The place of Bioscience in the UK s Industrial Strategy

Introduction The place of Bioscience in the UK s Industrial Strategy BACKGROUND DISCUSSION DOCUMENT 21 November 2016 As the UK Government develops its Industrial Strategy, and looks to refresh the 2011 Strategy for UK Life Sciences, this document sets out the importance and potential of bioscience to the UK s future. The UK has a strong history in bioscience and successive governments of different political persuasions have built upon the efforts and progress of those before them. This continuity and commitment has put the UK in a position to rival the US bioscience clusters of Boston and San Francisco. In 2015, the BioIndustry Association published its ten-year vision for the UK to become the third global bioscience cluster 1. It set out the ambitions of the sector and the challenges that must be addressed to achieve them. The Industrial Strategy is an opportunity for the sector to work with the Government to put in place policies that will help achieve that vision. A Government discussion paper is expected to be published around the Autumn Statement on 23 November. Over the coming months, the BIA will work with its 300+ members and the Government to develop specific policies to support UK bioscience; these will be guided by the need for sector-specific policies that will unlock the its unique potential, and industry-wide policies, including investment in R&D and skills and creating the right fiscal and trade environment for businesses to thrive. Our vision Our vision is to build the third global bioscience cluster a vibrant world-leading cluster, of the size and scale of Greater Boston today, as befits our great academic system. It will retain its distinct identity, be forward thinking in its priorities and be focused but mature further to drive global impact. From that vision flows five ambitions for the UK biotech cluster by 2025, it will be: 1. delivering obvious benefits to humanity, especially via improved health 2. distinct and differentiated, built off the UK s unique health assets and science capabilities 3. a thriving, well-structured innovation cluster consisting of a strong pyramid from large companies through to mid-cap to innovative start-up with: more than three top pharma companies headquartered in the UK all top 10 pharma sourcing deals here a strong tier of mid-sized companies a vibrant support services sector 4. able to build, attract and retain global management talent that is second to none 5. Europe s clear biotech leader, and widely acknowledged to be in the global top three Where we are today building on success We are building on emerging success in bioscience, supported particularly by the great fiscal climate in the UK, the Biomedical Catalyst and a strong pipeline of innovation. We are also starting to tackle complex issues like regulatory reform and innovation in the NHS. Overall, the system is feeling brighter than it has for many years, and more joined up. 1 The BioIndustry Association (2015), Building the third global cluster: State of the Nation 2015: https://goo.gl/sr1gnv www.bioindustry.org

Successful continuity The UK bioscience sector has benefited from at least a generation of industrial strategy (Box 1). We are half way through the present ten-year 2011 Strategy for UK Life Sciences created by the Coalition Government and continued by the Conservative administration. Key elements of it are working early access, regulatory reform, the Biomedical Catalyst but there is more to do. We have continued and built upon earlier successful policies from governments of different political make-ups (Box 2), from Margaret Thatcher, through Tony Blair to David Cameron. Box 1 - Industrial Strategies for biotechnology, 1980-present The Spinks Committee Report 1980 Biotechnology Clusters a report led by Lord Sainsbury, 1999 Biosciences 2015 a report to Government by the Biosciences and Growth Team, 2003 A review of UK health research funding, a report by Sir David Cooksey, 2006 The Life Sciences Blueprint 2009 Innovation, Health and Wealth 2011 The UK Life Sciences Strategy - 2011 Box 2 - Key policies for biotechnology, 1980-present 1980 Margaret Thatcher establishes Celltech, a publicly- and privately-owned firm to kick-start the biotechnology industry 1984 the state-owned British Technology Group s monopoly on publicly-funded research intellectual property is abolished 1995 the Alternative Investment Market (AIM) is launched by the London Stock Exchange, providing a source of public capital with lighter-touch regulation than the main market, which largely prevent biotech from listing. 1997 the new Labour Government introduces the Enterprise Innovation Scheme (EIS) and Venture Capital Trusts (VCT) to increase availability of venture capital 2000 R&D Tax Credits scheme introduced 2006 the National Institute for Health Research is established to make the NHS more receptive to research and innovation 2009 the Office for Life Sciences is created 2012 The Biomedical Catalyst is launched (refilled in 2013 and 2016) 2013 the Patent Box is introduced (first announced by Gordon Brown in 2009) At the heart of the Innovation Economy across the UK regions The life sciences sector makes a significant contribution to the UK s strength in innovation, which is a critical success factor for modern economies. The sector invests more than any other in the UK on R&D ( 4bn, 2014), has a turnover of more than 60bn a year, and generates annual exports and a trade surplus worth 30bn and 3bn respectively. It sustains high-quality jobs across the UK, with two-thirds of the sector s 220,000 jobs outside London and the South East. For example, the Speke corridor near Liverpool has a long history of major clinical and commercial biologics manufacturing and continues to attract significant investment, such as Allergan s Biologics R&D Centre of Excellence. Ipsen manufactures Botox in Wrexham and snake venom antidote is produced by BTG in rural West Wales. And the UK s two largest pharmaceutical companies, GSK and AZ, have almost 23,000 employees spread over 25 sites from Scotland to the South West of England. This shows that the value of the sector reaches all parts of the UK. Addressing national challenges: productivity and an ageing population Life science manufacturing employees have the highest Gross Value Added (GVA) of any high-technology sector over 330,000 per employee, delivered in part by commercialising new technologies such as genomics, personalised healthcare and Advanced Therapy Medicinal Products (ATMPs). Bioscience and the Industrial Strategy Page 2

