Inward investment report 08/09: life sciences

A rush of deals among the world’s largest pharmaceutical companies is set to inject a new wave of opportunity into the life sciences sector. Pfizer’s US$68 billion takeover of Wyeth kicked off the consolidation in January 2009, followed by Roche’s US$45.7 billion bid for Genentech and Merck’s US$41.1 billion move on Schering-Plough.

Alongside this global consolidation in the sector, the UK’s reputation for creativity and delivery held true. The country’s success in life sciences – with UK companies accounting for 45 per cent of new biotechnology drugs in late-stage clinical trials in Europe – is driven by its rich pool of talent and skills. Its world-class scientific institutions, impressive research base and track record in product development continue to attract and retain healthcare innovators.

Pfizer has announced it will open a centre of excellence for stem cells in Cambridge and has formed Cyclofluidic, a breakthrough technology company, in partnership with USB. The company’s aim is to significantly accelerate the drug discovery process by allowing researchers to test a greater range of potential new medicines in a shorter time. The UK Government’s Technology Strategy Board helped to facilitate the deal and continues to support Cyclofluidic by co-funding its R&D.

Additionally, United Therapeutics of the USA expanded its European headquarters in Chertsey, Surrey, a move likely to generate significant job creation over the next few years. New entrants into the UK included Almirall, Spain’s largest pharmaceutical company, which established a UK headquarters at Stockley Park, near Heathrow, after acquiring a portfolio of products from UK-based Shire.

Sewon Cellontech’s decision to set up an office and R&D facility in Cambridge for its regenerative medical system division was another vote of confidence for the UK. The Korean firm, which provides cell treatments, haematopoietic stem cells, medicines and cosmetics, was attracted by the strength of the UK’s research base, the quality of its academic institutions and the presence of like-minded companies in the Cambridge area.

The UK’s infrastructure and its potential as a springboard to mainland Europe, attracted Biocon, an Indian company developing biopharmaceuticals for diabetes, cancer and inflammatory diseases, to set up its European headquarters in the UK. UKTI, with Think London, introduced Biocon to potential academic research partners and helped to select its London location.

The healthcare and medical technology sector also remained buoyant, helped by the UK Government’s continuing commitment to increase investment in the NHS. The NHS acts as a highly effective incubator of life sciences achievement, boosted by its close relationship with UK centres of academic excellence and its focus on the progress of translational medicine.

This proved a draw for AgaMatrix of the USA, which develops and manufactures products designed to improve the quality of diabetes care. The company announced in June 2008 that its new European headquarters would be based in Oxfordshire. It is working with the NHS to develop WaveSense, a new technology that personalises each diabetes test to provide world-class accuracy. UKTI helped AgaMatrix find a way into the NHS through its extensive network of contacts.

Healthcare themes and emerging trends

Stem cell research remained highly topical following US President Barack Obama’s funding reversal. The UK, well established as a world leader in the field, is looking forward to increased collaboration with US institutions. Additional funding and the removal of funding restrictions would allow Britain’s premier institutions to further their existing collaborations and expand into new areas of research.

In the healthcare and medical technology sector, UKTI received an upsurge in inquiries about telehealth, telemedicine, medicines for children, translational medicine and dentistry. In addition, UKTI is progressing enquiries across a broad range of disease areas and treatments including neurosciences, oncology, infectious diseases, vaccines, monoclonal antibodies and tissue engineering.

Regulatory developments

The UK Government agreed a new Pharmaceutical Price Regulation Scheme (PPRS) with the industry in February which will provide a stable and supportive environment for pharmaceutical companies for the next five years.

Importantly, the new agreement introduces a more flexible pricing regime, allowing companies to raise or lower list prices following evidence about a drug’s efficacy, or if a product proves useful for different treatments. Furthermore, the National Institute for Health and Clinical Excellence (NICE) will now assess the drug at this new price for clinical and cost-effectiveness.

The agreement also sets out a more systemic approach to Patient Access Schemes. These schemes can improve the cost-effectiveness of drugs, so giving patients access to medicines that would otherwise be considered too expensive.

In July last year Lord Darzi published “High Quality Care for All”, the final report of his Next Stage Review of the NHS. The report centres around increased patient choice, partnership between key players and quality care. It sets out an environment within which innovation can flourish, ensuring that effective medicines and medical technologies are adopted, and creating new partnerships between the NHS, universities and industry to develop pioneering new treatments.

Looking ahead

The newly formed Office for Life Sciences will be the driving force in healthcare innovation in the coming year. Led by Lord Drayson, Minister for Science and Innovation, the Office comprises officials from the Department for Business, Innovation and Skills, the Department of Health and HM Treasury.

Its focus over the next six months will be to take swift action to improve the operating environment for the pharmaceutical, medical biotech and medical devices sectors. Its work will contribute to Government initiatives to establish a “new industrial activism”, to improve the UK’s business environment for leading industries.

One of the key objectives of the Office will be how best to market and communicate the UK’s strengths in life sciences to the world. UKTI will play a lead role in this work, drawing together business, academia and government to ensure that the UK message is coherent and compelling to overseas purchasers and investors.