UK inward investment report 07/08 - life sciences

As a global centre for scientific innovation the UK has a mature and successful life science industry. Well connected throughout the UK and globally, our scientists and their work with business produce some of the world’s best research and development. With 400,000 employees working in the industry and when the productivity of drug discovery in the UK (in terms of patents filed per one pound invested) is higher than in any other G7 economy apart from the USA, it is no wonder that 15 of the world’s top-selling medicines were developed in the UK.

World-class brands in biotechnology, pharmaceuticals, healthcare and medical device sectors have chosen to base operations in the UK, making the UK second to the USA as a key life science investment destination.

Biotechnology sector

The UK’s university-based research capability and centres of excellence, many funded by the Medical Research Council and the Wellcome Trust, have acted as a magnet, drawing 40 per cent of Europe’s public biotechnology companies to these shores. The country’s strong track record for encouraging start-ups and bringing products to market is driven in part by the NHS infrastructure for conducting clinical trials and is itself a growing source of bioscience innovation.

The UK’s excellent environment provides easy access for international companies, as demonstrated by the takeover this year by Roche of UK-based drug discovery company Piramed Pharma in a US$160 million deal. A specialist in treatments for cancer and immune inflammatory disease, Piramed was awarded the UKTI bio award “BioEntrepreneurial Company of the Year” in 2007.

The UK provides the best environment for stem cell research and this is largely due to the UK’s clear, comprehensive regulatory framework, a broad base of academic excellence, and its supportive public and private sector funding. Around US$350 million has been invested in UK stem cell research by the UK public and voluntary sectors. A £65,000 investment in this area was made by Korean specialist RNL Bio in an R&D collaboration agreement with Newcastle University. Newcastle also recently established the world’s first Stem Cell Bank – a single, national independent institute responsible for the supply of well-characterised cell lines derived from adult, foetal and embryonic tissues.

With a view to increasing the competitiveness of the bioscience industry still further, the UK Government has announced a high-level review of opportunities and barriers.

“We need the UK’s bioscience industry to continue to innovate, grow and increase its global competitiveness for the benefit of patients and the economy,” said Business Minister Shriti Vadera. “This review will address what more needs to be done to drive development.”

Pharmaceuticals sector

The pharmaceuticals industry accounts for more than 25 per cent of total investment by businesses in the UK, and in 2006 exports alone totalled £13.9 billion. All the world’s leading pharmaceutical companies have significant manufacturing and/or R&D operations here. Two of the world’s top five, GlaxoSmithKline and AstraZeneca, have their global headquarters in the UK, while the world’s largest pharmaceutical company, Pfizer, maintains its European R&D centre here.

A recent investor is Boston-based Solace Pharmaceuticals, which in 2007 opened a wholly owned subsidiary near Canterbury, in the south-east of England. Another is a Japanese-owned company PharmacoGenomic Innovative Solutions (PGXIS). With the help of UKTI it established a UK base in May 2008. Taking advantage of science knowledge based in the UK, PGXIS is progressing the use of genetic information in pharmaceutical development.

In June 2007, UK company Phytopharm announced collaboration with the Beijing Institute. The Institute’s scientists have extensive knowledge of traditional Chinese medicines and their research over the last ten years has led to the identification of a lead product that has the potential to improve memory and concentration. Phytopharm has collaborated with the Institute to develop its memory product, and has been granted an exclusive licence to develop and commercialise it globally.

In November 2007 the Government announced the creation of the UK Centre for Medical Research and Innovation, a new £500 million super-laboratory designed to promote opportunities for businesses to invest in translational projects. Staffed by 1,500 scientists, the centre will open in 2013.

Healthcare and medical technology sector

With a healthcare market of £120 billion in 2006, the UK is home to many of the world’s leading clinicians, scientists and researchers, attracted by world-class research capabilities and a track record of research breakthroughs. The country is a leader in developing cutting-edge healthcare products for a world market, exporting healthcare goods and services in 2006 to the value of over £14 billion.

The sector benefits from a broad base of academic excellence in many of the fields on which medical devices depend, such as biomaterials, bionanotechnology, manufacturing and regenerative medicines. Particular strengths lie in imaging, diagnostics, orthopaedics and innovative interdisciplinary devices, and in medical devices and diagnostics, with world players such as Johnson & Johnson, GE Healthcare, Guidant, Medtronic and Smiths Industries having bases in the UK.

Recent investors include Florida-based US Preventive Medicine, which established its HQ in the UK to deal with all international business outside the USA. In addition to this, US company Bayada Nurses has established a base in Kent to provide rehabilitative, therapeutic, and personal home healthcare services nationwide. Manchester and Belfast also had wins with the support of US companies, with the establishment of MIMIT (Manchester: Integrating Medicine and Innovative Technology) and the European Center for Connected Health respectively, and were all supported by UK Trade & Investment in their location decisions. UK company Parafricta, creators of ultra low-friction garments and bedclothes, attended Medica in November 2007. UKTI’s help in understanding the complex requirements of trade with foreign markets, along with prearranged meetings, resulted in Parafricta signing distribution agreements with Australian and New Zealand buyers at this large global trade show.

To ensure the NHS is equipped to stimulate innovation to the full, the Government has recently established new bodies including the NHS National Innovation Centre, the Centre for Evidence-based Purchasing, the NHS Technology Adoption Centre, and the Health Innovation Council. In January 2008 the Prime Minister emphasised the UK’s drive to prevention rather than cure by ensuring the NHS benefits from new and innovative technologies. He spoke of reforms to encourage plurality of provision, and a genuine level playing field for providers to a more responsive, accessible healthcare system.