UNLOCKING INVESTMENT INTO LIFE SCIENCES WILL DRIVE THE UK ECONOMY

By Nicky Godding, Editor

A report published last year by PwC for the Association of the British Pharmaceutical Industry revealed that unlocking life sciences could deliver for our economy as well as for the all-important patient health.

The government agrees. In 2021 it published its Life Sciences Vision saying that life sciences will be one of the great drivers of growth in the 21st century. Just last month it put some money where its mouth was and announced a £650 million war-chest to fire up the UK’s life sciences.

The vision is to build on the UK’s world-class science and research capabilities, make the NHS the country’s most powerful driver of innovation and create an outstanding business environment for life sciences companies.

But the UK’s share of global pharmaceutical research and development fell from 7.7 per cent in 2012 to 4.1 per cent in 2019, according to the report, and manufacturing production volumes have fallen by 29 per cent since 2009.

Currently, the UK’s £94 billion Life Science sector provides more than 250,000 high skill jobs across the UK from drug discovery to diagnostics, med-tech devices and digital health.

If the government’s Life Sciences Vision is implemented in full, the size of the prize is great: £68 billion in additional GDP over 30 years due to the benefits of increased research and development investment, along with a further 85,000 additional jobs from increased pharmaceutical exports.

And before we forget what all this investment should be about – a 40 per cent decrease in disease burden across the UK.

According to Knight Frank, UK life sciences venture capital funding reached £3.4 billion last year, a 41 per cent decline year-on-year but well above pre-pandemic levels.

Investment harder to find

In the first quarter of 2023, deal flows continued for the UK’s life science and biotech companies at all stages of development, according to the BioIndustry Association.

Private UK biotechs secured £258 million across 20 deals, with an average deal size of £13 million.

Investors were more likely to back companies with an existing track record, with five Series B deals recorded, but more reluctant to part with their cash, resulting in an average Series B deal down to £18 million, compared to £58 million in 2022.

Notable deals across the region included Milton Park, Abingdon-based Grey Wolf Therapeutics, an immune-oncology company, which raised £40 million in a Series B deal, and Akamis Bio (formerly known as PsiOxus Therapeutics), also based in Abingdon, raising £23 million to advance its gene therapy platform to treat cancer.

No initial public offerings were made on the stock exchange and just £37 million was raised by existing public companies, but that trend was replicated across the world. Investment is clearly currently harder to come by.

In the report, published by intelligence company Clarivate, BioIndustry CEO Steve Bates, said: “The quality of our science and management teams will carry us through this period, and the government’s more positive approach to R&D tax relief and continuing efforts to unlock pension funds hold real promise to super-charge the sector.”

Mike Ward, Global Head of Thought Leadership, Life Sciences, Clarivate, added: “Globally, there was a 37 per cent year-onyear decline in venture capital support for the biotech sector. This apparent loss of appetite is a reflection of the headwinds impacting the global economy as biotech innovation remains robust. It is not yet clear how long the financing drought may last.”

Where will new investment come from?

How can the UK bring more investment into the sector? Sir John Bell, Regius Professor of Medicine at the University of Oxford, suggests that pension schemes could be bundled together to create around five superfunds to invest in sectors, including science and technology.

This approach, he suggests, could stop young UK technology and life sciences companies looking overseas for investment.

In Jeremy Hunt’s March budget, he said that this year’s Autumn Statement would include proposals to unlock DC (defined contribution) pension capital to support UK growth.

What about innovation in the NHS, another ambition in the government’s Life Sciences Vision?

The NHS’s Innovation Accelerator (NIA) is spearheading innovation among health and care innovators. The accelerator provides tailored support for each entrepreneur (or Fellow as it refers to them), from networking opportunities and mentoring to helping them understand the barriers to uptake their innovation faces within the NHS.

Since 2015 the NIA has supported the scaling of 85 innovations. Close to 60 NIA-supported innovations have been successfully marketed internationally.

In March the NIA accepted 17 new Fellows on to its 2023 programme.

These include Chen Mao Davies from Gloucestershire who has developed Anya, a 3D interactive technology to help new mothers learn breastfeeding skills. Within the app, virtual communities and AI-powered support provide personalised 24/7 assistance for parents throughout the first 1001 days of their child’s life.

Other new Fellows include Rachael Grimaldi, Founder and CEO at Oxfordbased CardMedic, an app that reduces

Life sciences companies across the region

There are almost 100 life science companies across Bristol and Bath and the region’s life science technologyrelated ecosystem is worth around £8 billion.

Across the West Midlands, there are eight hospitals, 35 regional clinical research centres and 600 companies. The University of Warwick Life Sciences school is dedicated to improving healthcare. The Birmingham Health Partnership supports businesses and helps them with the commercialisation of innovations.

Surprising there is no up-to-date number of life sciences companies in Oxfordshire but it is likely that there are more than 450 as the county is part of the muchvaunted Golden Triangle of London, Oxford and Cambridge.

However, Oxford has major strengths in particular biotechnology subsectors, including drug discovery health inequalities by overcoming communication barriers between staff and patients and Ross O’Brien who runs Wysa, a Reading-based AI-based mental health chatbot that offers instant, supportive, responsive, direct access to digital selfcare support. It was the first AI-based digital mental health solution to undergo a random control trial in the NHS. and development, diagnostics, medical technology and imaging. There are approximately 7,200 jobs in biotechnology sub-sectors in Oxfordshire, with significant growth projected.

Last year the government also launched its Life Sciences Innovative Manufacturing Fund to support the manufacture of new medical treatments, devices and diagnostics and allocated £60 million of the total announced £277 million of joint public and private backing.

And then there’s the Life Sciences Investment Programme, a £200 million initiative managed by British Patient Capital, a subsidiary of British Business Bank, the government-owned business development bank, which addresses the growth equity finance gap faced by high-potential UK life sciences companies. This is expected to attract at least a further £400 million of private investment.

This investment programme makes cornerstone commitments to later stage life sciences venture growth funds with a strong UK focus, typically investing between £50 million and £100 million in each successful fund.

Such pump-priming investment into smaller companies should enable them to achieve the research data they need to attract greater private sector funding further down the line.

The Vale of White Horse in Oxfordshire had the highest employment in the medical technology sector of any UK local authority district at 3,900 people and generated the highest value of biopharmaceutical turnover (£5.5 billion).