Changing attitudes on UK life science and biotech investment

Changing attitudes on UK life science and biotech investment


Following our event ‘Change for good or just for now: will COVID transform UK health?’ earlier this year, we’ve continued to reflect on how the past 12 months may have shaped a new normal for our life science and biotech industry. An important component of this has been investment, and despite some initial seed and early-stage venture capital (VC) withdrawal as we embarked on the first national lockdown, one of the few silver linings of the pandemic has been a flourishing of scientific investment, with VCs, big pharma and others eager to fund companies involved in the fight against the virus.

In recent years, UK biotech’s in particular have struggled to access the capital they need to scale up and make their mark on the industry – investors have long known that these ventures are high-risk, often requiring several years of intensive cash burning before a first product reaches the market, with many failing to make it this far. Greater regulatory pressures, lengthy drug development times, and the increasing politicisation of drug pricing has all served to raise risks even further.

But the onset of a global pandemic swiftly changed this thinking and the importance of having a strong UK life sciences and biotech sector to provide effective vaccines, therapies and diagnostics was unanimously recognised as being crucial to enabling society return to a state of ‘normal’.

Last month the UK BioIndustry Association (BIA) revealed that UK biotech companies raised a record £2.8 billion in equity finance in 2020, marking the best ever year for the sector.

As to be expected, investment targeting vaccine development has proliferated rapidly, as global trials progress and governments race to place substantial orders. But the range of companies benefiting from investor interest has not been limited to those developing a vaccine, and other sub-sectors including small molecule drug development, research tools and data and cell and gene therapies continue to perform exceptionally well.

Moreover, it’s not only UK investors, but 24 new American and 16 new European investors capitalised on the UK biotech sector for the first-time last year, demonstrating global recognition for UK innovation. Whilst leading investors Apple Tree Partners, Morningside and Sequoia Capital have all recently established UK offices so that they can directly tap into the ecosystem – this vision is appealing, particularly for a government that sees science and innovation as central to its “levelling up” mission.

Chancellor Rishi Sunak’s budget commitment to reviewing the R&D tax relief system, plus the launch of a new fund targeting R&D intensive companies, will hopefully help drive UK life science and biotech investment to new heights in 2021 and beyond.

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