UK pharma’s ‘Golden Triangle’ faces competition from new challengers

pharmafile | June 29, 2015 | Feature | Manufacturing and Production, Medical Communications, Research and Development, Sales and Marketing |  BioGateway, Cambridge, London, Oxford 

The UK’s medical and scientific base is regarded as one of the world’s best. But the bulk of the pharma industry that depends on it is located in the Southeast of England, and within that it is largely dominated by the so-called ‘golden triangle’ or research sites in Oxford, Cambridge and London.

While the UK life sciences sector generated £56.2 billion for the UK economy in 2014, government figures published by Office for Life Sciences show “the pharmaceutical sector in the UK has significant concentrations of economic activity in the Southeast”. Companies based in the region contributed more than £8 billion – or a quarter – of pharma’s £32 billion turnover in 2014.

The three cities in the London-Oxford-Cambridge golden triangle alone are home to universities consistently rated in the world top 10, and five out of seven of the UK’s seven Academic Health Sciences Centres.

In recent years, other areas in the Southeast have sought to break the golden triangle’s dominance. The latest is Kent, where Pharmafile attended the launch of the BioGateway, a network of life science companies based in the county. The event was held at the Discovery Park, the former site of the Pfizer R&D facility in Sandwich.

The Pfizer site closed in 2011 and looked set to devastate the prospects for life sciences R&D in the area. At the time it closed as part of a $1 billion global cost-cutting exercise, Pfizer’s Sandwich site hosted the firm’s European R&D facilities – Viagra was discovered at Sandwich – and employed 2,400 people. When it shut down with the loss of some 1,750 jobs, the prospects for the area and UK pharma R&D looked distinctly bleak.

Life after Sandwich exit

However Tommy Dolan, who is vice president of Pfizer, told Pharmafile says the company has been able to turn the closure of its R&D site in Kent to an advantage for the business.

“One of the advantages is that we have the ability now to focus on certain areas, which has really allowed us to get a positive message in to government,” he says.

“When you align some of the things that happened here with the government’s drive to be strong in the design and manufacture of medicines, because we design and supply clinical trials here and have a real focus in that work, that aligns with government and gives us a very strong message in to government about what is needed to be strong and successful in this area.

“I think the scale of what we’re operating here means now we have a very significant voice in the government debate – more so than I think we would have had five or 10 years ago.”

The former Pfizer spot was sold to a private consortium in 2012, who have rebranded the site as the Discovery Park – and promptly set about attracting new investment and talent to the 297-acre area.

And in something of a U-turn Pfizer took a lease of around 250,000 square feet of offices and laboratory space in the Discovery Park. The US pharma giant now employees around 750 staff and contractors at the site, which is now used for clinical trial support functions, as well as it medical regulatory and quality assurance functions.

Boosting Kent biopharma

Other pharma and life sciences companies, including Mylan, have also located at the Discovery Park, where around 1,000 people are currently employed.

And to support the renaissance of the former Pfizer site at the Discovery Park, professional networks are springing up to champion the interests of pharma and other life science companies in the area – and attract new ones to locate there.

BioGateway is a professional network of life science companies, associations and institutes with ambitions “to build Europe’s most complete life science network and create an environment which will stimulate and enhance evolution and success… by building on Kent’s unique gateway into Europe.”

Simon Westbrook, chief executive officer of biotech company Levicept – which is based in Discovery Park and is member of the BioGateway, says the advantages of a location outside of the Golden Triangle are clear.

“Companies are attracted to areas like Kent, which are still in the Southeast and benefits from all of the infrastructure and transport links, but are far cheaper to locate in than the cities in the ‘golden triangle’.

“The rents in Cambridge have reached $800 per square metre for month on average – that’s going to drive out smaller biotechs for whom that is just not affordable nor sustainable.”

BioGateway is part-sponsored by Pfizer, and Dolan says that the investment is a validation of the company’s ongoing commitment to the Kent area, despite the closure of its R&D facility.

“The BioGateway adds value by allowing the Kent region to compete regionally in the Southeast. It’s a very vibrant area and it’s important to build on that, both for the Kent and the UK. It’s an important for us regionally to address some of the challenges that we need to overcome to be successful nationally.

“As for Pfizer – we’re still here; we’re an essentially part of the delivery of new medicines through Pizer’s global network. We’re very proud to be part of Discovery Park and a sponsor of BioGateway. It’s a win-win for Kent and for the UK as well.”

“The advantage is that if you can bring together diverse companies where maybe naturally you would see a partnership or business opportunity, the proximity can provide new opportunities in areas where there are competitive wins for the region that’s the right fit and provide value to the UK economy as well.

Kent is of course home to other life science hubs, including the Kent Science Park in Sittingbourne, and faces competition from other parts of the UK that are also seeking to establish themselves as challengers to the golden triangle cities in the UK.

UK competitors

The North West Regional Science Park is based in Northern Ireland and was backed by a £12 million investment to allow the construction of a 50,000 square foot commercial and research centre science park facility.

And the Manchester Science Partnership is based in Alderley, where it houses a community of innovative science and technology businesses in the UK’s largest science park operator with five sites across the North West.

Alderley could benefit from future investment in transport and infrastructure if Chancellor George Osborne pushes through plans for a ‘Northern Powerhouse’ of economic growth, which he says would ‘rebalance the national economy’.

Yet Alex Watson, chief executive officer of BioGateway, says there’s more than enough room within UK pharma for all of these hubs. “There’s certainly room for all of us in the UK pharma space. It’s a global business and I don’t see it as at all competitive”, he says.

