February 5, 2012 4:02 pm

Criticism over life sciences fund spending

Just a single life sciences company domiciled in the UK has so far received money from a £200m government fund set up two years ago to boost investment in the sector.

CN Creative, a manufacturer of “electronic” cigarettes designed to wean smokers off less healthy alternatives, is the sole company to receive support from the Future Technologies Fund, at a time of growing concern over the UK’s ability to sustain a new generation of biotech companies developing experimental medicines.

The UK FTF, established by the previous Labour government to boost the UK’s role in life sciences, advanced manufacturing and information computing, has so far placed into venture capital funds just over one-third of the money it generated, as it passes the halfway point towards its deadline of February 2014.

The slow pace of progress has triggered criticism by industry experts and politicians. George Freeman, a former venture capitalist and Conservative MP advising the current coalition government on its life science policy, who is sceptical of millions of pounds left unspent from previous public schemes channelled via fund managers to stimulate the life sciences, said: “Launching funds is relatively easy. The real challenge is removing barriers and creating incentives that change behaviour.”

He contrasted the FTF with his administration’s Catalyst Fund unveiled last December, which has earmarked £180m for “translational research” seed funds administered by scientists and experts to stimulate promising early-stage projects by fledgling companies, clinicians and academic researchers alike. “It is not a fund that will be paying fees to managers or paying for things that would have happened anyway,” he said.

Officials at the European Investment Fund, which won the mandate to manage the FTF “fund of funds” from the government, say they have invested nearly £70m to date into venture funds, which have in turn so far bought stakes in 24 companies including five in the life sciences – four domiciled outside the UK.

They stress that they are on track, and close to placing significant investments into two more venture funds. They add that it takes time to identify suitable investments and it would not be unusual to extend such a four-year programme by one year, with returns generated a further six to seven years later.

Moreover, the EIF argues, it has fulfilled its mandate to double the £100m in government support for investment, although all the matching funds came from the EIF’s own facilities, which are also ultimately controlled by member states – including the UK as a 16 per cent shareholder in the institution.

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