While the UK’s life sciences and biotech sector has strong early-stage academic work, a thriving startup scene, and world-class universities, “we aren’t doing so well on scale-ups”, said the UK Minister of State for Science Lord Patrick Vallance.
Despite the UK having a bustling startup scene, the real challenge is scaling up these companies, highlighted Vallance at the annual Jefferies London Healthcare Conference.
“We build our companies; we get them to a point where we get that early clinical efficacy. By and large, we will have the majority of the equity investors that come into our company will not be UK-based, and the majority will be US-based,” explained Kate Bingham, managing partner at SV Health Investors.
She went on to explain that as these companies start bringing in US-based investors, there is a risk that they become more US-focused and potentially relocate.
“We need to be in a position where we have UK companies that can still raise money in the [United] States but are strong enough and robust enough to stay here without getting sucked into becoming US-based companies. And that is the biggest risk that I think we face because we just don’t have that growth capital,” added Bingham.
British Business Bank CEO Louis Taylor also acknowledged this scale-up challenge, adding: “We know we’re lacking in the scale-up phase – that’s going to be a big focus.”
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The British Business Bank is putting this into focus via the co-investment and direct investment capability called the Future Fund Breakthrough. The goal is to help establish life sciences as an attractive asset class for UK investors, particularly domestic pension funds, which currently have very low exposure to the sector compared to their US counterparts.
To further facilitate pension fund investments, Taylor mentioned that the British Business Bank will be “focusing on the UK pension funds and trying to get them involved in this sector by setting up a vehicle through which they can invest”.
The UK Government is also developing an industrial strategy, said Lord Vallance. This suggests a long-term, strategic focus on supporting the life sciences sector.
Last month, the government announced the creation of a Regulatory Innovation Office, which Lord Vallance said is intended to “tackle problems that small companies have in particular, having to navigate multiple regulators to get where they need to get to”. The goal is to simplify regulatory processes and provide more support for small biotech companies.
