Mind the gap: UK life sciences vs. an emerging skills shortage
Introduction
The UK life sciences industry is burgeoning and, thanks in part to the role played by Covid in supercharging a range of sectors, it is on a path toward further expansion. Until recently, private equity and venture capital money flowed into start-ups and, despite a comparative slowing of the pace in recent months, established firms continue to transform and grow their operations.
However, at a time of unprecedented development, the industry also finds itself at the centre of a skills shortage that threatens to stall, or even halt, its trajectory.
With government and healthcare providers demanding new and more innovative ways of tackling future public health challenges, life sciences companies are struggling to find the personnel they need to meet their ambitions. This skills gap is not only a failure of education and training – with too few graduates with the right skill sets emerging from universities and modern apprenticeship programmes – the dearth of suitably qualified people is also evident at the sharp end of the industry, where there is a critical lack of experienced scientists, chemists, engineers, and senior executives with a science background.
So, what are the causes of this scarcity that appears to threaten the march of what could, and should, be a world-leading industry? Do the people needed by UK life sciences companies exist and, if so, where are they currently working? Crucially, why are they not willing, or able, to work in the UK and what can be done to take them there?
The skills shortage is not new, nor is it solely a UK problem. Already in 2020, a report by McKinsey –Pharma operations: creating the workforce of the future1 – suggested that 80% of pharmaceutical-manufacturing companies globally were reporting a skills mismatch. In an industry driven by innovation there is, of course, an expectation that occupational profiles will constantly be shifting. The McKinsey report estimated that, in the next decade, up to 90,000 pharma jobs could become redundant through automation, and that new discoveries and processes would create between 90,000 and 120,000 new roles. Pressures caused by Covid have generated an unprecedented demand for talent. Aon’s
Salary Increase and Turnover Study2 in 2021 suggested 71% of life sciences companies were planning to increase their workforce in the following 12 months, over a third by more than 15%.
The UK Government collaborated with the life sciences industry to publish a skills strategy document –The Science Industry Partnership (SIP) Life Sciences 2030 Skills Strategy3 – which estimated that 133,000 extra life sciences jobs will need to be filled by 2030.
Three years on however, the ability of many companies to recruit people qualified and experienced enough to fill those posts is proving problematic. In a recent survey of life science employers in the north of England, 45% reported being unable to find appropriately skilled applicants, with a further 30% saying there were too few applicants.4
A survey of employers for the SIP report found that recruitment of experienced staff is the main skills challenge facing the industry, across all disciplines. In informatics, computational, mathematical and statistical areas, at least 50% of respondents said recruitment of experienced staff was a concern.
This report will consider the reasons for this apparent skills shortage, the impact it could have on the industry and what businesses, government, education providers and other stakeholders can do to address it.
Why is there a skills gap in UK life sciences?
In the past only postgraduate students were required to apply but in 2021 the rules were extended to cover academics on skilled worker visas, including those already in the UK.6
The migration of scientists from the UK to other countries might partly explain the shortage. In 2020, the UK experienced a net loss of 1,300 scientists abroad, having been a net importer as recently as 2015, according to OECD data.5 At the same time, there has been an apparent drop in the number of scientists coming to the UK to work, both from European Union (EU) countries and beyond. In 202122, at least 60 scientists – more than half from China – reportedly left the UK after concerns were flagged by delays in the processing of applications under the Government’s Academic Technology Approval Scheme (ATAS), that left some people unable to take up prestigious posts for up to seven months.
The UK’s decision to leave the EU may also have had an effect of discouraging scientists from working there, according to Peter Hewkin, head of the UK Microfluidics Consortium, a global group of companies involved in micro-science, including synthetic biology and point-ofcare diagnostics.7
Last October it was reported that 22 of the country’s most senior scientists had decided to leave, due to concerns over the future of funding, caused by the fallout from Brexit. It followed delays in negotiations with the EU to keep research funding of £84m for the Horizon Europe programme. Brussels said it would not continue with discussions until Brexit-related issues, such as the Northern Ireland protocol, were resolved.8
Other contributory factors have included the war in Ukraine, a shortage of lab space in Oxford and Cambridge – which, together with London, form the so-called ‘golden triangle’ of UK life sciences activity –and months of political upheaval in the second half of 2022, when the UK had three prime ministers in as many months.9
A series of ongoing ‘fiscal fixes’ – including a rise in the rate of Corporation Tax from 19% to 25% – may also have had an effect of discouraging investors and scientists, as the UK Chancellor of the Exchequer seeks to rebalance the UK economy.10
What is the impact of the skills shortage?
Despite this political uncertainty and other factors, 2022 saw greater volumes of hiring in life sciences than in previous years, and the challenge for many employers was identifying and attracting top talent.
