UK Biotech Gains Momentum

Bates: Things are changing for the biotech sector in the UK. We are certainly seeing some more positive signs. The global economic crisis hit our sector hard and companies retrenched, reconsidered their options, but in most cases, survived.

The UK has the largest biotech pipeline than any biotech cluster outside the US. It has a vibrant tranche of companies at all stages of development, an enabling environment for start-up companies to develop, and is the best place in Europe for raising innovation capital.

PTE: What drug development trends have you seen during the past decade. Do you expect things to change over the next few years?

Bates: The past decade has seen the rise of biologics, such as monoclonal antibodies, and this class of therapeutics now make up around half of the global biopharmaceutical pipeline. Now we are seeing the development of more advanced therapy medicinal products, including cell and gene therapies.

Knowledge gained from the human genome project, coupled with greater understanding of biology and access to cheaper genome-sequencing technologies has seen the development of more stratified therapies. Additionally, many companies are now looking at how epigenetic changes affect disease management.

PTE: What key challenges do biotech companies in the UK face when it comes to developing new and improved therapies?

Bates: Finance is the biggest challenge for companies in the UK. This has been the case for several years now and affects companies at all levels. In part, this challenge has been down to the general economic environment, the more risk-adverse nature of investors here and also due to the relatively small number of investors that understand healthcare.

Nonetheless, there are investors who continue to recognise the quality of science in the UK biotech sector, and the UK leads Europe in innovation capital raised as well as the number of financing rounds. The total capital raised in the UK in 2012 was driven by financings of more than €20 million for private companies PsiOxus Therapeutics, F2G and Cell Medica and public company Vernalis (1). However, the UK and other European countries still trail behind most of the main US biotech clusters in innovation capital raised.

In recent years, venture-capital investors have taken a more asset-focused stance with the goal of taking a particular therapy to a certain stage before selling it. However, in the past year, there have been a couple of funds such as Syncona Partners and Cambridge Innovation Capital that have said they are looking to create companies.

PTE: How is the UK’s pricing and reimbursement policy affecting drug development and the biopharmaceutical market?

Bates: I’m concerned about the changes to the Pharmaceutical Price Regulation Scheme (PPRS) from 1 January 2014. The BIA has repeatedly warned that the government’s pricing proposals for pharmaceuticals put at risk future investment in the UK R&D base, as the perception of the UK as a market for innovative products has an important bearing on the global investment decisions of multinational biopharmaceutical companies. It is, therefore, extremely disappointing to see that the Department of Health “believes there is no reason to expect that changes in UK prices would significantly affect the UK’s attractiveness as a location for R&D” (2).

For NHS patients to receive the full benefits of new treatments, it is vital that new medicines are launched in Britain as a first location around the globe. This enables UK clinicians to remain as global opinion leaders amongst their peers, which encourages further R&D in the UK. If we lose this global pole position, it will be hard to regain it. UK patients will consequently miss out on the latest treatments and clinical practice in the UK will cease to be world leading.

I was pleased that the Medicines and Healthcare Products Regulatory Agency’s Expert Group on Innovation in the Regulation of Healthcare supports the idea of an early access to medicines scheme, for which we have long advocated. Now it is essential that government implements a properly funded and reimbursed early access to medicines scheme.

PTE: What is the UK government doing to increase innovation and R&D productivity in the biotech sector and how does the BIA fit into the big picture?

Bates: Although global competition is increasing, the UK maintains a leadership position because of its traditional academic strengths in chemistry, basic biology and clinical science together with a pharma-experienced workforce. The UK science base remains globally competitive as measured by citations per research scientist, the number of Nobel prize winners and the number of patents. This position has been supported by significant funding from the government (e.g., more than £2 billion provided via the research councils and another £1 billion via National Institute for Health Research annually) in addition to targeted initiatives for translating research such as the Biomedical Catalyst (3), which the BIA heavily promoted. Indeed, funding for biomedical sciences research was largely protected in the last government spending review.

The Biomedical Catalyst, which has supported more than 100 business-led awards across the UK and across a variety of therapeutic areas, has also leveraged in more than £70 million in private capital, and is being used in a number of innovative ways, including enabling the translation of projects that would otherwise not have received funding or been moved offshore for continuation.

Other grant-funding streams have supported various companies including the highly competitive regenerative-medicine and cell-therapy programmes. Used in the same way, the funding has enabled companies to leverage their investment and prolong cash-burn.

There are also life-science companies taking advantage of other government schemes to build further research capacity in the UK such as the Regional Growth Fund (RGF) and the Advanced Manufacturing Supply Chain Initiative (AMSCI). The RGF is a £3.2 billion UK government fund, helping companies throughout England to create jobs between now and the mid-2020s. The RGF supports projects and programmes that are using private-sector investment to create economic growth and sustainable employment. In 2011,  Redx Pharma secured a £5.9 million grant from RGF to support the launch of Redx Oncology and a further £4.7 million in 2012 to launch Redx Anti-Infectives. The AMSCI, on the other hand, is a funding competition designed to improve the global competitiveness of advanced manufacturing supply chains in the UK. This funding is available to support R&D, skills training and capital investment. It will help UK supply chains achieve world-class standards and encourage major new suppliers to locate in the UK. In September 2013, Oxford BioMedica received £7.1 million as part of a consortium to support the development of a centre of excellence in Oxford for specialist manufacture of gene-based therapies and to help create world-class excellence in supply chains.

PTE: What is the future outlook of the UK biotech sector over the next five years?

Bates: The number of companies in the UK remained flat during the financial crisis but there are now signs of growth given that the UK is recognised as having one of the best environments in the world for establishing new companies. This enabling environment is helped by a number of government measures such as R&D tax credits, the Biomedical Catalyst, the Patent Box and low corporation tax rates--all issues that have been advocated for by the BIA for a number of years.  

The Patent Box is a tax measure which applies a reduced rate of corporation tax to qualifying revenues. The policy recognises the importance of innovation to the UK economy and provides a well-targeted incentive to encourage the location of significant R&D activities in the UK. The Patent Box is now in its first full year of operation and the introduction of the policy led to a £500 million manufacturing investment by GSK.

The strength of the science in the UK, both in universities and industry, is recognised globally and UK companies are involved in many licensing and acquisition deals each year. This strength has arguably led to a situation whereby the sector’s ability to grow standalone commercial biotech companies as role models is diminished as promising UK companies are acquired during their development phase.

Despite all these positive signs, we recognise that there is more to be done. The initial public offering (IPO) window has opened in the US and it is beginning to look like investors in the UK are ready to support biotech IPOs here again. More needs to be done to demonstrate the potential value of biotech to city investors, and the introduction of Citizens’ Innovation Funds (4) would provide the general public with the opportunity to demonstrate their patriotic potential and support innovative UK companies such as those in biotech.

I believe the UK has a strong biotech sector from the newest start-ups to global players, a government that recognises the health and economic benefits the sector could deliver and a health service and regulatory environment that is open to innovation.

References

1. UK BioIndustry Association, “UK--The strongest bioscience cluster in Europe: State of the Nation,” bia.me/BIASOTN13, accessed 2 Dec 2013.
   Department of Health, “Government Response to the Consultation on Revisions to the Statutory Scheme to Control the Prices of Branded NHS Medicines,” accessed 2 Dec 2013.
2. UK BioIndustry Association, “Biomedical Catalyst,” bia.me/BIA_bmc, accessed 2 Dec 2013.
3. UK BioIndustry Association, “Citizens’ Innovation Funds,” bia.me/BIACIF, accessed 2 Dec 2013

About the Author
Steve Bates is chief executive officer of the BioIndustry Association.