The life sciences sector contributes more than £70bn per year to the UK economy. The UK pharma industry has been hugely successful at attracting investment with pharmaceutical companies investing 16% of their European R&D spend in the UK, compared with its 9% of European market share by sales.
One consequence of Brexit was the departure of the European Medicine Agency (EMA) – despite the presence of significant expertise and talent here, it was obvious that as a "third country" outside the EU, the UK could not host an EU agency.
Concerns were raised by the Nuffield Trust and others that the physical departure of the EMA was going to act as a disincentive for future pharmaceutical investment. The EMA had attracted private investment in the UK with biopharmaceutical companies competing for closer ties with one of the world’s key drug regulators.
How does the future of the UK life sciences look?
First, some good news from the Trade and Cooperation Agreement announced on 24 December 2020 was that UK researchers would still be allowed to participate in EU research programmes.
Secondly, the skills of the UK life sciences sector have been demonstrated recently with the development of the Oxford COVID-19 vaccine and rapid implementation of the UK-wide vaccination programme.
Post-Brexit the UK Government is determined to ensure that the life sciences industry thrives. The industry was highlighted as having enormous strength in Boris Johnson's first speech as Prime Minster in 2019 and he has followed that up with meetings with leading industry figures including Bill Gates, who as a joint founder of the Bill and Melinda Gates Foundation is a major investor in seeking solutions to global diseases.
To that that end the Government has proposed a new public/private investment fund (The Life Sciences Investment Programme) which will invest directly and indirectly (though funds) in companies in the life sciences sector. An initial £200m investment has been ear-marked in the hope of attracting an additional £400 million from the private sector.
A hopeful source of private funds appears to be the Gulf states' sovereign wealth funds. In particular, the Government is reported to be in discussions with Mubadala, the $232 billion state-owned investment fund of Abu Dhabi.
While nothing has yet been announced, any such investment would be a major coup for the UK Government – helping it vindicate its view that Brexit would not be a deterrent to ongoing investment in UK industry. It would certainly be a significant injection of investment capital for the life sciences sector and hopefully stimulate further and continued external investment in the sector. The Government has said that the investment programme will be established even without foreign investors, but most likely it will wait until it can attract the external investment.
Once established, there will be considerable interest in how the money is invested and how the Government follows through on this important investment.