Report highlights challenges facing life sciences sector amid economic turbulence
Titled ‘State of the Discovery Nation (SODN) 2024: Fostering a Dynamic, Sustainable Medicines Discovery Sector,’ the report published in conjunction with the UK BioIndustry Association and the Association of the British Pharmaceutical Industry highlights the critical need for concerted efforts to mitigate funding risks in medicines discovery and attract more investors.
The report emphasizes the indispensable role of the life sciences sector in advancing patient health, UK productivity, and investor returns. It reveals that in 2021, UK life science companies generated £108.1bn in turnover and accounted for 35% of all life science startups formed in Europe since 2012.
Small and medium-sized enterprises (SMEs) contributed significantly to innovation making up 70-80% of the sector’s 6,580 businesses.
Keeping the life sciences sector healthy
Professor Chris Molloy, CEO of Medicines Discovery Catapult, said: “If we want to keep the life sciences sector healthy and able to compete on a global stage, it is not enough to ask investors to simply become more comfortable with high-risk investments. We need to de-risk the innovation as much as we can.
“For early-stage companies, we need to offer more coordinated access to the skills and technologies they need to generate ‘investment-ready’ data sets. For investors, we need to provide them with a holistic picture of the health landscape and the UK medicines discovery pipeline, so they have more insights to make funding decisions. In short, our sector deserves a purposeful fit-to-fund programme that will ultimately serve our patients, our pensions, and our national productivity.”
Macroeconomic factors such as inflation and geopolitical instability have precipitated a concerning decline in investment in therapeutic companies. MDC's analysis highlights a substantial reduction in SME funding from £3.04bn to £1.7bn between 2021 and 2022, primarily due to a decrease in public equity funding exacerbated by inflationary increases in R&D costs.
Skilled staff shortages and limited lab space
This reduction in investment, coupled with challenges such as skilled staff shortages and limited laboratory space, has created a detrimental cycle hindering companies' ability to generate investment-ready data and secure funding.
Steve Bates OBE, CEO of the UK BioIndustry Association, said: "SMEs are at the forefront of innovation, with the majority of new medicines in the global pipeline originating from their labs. Their agility and cutting-edge research are propelling us forward in oncology, infectious diseases, and neurological disorders. Their success is not just a win for the sector but a beacon of hope for patients worldwide."
Dr Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, stressed the necessity of fostering an ecosystem conducive to supporting UK-based companies throughout the medicine development pipeline and attracting increased inward investment to realize the UK's potential as a global life science powerhouse.
In conclusion, the report calls for collaborative efforts to bolster the medicines discovery sector, ensuring a rich pipeline of innovations and sustaining the UK's leadership in life sciences to benefit patients, investors, and national productivity.
