Achieving the vision

The starting point: UK bioscience today

The UK is the European leader in the bioscience industry, and number two in the world after the US.

These figures put the UK on a par with one of the major US biotech clusters, such as Southern California or New England, and well ahead of major European rivals in Switzerland, France, and Germany. If the bioscience activities of major pharmaceutical companies are included, the UK position is stronger still in comparison with European rivals.

The majority of companies are less than 15 years old, and only 8% are publicly traded. The sector is fast-growing - taking the biotech sub-sector as a proxy of the broader bioscience/healthcare sector, employee numbers have grown at a CAGR of 35% and revenues by 48% between 1995 and 2002. The promise of the UK bioscience industry is clearly shown in its development pipeline: at least 194 drug candidates are in development, and 23 in Phase III clinical trials. (9)

The UK bioscience sector has significant sources of competitive advantage against most other countries, and these will need to be strengthened and sustained:

• An existing bioscience sector, with maturing companies - boasting 18 public companies that are now profitable, and at least 38 marketed products. (10) In an industry with such long timelines, the relative maturity of UK companies is an obvious advantage over newer competitors such as Singapore, Ireland, India, and China. The UK boasts:
• A strong bioscience research base - evident in the 23 Nobel laureates awarded for biomedical research at UK research institutes in the past 40 years, including four in the past seven years (11), and made possible by Research Council and Research Charity funding.
• Improving university-industry links and technology transfer - with infrastructure and support for the generation and commercialisation of university-generated intellectual property.
• Major presence of several large pharmaceutical companies engaged in bioscience research and manufacturing in the UK.
• Growing scientific and managerial talent base - to the point that the UK now has a pool of experienced scientists, senior managers, investors, and serial entrepreneurs who have played roles in multiple companies, and who need to be retained in the UK.
• Established, sophisticated private and public capital markets for bioscience investment - including EuropeÍs leading venture capital industry and the largest stock exchange, which has by far the highest number of bioscience listings, and an attractive capital gains tax regime for investors.
• A single provider healthcare system in the NHS - offering the prospect of collaboration with skilled clinicians and access to a large and varied patient pool. The NHS remains a distinctive asset whose potential has yet to be realised.

Sustaining the UK's leading position from this starting point is by no means certain. At every competitive level, the US performs even more strongly than the UK. The risk is that the bioscience sector will simply relocate to the US, attracted to the world's largest end-market, the critical mass of established, profitable companies, the deep talent pool, and the generous funding (from the $27 billion annual budget of the National Institutes of Health, through to the most developed public capital markets for technology in the world in NASDAQ). (12)

The progressive and continuing migration of the European pharmaceutical industry to the US shows this is no idle threat. At the same time, global competition is intensifying. Countries such as Singapore, Ireland, India and China have less of a bioscience heritage than the UK, but are offering extremely generous financial incentives to companies and individuals to build a bioscience sector. All have their sights set on becoming the worldÍs second largest player in this field.