The scheme applies to scientists from some regions outside of the EU and US working on ‘sensitive subjects’ with potential military applications. In practice this includes most engineering, computing and materials science and much physics and biochemistry research.
The most common areas of growth continue to be in research, regulation, sales, and marketing, as companies seek to bring more products to market and to make their sales teams responsive in the post-Covid era.
“A lot of talented UK staff are attracted to the US where salaries are higher and living costs, including housing, are generally lower
With a surplus of hard-to-fill roles, employers are having to work harder to entice top talent. Some have had to entertain the possibility of employing less experienced candidates, who they can then upskill.
Some employees at the senior, quality end of the market – for example in regulatory and biometric roles – can work remotely, thereby expanding the potential candidate pool for employers. However, those in what are traditionally known as ‘wet chemistry’ roles, require to be on-site, at least for part of the time.
In this candidate-scarce market, employees have been able to command higher salaries. Clinical research associates and data scientists have seen average salaries rise by 13.7% and 11.9% in the past year10, while those in more senior positions have seen wages rise by as much as 25%, as employers seek to attract and retain senior talent.11 Until 2018, salaries had remained virtually static since the 2008 financial crash. Companies of all sizes are now routinely offering six-figure salaries for senior people in medical diagnostics and life sciences, which are catching-up with equivalent positions in the finance and information technology (IT) industries in the south-east of England.
A lot of talented UK staff are attracted to the US, where salaries are higher and living costs, including housing, are generally lower. The shrinking talent pool in the UK, combined with a fall in the value of sterling against the dollar, has made it more difficult for firms to recruit scientists at the most senior levels.
In the past decade, China appears also to have become an attractive destination for scientists globally, at the expense of the US. In 2015, the US was the most attractive scientific destination in the world, drawing a net total of 3,000 scientists, but by 2020, that number had fallen to 1,000.
During the same period, China went from being a net loser of scientists, to replacing the US as the world’s most attractive destination. In 2020, a net total of nearly 1,800 academics relocated to the country.12
The comparatively small market in the UK accounts for a disproportionate movement of labour to America and China. From 2005-2018, Europe accounted for just 16% of total cell and gene therapy (CGT) patent registrations, compared with 28% in the US and 56% in China.13
Less entrepreneurialism and venture capital, and more aversity to risk in Europe, are often cited as underlying causes of its comparatively small market share, compared with the US.
In 2021, 295 publicly listed biotech companies in Europe’s top 10 performing regions posted revenues of
US$48.984billion, compared with $153.403billion by 519 companies in America’s top 10 regions. The UK’s 56 publicly listed biotech companies accounted for $969m of the European total, compared with $23.067billion in Germany and $8.381billion in Ireland.14
UK life sciences companies are also losing talent with transferable skills – mostly in statistical and analytical roles – to other sectors which are able to meet their higher wage demands.
One employer told the SIP study: “Many experienced colleagues in the analytical area develop a breadth of interdisciplinary skills and knowledge, given that an analytical scientist’s role will touch or integrate with most scientific areas in the biopharm business.
“The positive impact for these individuals, is that they are often sought after for senior roles in multiple business areas, and often end-up switching career direction…out of analytical to other areas – regulatory being one example.”
He added: “This brain drain from core experienced analytical roles, puts pressure on the business and increases competition in the sector around attracting experienced senior analytical professionals.”15
What can be done to bridge the gap?
Life sciences companies in the UK are doing all they can to recruit top talent for their most senior positions, including offering attractive, globally competitive remuneration and relocation packages, and being flexible about where people work. The skills shortage requires a strategic approach, and many businesses are looking to implement more employee-focussed practices and retention strategies, such as long-term incentive schemes.
Attracting experienced expertise, often from abroad, in a highly competitive global market, requires support from government, universities, funders and other stakeholders to present a united front.
In its December 2021 paper, The UK biotech sector: The path to global leadership, McKinsey suggested UK companies need to adapt to win the global race for life-sciences talent to support maturing portfolios.
Among its suggestions – not endorsed by the industry – is for UK firms to establish a US base to house certain key executives, such as CFOs and to change traditional UK perceptions of success and failure, for example accepting that a CEO from a failed biotech might have valuable experience to bring to the next start-up. Other suggestions in the McKinsey report include the need to consider siting clinical or regulatory operations in the EU, close to senior talent and potentially in lower-cost markets.16
With increases in inflation and in the cost-of-living, a growing number of UK companies are exploring more creative financial packages for potential employees, in addition to competitive salaries. Many are opening-up company ownership, through shared equity schemes to attract talent and drive growth.
Start-ups often don’t have the capital to match the salaries of more established firms, and offering equity to key senior employees is an effective way to leverage their company and differentiate them positively from their competitors.
