Reforms to funding and innovation in the NHS are a good idea, but they may not yield blockbuster companies, says Geoffrey Owen.
The Brexit vote came as a shock to the British life-sciences industry. But could what seemed to be a disaster be turned into an opportunity? According to a report by the government’s life-sciences adviser John Bell, published at the end of August, leaving the European Union could, if managed carefully, “be used as a catalyst to take steps to speed the growth of the life-sciences sector in the UK”.
Bell’s report on the life-sciences industrial strategy recognises the problems that may result from Brexit, and urges the government to mitigate them—for example, by ensuring that immigration rules are flexible enough to permit the recruitment of EU scientists.
He also wants the UK to continue to work closely with the European Medicines Agency, pointing out that “the UK market is too small, even with the fastest and most innovative regulatory system in the world, to stand alone”. He favours continuing involvement in European programmes such as the Innovative Medicines Initiative. How far the government can act on these recommendations will depend on the outcome of the Brexit negotiations.
The main thrust of the report is not on Brexit, however, but what the UK can do independently to strengthen the life-sciences industry.
Some of the proposals are ambitious, not least the suggestion that the government should set up a Health Advanced Research Programme to take on high-risk “moonshot programmes” in health care. The goal would be to create two or three new industries over the next 10 years, with the support of funders including the NHS and industry.
Bell is evidently impressed by the Defence Advanced Research Projects Agency in the United States, famous for risk taking and for starting the research that led to the internet (its failures are often forgotten). Whether the government can afford to back HARP and also expand UK Research and Innovation is open to question.
On UKRI, the report says that science funding needs to be modernised to take more account of cross-disciplinary research. Bell also criticises past research council funding for making little contribution to emerging areas such as gene editing, and argues that new funding mechanisms are needed to support high-risk research that could lead to significant breakthroughs.
No less important than reinforcing the UK science base is the need to make better use of the NHS as a partner, customer and supplier of data to the life-sciences industry. There should be far more interaction between industry and the NHS in the evaluation of products. At present, access to and diffusion of new medicines in the NHS is often slower than in other countries. Bell rightly insists that the NHS should be more innovation-friendly.
Another weakness in the British system, according to Bell, is the dearth of long-term capital to support young firms as they move from research to commercialisation. Too many companies have been sold too early, often to overseas buyers, before they have reached maturity.
On this issue, Bell sees lessons in continental Europe, where several successful life-sciences companies are controlled by foundations or families, and are thus protected against takeover.
He points to Cambridge Antibody Technology, bought by AstraZeneca in 2006, which might have grown into a sizeable, independent pharmaceutical company if patient investors had provided support when it needed funds to scale up. He suggests greater use of dual-class shares, common in the US, which allow business founders to raise capital while retaining control.
Bell criticises the conservatism of UK investing institutions, most of which shy away from high-risk life-sciences firms. But the underlying problem here is not so much conservatism, rather that the UK biotechnology industry has not produced enough big successes since its birth in the 1980s.
UK-based investors have seen little to encourage them to devote time and effort to understanding the life-sciences industry. It made more sense to invest in the US, where the biotech industry is larger and more profitable.
Bell sets a goal for the UK to create four life sciences companies valued at more than £20 billion in the next 10 years. But given the continuing trend for promising start-ups to be acquired by pharmaceutical companies—often the best way of ensuring that novel technology is commercialised—there must be some doubt over whether this is realistic. Access to finance could certainly be improved, but it is also important that the UK remains open to inward investment, some of which will involve acquisitions.
Geoffrey Owen is a visiting professor at the London School of Economics and Political Science, former editor of the Financial Times, and co-author with Michael Hopkins of Science, the State and the City: Britain’s struggle to succeed in biotechnology (Oxford University Press, 2016).
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This article also appeared in Research Fortnight