And Dolan agrees. “There are benefits in Kent in terms of the cost base, the environment and the skill base that already exists here. It would be difficult to set up something de novo to compete with the triumvirate of Oxford, Cambridge and London but we can be complimentary,” he adds.

However, the ivory tower sites of life sciences research are not standing by while other areas secure investment. This month Cambridge’s Granta Park announced that Illumina is signing a 20-year lease for a 155,000 square foot scientific research building in the park, which will serve as the new European headquarters for the genomics firm. Illumina will be joining Takeda at Granta Park, who also have a custom-built facility in the area.

Doug Cuff, who is UK regional director of Granta Park’s leaseholder BioMed Realty, tells Pharmafile: “Cambridge has grown into one of the four core life science markets in the world due to the presence of a top-tier research university and the renewed commitment of the UK government to support its life science industry.”

But he concedes: “There are other strong markets here such as London, Oxford and Manchester that have some of the key elements to recruit, retain and grow life science companies, but our recent announcements of bringing Illumina and Takeda Pharmaceuticals to Cambridge reflects how Cambridge has developed into a world-class innovation district with plenty of opportunity to grow.”

This month London Mayor Boris Johnson announced he is considering plans for a £10 billion ‘megafund’ that would make it easier for pharmaceutical companies in London to develop ground-breaking new drugs and treatments.

Speaking at a conference at MedCity, the initiative launched by the Mayor in 2014 to drive forward life sciences research, development, entrepreneurship and commercialisation in London, Johnson called for “a radical new approach to life sciences investment is needed if London and the rest of the country is to maximise the full economic and health benefit of its world-leading research and development base.”

“London is one of the most powerful scientific discovery engines in the world, home to an incredible cornucopia of research, medical and financial pre-eminence”, he continued. “We hope to harness our role as a global financial centre that will bring more life-saving drugs to market and deliver a huge boost to the economy.”

Need for investment

While Eliot Forster, executive chair of MedCity, says: “If you compare the UK to other leading life sciences hubs, we are extremely competitive – we have huge innovation, creativity and entrepreneurial drive, and we are increasingly agile in translating exciting research into spin-out companies.

But he adds: “Capital is a key ingredient that grows those companies and brings therapies to market, and at the moment we simply don’t have enough of it. If we want to develop another GSK or AstraZeneca, if we want to get a full return on the investment we put into our research base, and if we want better therapies more quickly, this is an issue we have to address.”

A megafund would aim to bring together investors who would not normally invest in biomedical research and drug development. In return they could have a small percentage of the royalties from successful products or licensing revenues that result.

The megafunds could potentially be created using a mix of debt and equity finance that would be able to be invested simultaneously in different drugs at different stages of development. By pooling various drug development projects in a single investment portfolio, the overall risk for investors would be lower, with a much higher chance of bringing projects to fruition. This model is well-known in the financial services sector – but would require reworking to tackle the key differences in scale and complexity of life science projects.

Another option would be to make use of a new financing and advisory programme set up jointly by the European Commission and the European Investment Bank. The initiative helps to share best practice between innovation and life science focused companies seeking to attract public and private investment in life sciences, which is expected to provide more than £17 billion of new financing for research and innovation across Europe in the next five years.

Additional options for incentivising a more patient approach to investment being considered include tax incentives for investors who hold onto shares for more than 10 years, to encourage them to behave more like owners and grow larger companies, and capital gains incentives where lower capital gains tax is paid the longer it takes to get a return.

The MedCity conference was attended by bosses at several pharma firms with a presence in the UK. Dr Tim Luker, director of external innovation at Eli Lilly says: “Lilly welcomes City Hall’s ambition to put London at the forefront of biomedical research, investment and funding. We believe that only though research collaboration and new funding models can we speed the discovery of new medicines to treat the world’s most challenging medical conditions.”

And Dr Belen Carrillo-Rivas, head of R&D innovation projects in worldwide R&D at Pfizer notes: “Given that the scientific and technical expertise exists in the UK potentially to make major breakthroughs…. We hope that discussions such as these that the Mayor’s office is hosting can help support scientific advances.”

The UK end-goal

The longer-term goal for the industry should be to drive investment in UK biopharma over the next decade to make it a credible challenger to the global hubs in Boston and Silicon Valley, California.

This aim has already been stated by the BioIndustry Association, which says the UK has the potential to grow the sector into a global leader over the next decade – which would have the capacity to take four times as many drugs and other innovations into clinic and to patients, and attract private investment of £2.9 billion a year.

To meet these ambitions will require multiple thriving R&D hubs, and crucially, investment in the companies that operate all over the UK. Flying the flag for the life sciences prospects of the UK – in the golden triangle and elsewhere – falls to Mark Treherne, chief executive of the UK Trade and Investment’s Life Sciences Organisation (LSO).

The LSO is a dedicated government unit that supports overseas investment into the UK and exports from the UK from the earliest R&D collaborations through to clinical trials, commercial operations and partnerships.

“The UK pharma industry certainly can’t just keep on doing things the same way we have been for the last 20 years,” Treherne says. “Drugs now are very expensive and so we have to show clinical and financial utility for every pound that’s invested in UK pharma, and reduce the high attrition rate in the healthcare sector.”

Speaking at the BioGateway launch, Treherne said there has been a consistent increase in life sciences investment in the last three years, over which time the LSO brought in investment in over 180 businesses and created more than 5,500 jobs.

As he says: “We need to make the whole of the UK more competitive, by increasing investment in the regions. The UK is the number one place for foreign direct investment in Europe and we have to keep it that way.”

Lilian Anekwe