Share ownership options include Enterprise Management Incentive (EMI) schemes, growth shares, ordinary shares, and unapproved option schemes that allow companies to offer tax advantages, while improving employee retention and productivity.
Companies can also do more to attract talent by offering potential employees clearer opportunities for career progression. Research consistently shows that people in the life sciences want to move to a new role to work with new technologies, on interesting projects and with opportunities for career progression. The least important reasons for them to move are generally for basic pay and flexible working.
Experience, expertise, ethics and knowledge all matter in life sciences, and so building a long-term career plan is important to people working in the sector. The most successful companies are those which communicate most clearly with staff, ensuring they know what work their employees find most interesting, and what suits their talents best, so they can set clear career goals and identify the most suitable positions for them. With the wide diversity of disciplines that exist within the sector, employers could also learn to be less focused on the previous experience of potential recruits, and look more at their transferable skill set. The chances are that those employees who opt to stay with a company for a long time will be doing very different work in five years’ time than that for which they were
recruited. The most important skills cited by several studies and publications as being important for life sciences professionals, include research ethics, scientific peer communication, bioethics, time management, research project management and scientific knowledge and methods outside of their present research area and awareness of industry trends. Those who are able to demonstrate a high level of proficiency in those areas would arguably be a stronger recruitment proposition for a firm than those with a track record of experience in a particular silo or research discipline.
EXODUS OF SCIENTISTS
In the past year, at least 60 scientists – more than half from China – reportedly left the UK after concerns were flagged by the Government’s Acacemic Technology Approval Scheme
60
SALARY INCREASES
Senior executives and experienced scientists have seen their remuneration rise by as much as 25% in the past 12 months, as companies seek to recruit and retain the best talent.
25%
AMERICAN DOMINANCE
Companies are encouraged to capitalise on the Global Talent visa system, introduced by the Conservative Government to attract the ‘best and brightest minds’ to the UK. Prime Minister Rishi Sunak recently announced new measures to make the visa system more attractive to top talent from overseas, whilst also making it quicker and easier for businesses to access the talent they need.17
Changes to research and development credits, which came into force in the spring are also expected to have a positive impact. From April, SMEs that invest more than 40% of total operating costs in R&D, and have yet to turn a profit, will receive a cash payment of 27p per £1 invested. It is certainly an effective way to incentivise investment by reducing the costs of innovation, particularly for SMEs taking a significant
In 2021, 295 publicly listed biotech companies in Europe’s top 10 performing regions posted revenues of US$48.984billion, compared with US$153.403billion by 519 companies in America’s top 10 regions.
IMPACT OF BREXIT
Delays in negotiations with the EU to keep research funding of £84m for the Horizon Europe programme in the UK have led to uncertainty and the departure of scientists to other countries.
519
£84m
Companies can do more to attract talent by offering potential employees clearer opportunities for career progression
financial risk in their development process. Meanwhile Professor Andrew Pollard, co-inventor of the Oxford AstraZenica Covid vaccine, has urged UK ministers to invest in clinical research to increase staff across medical and research roles, with more training schemes, such as those provided by the National Institute for Health Research (NIHR). Encouraging more people to pursue a career in life sciences starts with education, according to Pollard, who believes better communication around the lifesaving roles of specific scientific disciplines would also help.18
Steve Bates, head of the BioIndustry Association, has also urged the UK Government to review its proposed changes to research and development tax credits, a view echoed by Tony Hickson, Chief Business Officer of Cancer Research UK, who said the credits were being cut at a time when it was hard for firms to raise money through floats or venture capital firms.19
Conclusion
The UK life sciences sector is experiencing a skills shortage that is threatening the scale and pace of its expansion. With demand growing for new and innovative ways of meeting future public health challenges, companies are struggling to recruit the personnel needed to fulfil their plans. This skills gap is evident across the industry and at all levels, from graduates to experienced scientists, chemists, engineers, and senior executives with a science background. The reasons for the shortage are multiple and often complex. They include the migration of scientists from the UK to other countries – including to China and the US, where they are more handsomely rewarded and where their salaries stretch further – and a drop in the number of scientists coming to the UK.
Other factors contributing to the skills shortfall include Brexit, the war in Ukraine, the vagaries of UK domestic politics and a shortage of lab space. There is also some evidence of skilled, experienced professionals leaving the life sciences sector to work in other fields where they can make use of transferable skills.
Plugging and reversing the skills gap – to keep expertise in the UK and attract it from abroad – requires a strategic
effort involving companies, investors, government, universities and other stakeholders. Employers can contribute by offering more creative financial packages, for example through shared equity schemes, and also by providing clearer opportunities for career progression. Communicating clearly with staff, using their talents to their best advantage, setting them clear career goals, and supporting them to achieve those goals through well-resourced and ambitious business plans, can also assist in the collective effort to supercharge the sector, ensuring it achieves its deserved success.
