Government hopes to drive UK growth through the life sciences depend upon commercial as well as public sector support. So how does the UK BioIndustry Association, which reports each quarter on biotech investment, view the market’s likely impact on the lab?
The start of 2023 brought some dispiriting news with the latest analysis from BIA – the UK BioIndustry Association – presented in partnership with data insights firm Clarivate.
Looking back on 2022, it reported some £1.785 billion had been raised over those 12 months. An impressive figure, until set against the £4.506 billion recorded for 2021. While that figure was appreciably higher than for other years and CEO Steve Bates emphasised a fall had been expected after two “bumper years”, the BIA chief cautioned that competition for investment was intense.
With the last quarter of 2023 approaching Dr Martin Turner, BIA Head of Policy and Public Affairs, offers his responses to questions about the investment picture and the enduring challenge of securing lab spaces in the UK.
UK life science’s venture and public funding jumped 29% this quarter. Given that it plunged year on year in 2022 after a record 2021, is sector investment in a good place?
With a record £4.5 billion r aised by UK companies, driven in part by the pandemic raising investors’ appetite for healthcare innovation, 2021 was an exceptional year for investment in life sciences. Investment in 2023 looks on track to be comparable or slightly better to levels seen in the years leading up to the pandemic, which is not a bad place to be.
What has fuelled this latest increase?
Levels of investment naturally fluctuate quarter on quarter, often driven b y a few large deals. For example, in Q2, Ascend Gene & Cell Therapies raised £106.3 million.
The report suggests the UK and Europe are lagging on IPO/launch investment and follow-on financing; will this exacerbate the risk of innovative spin-outs looking further afield for scaling up growth?
IPO and follow-ons (both of which represent public markets) are down in the UK, the rest of Europe and the US, due to public markets investor confidence being suppressed by macroeconomic factors, including interest rates and inflation. Innovative UK companies source scaleup capital from global sources and the current environment doesn’t change that.
Private investors accounted for most of the Q2 increase. Given they seek ‘high value market segments’, is that a concern for research areas – bacteriophage development, for example – where ROI takes longer?
No, we do not believe the source of capital significantly affects the types of products that are developed. If anything, private investors have a higher risk appetite and will back the more innovative and cutting-edge areas of research in search of outsized returns.
The BIA has applauded initiatives by Government and the City of London regarding access to pension investment, SME R&D rules and action on Silicon Valley Bank. How will these impact at the lab rather than investor level?
We have seen very significant progress at a policy level to support life science companies and increase their access to finance, particularly by unlocking pension funds. This will hopefully lead to more capital available for life sciences R&D, company growth and therefore progress and investment in the labs.
Is the SME becoming a more important player or simply a more attractive target for acquisition. Is there any change in the proportion of partnerships, collaborations, spin-offs and joint ventures compared with mergers and acquisitions?
Medical innovation is driven by smaller companies, which represent 65% of the global drug development pipeline with an additional 7% being developed by them in partnership with larger firms. Smaller firms are becoming ever more impactful on the global market; in 2021, 90% of all deal activity involved an emerging company, up from 81% five years ago.
Decentralised clinical trials are one example of a developing trend that increases data reliance and investment. Will we see more biopharma and digital/AI sector collaboration?
Yes, great advances are being unlocked by the combination of life sciences and computer technology, an area called TechBio. We expect to see more of this in the future and will be exploring this at our upcoming TechBio conference in October and accompanying report.
Dr Martin Turner, Head of Policy and Public Affairs at the BIA
