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November 19, 2013 10:01 pm
In an empty field on the southern outskirts of Cambridge, Pascal Soriot is overseeing investment in an ambitious new complex to reap the benefits of what he hopes is a vibrant future for the evolving British life sciences sector.
Earlier this year, the new chief executive of AstraZeneca dealt a blow to the UK’s pharmaceutical industry when he announced the closure of the Anglo-Swedish group’s historic research centre in Alderley Park near Manchester, as well as its London headquarters, with the loss of hundreds of jobs.
Yet in its place, he has put his faith in a newer approach to drug development in a different location, where he wants company scientists to work more closely with university and charity researchers, hospital doctors and independent biotech companies.
He is not alone in aggressively pruning his organisation. In 2011, Pfizer shut its sprawling but isolated postwar research centre at Sandwich in Kent. GlaxoSmithKline has cut back some of its operations north of London. And, in recent weeks, Shire has unveiled plans to scale back research at its former Basingstoke offices in Hampshire, while Novartis is shutting its Horsham unit in West Sussex.
“The whole pharma landscape around the world is going through tough times and we are not immune,” says Mark Treherne, chief executive of the government’s Life Science Investment Organisation. “There are fewer net jobs in big pharma, but you have to look at the whole food chain.”
He points to a compensatory growth in smaller biotech companies, clinical research organisations and other niches in life sciences, notably in medical devices.
While Mr Treherne attempts to present a government policy of “UK first” without any local bias, many recent investors have focused on the “golden triangle” that takes in Cambridge, Oxford and London.
In central London, for instance, that includes Johnson & Johnson, which has opened an innovation centre, one of a handful around the world. There are also the headquarters of grant-giving organisations led by the Wellcome Trust and Cancer Research.
The Francis Crick Institute for biomedical research is also set to open in 2015.
Mr Treherne says his “competition” in attracting inward life science investment is often other EU countries. “Most people looking at the European market consider the UK as a gateway.” He cites advantages including flexible labour laws, an extensive ecosystem of suppliers, tax benefits, and the European Medicines Agency HQ.
Mr Treherne points to a life science sector that still includes 4,500 companies employing 165,000 staff, spends nearly £5bn on research and development, and has an annual turnover of more than £50bn.
Steve Bates, head of the BioIndustry Association, a trade body, shares his optimism. He points to the UK’s traditional strength in scientific research, its language and facilities for families. He cites a report he commissioned from EY, the consultancy firm, arguing that the UK has the strongest bioscience cluster in Europe, ranking below New England, San Francisco and San Diego in the US.
He cites initiatives including the Biomedical Catalyst and the Technology Strategy Board to help support fledgling drug developers, and the “patent box”, which provides tax credits for companies registering their intellectual property in the country. “The Spanish are trying to emulate it and the Germans are complaining, so it must be attractive,” Mr Bates says.
Chris Brinsmead, a life science business adviser to the government, points to efforts to ease red tape around clinical trials. “A lot of people like to talk about the negatives, but there are now more anecdotal success stories too,” he says.
Prime minister David Cameron, has unveiled efforts to scale up genetic testing in the NHS and integrate the health service’s patient data more effectively so that researchers can gather better information. Others are more cautious. Funding remains tight, from government financing of promising early-stage academic projects to the modest appetite of the equity markets for initial public offerings from the more-established biotech businesses.
Larger drug companies express greater frustrations at the UK’s approach to the approval and uptake of innovative medicines.
That includes the role of the National Institute for Health and Care Excellence (Nice), which advises the NHS on which new medicines are safe and cost-effective. They also point to poor uptake in the NHS of even those medicines that are recommended by Nice.
The latest drug pricing agreement with industry caps growth in the medicines bill to the NHS, but allows companies to set their prices freely and creates scope for the health service to pay for costlier new medicines if the manufacturers provide discounts on older products.
“There is a danger of disconnect between all the positive messages coming out in support of life sciences, and what’s really happening on the ground,” warns Chris Stirling, UK and global head of KPMG’s life sciences practice.
“The NHS is under significant funding pressures. My worry is there is a danger of pushing too hard,” he says.
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