Products developed by the UK biosciences sector address the major health challenges faced by our society, such as an ageing population, dementia and cancer. The sector also underpins the Government s commitment to address global health challenges such as antimicrobial resistance (AMR), HIV/AIDS, and malaria. Medical technologies, including emerging digital technologies and devices, are creating substantial opportunities to improve NHS efficiency and deliver improved UK healthcare. Opportunities and challenges as the UK leaves the EU As the UK prepares to leave the EU, delivery of an internationally-competitive industrial environment for the bioscience and life sciences sector, and industry in general, is more important than ever. The fundamentals of UK bioscience that underpin our vision remain strong. And the decision to leave the EU creates new opportunities as well as challenges, including greater freedom to design innovation-friendly law and regulations in areas such as genetic modification and cell-based therapies, and allow better targeting of tax incentives to key sectors that will lead the UK s future economy. However, there are questions over sources of funding science and innovation, the inter-operability of international regulation, and the attractiveness of the UK for global talent. The industrial strategy is an opportunity to address these to secure a positive outcome for the UK as it exits the EU and maintain us on course to achieve our vision by 2025. The Industrial Strategy should capitalise on the UK s strengths in bioscience. An industrial strategy that supports the sector will help attract investment to the UK, stimulate the growth of our domestic industry, deliver effective and efficient healthcare for future generations, and demonstrate that the UK is open for business. Policies to support the UK bioscience sector The following are policy options for discussion and further development by the BIA, Government and wider life sciences community. Increase availability of growth capital UK bioscience companies require greater access to growth capital to fund later stages of R&D, however, the large funds required and long timelines to return on investment act as barriers. Increased access to finance could be achieved through, for example: opening-up retail investment opportunities through BIA-proposed Citizen s Innovation Funds or other forms of tech ISAs establishing large funds (total > 500m) with Government money matched with private investment changing inheritance tax relief to support intergenerational ever-green investment unlocking pension fund money through regulatory changes and creating incentives for pooled council pension funds to invest in Industrial Strategy-aligned portfolios Capitalise on the high-value manufacturing potential of advanced therapies It is clear that Ireland has successfully targeted new medicine manufacturing sites as a key sector for jobs and growth for a generation, the UK is at risk of losing out as a result. The UK has a world-leading position in the discovery and development of advanced therapies, putting it in a strong position to capitalise on the establishment and growth of an emergent industry that will manufacture and deliver them to patients. To achieve this, the government should enact the recommendations of the ATMP Taskforce, which will: cement global competitiveness, including the establishment of a clear route to market and the clinic boost the UK s capability to meet demand for ATMP manufacturing and supply build a skilled workforce and enduring talent pool. Bioscience and the Industrial Strategy Page 3

