Universities are being seriously weakened by the international brain drain, higher education minister Margaret Hodge warned last week.
She told delegates at a science conference in London that universities must not become complacent in the face of fierce competition from other countries.
"Academics are promiscuous," she said. "Give them a good laboratory and salary, and many will travel. If we don't maintain competitive salaries, we won't maintain the competitive edge in the global economy."
Ms Hodge recently visited China, where the government has pledged a 20 per cent increase in investment in higher education every year for five years.
She admitted: "Even some of our best SRIF (Science, Research Investment Fund) investment doesn't look as good as what they're doing."
The damaging effects of international competition will be discussed at the University of Oxford on Saturday.
Peter Farrow, senior director of science policy at the pharmaceutical company Pfizer, will tell a meeting of the rightwing Atlantic Bridge group that Europe is losing its lead in pharmaceutical research and development.
Dr Farrow told The THES : "We are already beginning to miss out on our fair share of the good research. More and more is going on elsewhere."
He will tell the conference that the UK needs to worry not about competition from Europe but the US. He said UK universities had a long way to go in terms of attracting partnerships with industry.
Shadow health secretary Liam Fox, who will chair the meeting on Saturday, said the UK was in danger of becoming anti-innovation. He said issues such as the intimidation of animal scientists meant that medical research was shifting increasingly to the US.