Why London is at the heart of life sciences
pharmafile | October 5, 2015 | Feature | Research and Development | NHS
by Eliot Forster
Whatever disease you’re trying to cure, you can bet that somebody in London has it. That probably isn’t the tourist board’s number one message, but in some ways it’s as great a selling point for the city as the Tower of London.
London is the place the whole world comes to live, play and do business. At the last count, around 230 languages were spoken here, and almost every nationality and ethnicity is represented. Because of this, a deep pool of clinical opportunity has emerged in which an increasing number of international life sciences companies are eager to fish.
New figures from London & Partners, the Mayor’s business agency for the capital, show that international life sciences companies created three times as many jobs in London in 2014-15 as in the previous year. Fourteen companies from Europe, Asia and the USA created 325 new jobs and generated £24.35m for London’s economy, compared to eight non-UK companies creating 100 life sciences jobs in the previous year.
However promising these numbers are, they don’t paint the full picture of the diversity of these jobs and the variety of reasons why London was the right place for all these companies. Everyone knows that the UK does great science, but of course we do a lot more than that. From a business point of view, London is beginning to pulsate with life sciences activity.
So what makes London such a hot ticket? Firstly, London is not succeeding in glorious isolation; it is a fully integrated part of a country that excels at life sciences research, development, translation and commercialisation. In particular, the geographical closeness of London, Oxford and Cambridge creates a relatively small and easily navigable region with world-leading life sciences critical mass.
Companies come for different reasons, and naturally our scientific excellence is one of them. When Pfizer based its new Gene Therapy Unit in the heart of London’s Knowledge Quarter, a chief attraction of that location was the proximity of the London, Oxford and Cambridge universities it already has strong relationships with in rare disease research and translation. For Boston-based Mobiquity, our complementary life sciences, tech and digital strengths meant they knew they would find the right people to make their expansion pay.
Underpinning all of this is the world-leading legal, financial and regulatory framework that business needs; it is the meeting of leading scientists and clinicians, a large and diverse patient population supported by a single healthcare system, a lively mix of big industry and SMEs and the global financial clout of the City that makes London such a huge draw. Add to that moves such as Patent Box, R&D tax credits and the corporate tax rate, and the message is clear – the UK is a place that values and supports innovation.
Local and national government support also sends a reassuring and attractive message to international industry. The creation of the world’s first Minister for Life Sciences says more than a thousand words could about the priority the UK is giving to life sciences. The establishment of ‘catapults’ in potentially disruptive and commercially rewarding areas like cell therapy and precision medicine also attracts businesses keen to locate in centres with highly exploitable R&D.
Ironically, as international industry invests and expands in the UK, one of the challenges for our life sciences sector is keeping promising assets growing and building here. Much has been said about the financing ‘valley of death’, which sees promising companies fail due to challenges in accessing funding at particular stages, such as taking late-stage research into clinical development and for phase III trials and beyond.
I don’t need to reiterate the need for much more long-term investment to be available for growing companies with a promising pipeline. If we want to seed another GSK or AstraZeneca, it’s an issue we must address urgently.
It is also a crucial part of our ongoing attractiveness for international investment. Changing business models in the pharmaceutical industry means companies are acting as venture capitalists, investing in new companies and technologies to expand their pipeline and enter new markets at reduced risk. A thriving ecosystem of SMEs co-located with exceptional academic institutions is an irresistible draw.
While the UK still can’t compare with the big American clusters when it comes to liquidity, there are promising signs that we are turning the ship around. When Circassia CEO Steve Harris was looking to float the company, all the experts told him that a US IPO was the only way. He kept his nerve, trusted his own judgement – and in March 2014 led Circassia to one of the biggest biotech listings that the London Stock Exchange has ever seen.
What a difference a year makes; recent weeks have seen a small but significant number of US companies bypassing New York and listing in London. Both California’s Verseon and Boston’s PureTech cite the presence of long-term, knowledgeable investors for their decision, of which the visionary Neil Woodford is the most prominent.
Woodford, of course, is himself a London Stock Exchange success, raising £800m for his Patient Capital Trust in a 10% over-subscribed share offer in April this year.
When MedCity joined Mayor Boris Johnson’s delegation to Boston and New York in February this year, we found genuine enthusiasm for the UK and recognition of our life sciences excellence. There is significant collaboration with our academic centres and an appetite for more.
US companies want to develop bases and carry out clinical trials here as they bring products to the market. However that was partnered with a perception of a timidity and lack of risk-taking over here, particularly from an investment point of view. Cultural change takes time, but I’m confident that we are moving in the right direction – and that international industry sees we are doing so.
So what do we need to do to maintain and develop our London’s status as a place where the world comes to do life sciences business? First of all, we need to keep pushing the message that the UK is open to business, investment, talent and collaboration. That means maintaining an attractive fiscal environment for companies looking to expand, keeping our doors open to talented entrepreneurs who want to set up new businesses and ensuring our immigration rules reflect the fact that the market for life sciences talent is global.
In the past, the major pharmaceutical companies played a valuable role as the training grounds of industry; when Pfizer sold its research facilities in Sandwich, Kent, there was a large and traumatic loss of skilled jobs, but one positive side effect was the creation of many exciting new enterprises by Pfizer’s hugely knowledgeable former staff.
The evolution of the pharmaceutical industry means those training grounds are in shorter supply. This creates a real opportunity for universities to step into that gap, and make sure we are developing the talent that international industry needs in management and leadership as well as in research.
We also need to make the most of one of our major selling points – the NHS. Our health service is a huge asset for life sciences, providing a test bed for industry and supporting major longitudinal studies that would be hard to do elsewhere – most notably, the 100,000 Genomes Project and East London Genes and Health, a research study set up to help fight against heart disease, diabetes, and poor health in South Asian people in East London, where the rates of these and other diseases are amongst the highest in the UK, which are both attracting considerable interest internationally.
But for all its many virtues, the NHS is also highly complex and extremely difficult for businesses large and small to understand and navigate. With the general election now done and dusted, I hope the government will move forward quickly with the innovative medicines review announced in 2014. Government, academia, healthcare, industry, charities and investors need to work together to streamline the route from the lab to the patient. Success in this area will be good for health and for enterprise.
So let’s not take our eye off the ball – but let’s also allow ourselves a moment of celebration. Our sector is in rude health; the new figures on international jobs growth add more evidence to the optimistic buzz that surrounds UK life sciences. Record levels of capital were raised by life sciences companies on the London Stock Exchange in 2014 – £1.25bn in IPOs and follow on offerings.
2014 also saw a 41% increase in venture capital funding for the sector. Our pipeline of new candidates is second only to the USA. Our leading academic institutions are regularly ranked as amongst the world’s best, and are investing heavily in major new infrastructure that will bring R&D, translation and commercialisation ever closer.
Joining the Mayor of London’s delegation to the US East Coast was instructive not only in what we can learn from those major clusters but also in how finely matched we really are. The environment has rarely been more propitious for the UK to establish itself as the place where the world comes for all aspects of life sciences business.
MedCity is a collaboration between the Mayor of London and the Capital’s three Academic Health Science Centres – Imperial College Academic Health Science Centre, King’s Health Partners and UCLPartners. It is supported by HEFCE and London & Partners and works with the life sciences sector across the greater south-east of England.
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