will lead to more discoveries, like the identification of a new compound by UCL which is now undergoing clinical trials for the treatment of several neurodegenerative conditions, including Parkinson's disease, epilepsy and multiple sclerosis.
"We believe that Europe is a key market to invest in and the UK has an excellent reputation for scientific innovation, especially in the area of life sciences," Haruo Naito, president and CEO of Eisai, said in a statement.
"The creation of a 'seamless value chain' (SVC) is the principle at the heart of our decision to bring together our European operations on a single site in the UK."
Eisai's European operations were set up in 1988 when clinical research started in London and since then they have expanded to Germany, France, Spain, Italy, Switzerland and Sweden, with plans to eventually operate in all EU member states.
The Association of the British Pharmaceutical Industry (ABPI) welcomed the news but warned the UK now has to compete harder than ever to win future investment and cannot afford over-regulation.
"The UK is a world-player in researching and producing innovative medicines, but it is facing increasing competitive pressure, especially from emerging economies such as those of India, China and Singapore," said Richard Barker, ABPI Director General.
"No company can be expected to invest in the UK if the environment here is not sufficiently welcoming."
Capital expenditure by pharmaceutical companies in the UK has been declining since a peak of nearly £1 billion in 2001 and, while the latest figures are still awaited, a further drop is expected.