Make the NHS an innovation engine The NHS must be better able to support and use innovation to the benefit of both UK health and the broader innovation agenda. This can be achieved though, for example: taking forward the recommendations of the Early Access Review, including a funded Early Access to Medicines Scheme (EAMS) and creating a truly-digital health service to allow access to fullyconnected longitudinal datasets new systems and processes to make the NHS a global destination for clinical trials and accelerate delivery of the latest medical innovations to patient through Advanced Therapy Treatment Centres new incentives, both to Trusts and between the NHS and private sector innovators for instance, effective risk sharing and the ability to invest in new therapies Cross-sector policies to support UK industry The following are policy options for discussion and further development by the BIA, Government and wider life sciences community. Public support for R&D and technology transfer Government support for early-stage public and private research and innovation is key to underpinning the UK s high-tech industries and increasing productivity. Research infrastructure in the NHS and world-leading facilities such as the UK Biobank and Diamond Light Source represent fundamental strengths of the UK ecosystem that attract global R&D companies. The government must increase investment in basic, translational and clinical research in the academic community to maintain our world-leading research base. Ongoing investment in research infrastructure is also essential to provide world-class facilities for academic and industry use. Innovate UK s budget should increase and the Biomedical Catalyst must continue with year-on-year funding. Industry should also be engaged in any evaluation or review of Innovate UK s funding mechanisms. The UK needs to improve the current technology transfer operational model to ensure that intellectual property generated in academia is commercialised to its fullest potential. This should include increasing the interactions of academia with industry and vice-versa. A skilled workforce The UK s future prosperity depends on industry s ability to develop, attract and retain a highly-skilled workforce. The life sciences sector provides a range of career opportunities at all levels, from advancedmanufacturing technicians trained through the apprenticeship system to PhD-level research leaders. The sector is also supported by a large supply chain and services industry, including legal, financial and commercial services. The planning, funding and delivery of skills training should be led by government and industry in partnership. This should identify key skills areas in which the UK wants to excel, and tailor funding, curriculums and apprenticeships/industrial placements accordingly. Focus should be given to building career routes through vocational and other non-degree based tertiary education. The government should develop an immigration system which facilitates ease of movement for skilled students, researchers and workers. The system should be needs-based, straightforward, rapid and provide certainty of outcome. Fiscal incentives for private investment in innovation The UK has built a globally-competitive tax environment over a generation, which has helped cement it as a premier destination for R&D. Well-targeted incentives for investment in innovation are vital to support and grow UK industries and attract foreign investment. Tax incentives to encourage businesses to invest in R&D (R&D tax credits and Patent Box) must be maintained and remain globally competitive. Bioscience and the Industrial Strategy Page 4

The government should maximise the potential of tax-advantaged schemes and refine financial regulation to encourage private investment from individuals, banks and funds. These should be better targeted towards truly innovative research intensive companies, supporting higher-risk activities. A focus on growth capital is especially required. Inward investment and international trade Global industries such as the life sciences are reliant on a stable business environment and the ability to move goods and capital across borders. As an open trading nation with a competitive fiscal environment, the UK is currently seen as a very attractive destination to base business operations, which is a hard to win achievement but easy to lose. Customs duties, import VAT, border controls and capital controls should be minimised as much as possible. The government should support exporters by leading trade delegations with industry. Industry must also be closely involved in the negotiation of international trade agreements. Next steps There is optimism and ambition in the sector to build on the UK s bioscience success, and to work closely with Government to create the right conditions for innovation to flourish and for the UK to reap the rewards. This will require continuity in the direction of Government policy adding to successful strategies that have come before and long-term thinking to deliver. The BIA and its members are already working collaboratively with the Government on the opportunities and challenges of Brexit. Over the coming months the BIA will expand this work through its advisory committees and bespoke member workshops to seize the opportunities presented by a new Industrial Strategy and refresh of the Strategy for UK Life Sciences. Bioscience and the Industrial Strategy Page 5