A successful future for UK Bioscience

The BIGT’s vision is that by 2015, the UK will have secured its position as a global leader in bioscience. To secure this position, the UK must create:

• A diverse, self-sustaining bioscience sector, with a core of large, profitable, world-class companies, second in size and achievement only to the US.
• The most efficient and effective setting for conducting clinical trials in the world - a source of true distinctiveness.
• A healthcare system, regulatory regime, and business environment that support innovation in bioscience, delivering early access for patients.

By acting now to make this vision a reality, the UK can realise two significant benefits:

• Improved national health, through improved clinical performance and early access to innovative medicine.
• Increased national wealth: enhanced Gross Domestic Product by maintaining and supporting a high growth, high margin, high value-added, knowledge-based industry.

The vision

To create a diverse, self-sustaining bioscience sector, with a core of large, profitable, world-class companies: Bioscience offers tremendous potential for improving the quality of life and standards of care. As a more mature industry with a huge domestic market, the US bioscience industry is likely to remain the world leader for the foreseeable future. However, the BIGT believes the UK must take steps now to secure its current threatened position as Europe’s leading bioscience centre and number two in the world.

To create a sustainable bioscience sector by 2015: The UK needs to establish a core of sizeable, profitable companies from the players that exist today. In addition to organic growth, consolidation and attrition - already evident this year - will inevitably assist the process of creating companies on a larger scale. Diversity will be a defining feature of the sector.

UK companies are likely to prosper through different business models: Some companies will reach profitability by developing blockbuster products. Others will succeed by focusing on smaller products for niche indications. Some will achieve success through excellence in the provision of research, development or manufacturing services. Others will be fully integrated companies. Some will concentrate on core areas of expertise in the drug development process. All, however, will need to retain a significant portion of the value created by their activities in order to succeed. (1)

The UK will become the most efficient and effective setting for conducting clinical trials in the world: The NHS is a unique institution globally, providing a gateway to the largest single pool of patients in the world, and caring for those patients from cradle to grave. Domestic access to high quality, rapid and economic clinical trials is essential to bioscience companies. Increasing participation in clinical trials will also play a crucial part in modernising the delivery of healthcare, as protocol-driven care improves both patient outcomes and the skills of healthcare professionals. The NHS should be a leader in clinical innovation, with the infrastructure and the expertise to support cutting edge clinical research that improves patient care. Such a capability would provide a significant competitive advantage for the UK bioscience sector, which no other country would be able to match. It would act as a clear incentive for companies to establish themselves in the UK.

A healthcare system, regulatory regime, and business environment that support innovation in bioscience, delivering early access for patients: Bioscience companies are attracted to a supportive environment, which understands and promotes innovation. The UK bioscience industry must have a track record of collaborating with NHS clinicians and academic scientists to develop increasingly sophisticated treatments, while also monitoring their success. Regulators such as the Medicines and Healthcare Products Regulatory Agency (MHRA), National Institute for Clinical Excellence (NICE), European Medicinal Evaluation Agency (EMEA), and the Home Office must develop a better understanding of the trade-off between risk and reward that comes with innovation. Finally, the UK must have the managerial and scientific talent, the funding environment, and the bioprocessing expertise to support a strong bioscience sector.

Benefits to the UK

Improved national health: through improved clinical performance and early access to innovative medicine. Demand for innovative medical treatments is constantly growing as people in the wealthy developed world live longer with a concomitant increase in the burden of chronic diseases. At the same time, patient expectations about the quality of treatment and care they receive are rising. However, unmet medical needs remain high, and the pharmaceutical industry faces diminishing R&D productivity, as shown in Figure A.

The new tools of bioscience, such as genomics, proteomics, metabonomics, and bioinformatics, have the potential to address many medical challenges, as evidenced by the significant investment in this area by both smaller biotech firms and larger pharmaceutical companies. While developing new chemical drugs using these methods is proving harder than expected, biopharmaceuticals based on natural macromolecules, such as human proteins, are already making a substantial contribution to the treatment of disease.

This is only the beginning. Bioscience has the potential to affect most aspects of healthcare. For example, bioscience should enable:

• Earlier identification of disease risk and disease diagnosis, through genetic screening and diagnostics - as seen, for example, in breast cancer.
• Development of targeted drugs, with higher efficacy (because they focus on particular patient pools or forms of disease), and improved safety (because they may reduce side effects).
• Faster and more precise detection of pathogens.
• Disease prevention through more effective and targeted vaccines.
• New modes of treatment for previously untreatable conditions,
  e.g. engineered tissue, stem cell therapies.
• Faster drug development, which will deliver critical treatments to patients more rapidly.

Bioscience has the potential to improve health and also improve the economics of preventative medicine and treatment of illness. Tests that enable early diagnosis and highly effective innovative treatments, though expensive on a per unit basis, can reduce the total cost of care and the economic burden of disease - as seen, for example, with diabetes. Bioscience also has the potential to improve the quality of life of an ageing population.

Some might argue that the UK does not need to be a global leader in bioscience to secure the benefits of improved national health and wealth, as the NHS could simply buy diagnostics and treatments from foreign bioscience companies. The BIGT does not believe that such an approach is wise. The UK is a relatively small pharmaceutical market, accounting for just 3% of the global market, a status that is likely to diminish over time with the rise of new markets such as China and India. Global companies do not need to test or launch their products in the UK to succeed.

To ensure that patients have faster access to the most innovative healthcare treatments, the UK has two priorities:

• Continue to build a strong domestic bioscience sector, which has a vested interest in improving UK healthcare.
• Create a healthcare system receptive to innovation that encourages both domestic and foreign bioscience companies to trial and market their products in the UK.

Receptiveness to innovation can be signalled in a number of ways, including improved infrastructure and processes for conducting clinical trials and collaboration between academia, industry, and service providers to develop new treatments, such as those used in regenerative medicine. Both these measures will improve the quality of healthcare, and will anchor the bioscience industry more firmly in the UK.

Increased national wealth: enhanced Gross Domestic Product by maintaining and supporting a high growth, high margin, high value-added, knowledge-based industry. The UK has stated objectives to increase economic productivity and global competitiveness. The bioscience industry can play a key role in helping to meet these objectives. The US is held as the benchmark for a competitive economy and has a clear strategy. It has moved low value-added manufacturing offshore and has focused on creating a knowledge-based economy, with high value-added jobs. This remains the UKÕs aspiration. But it has not been the UK reality historically, as seen by disappointments with the IT sector, for example. One exception is the pharmaceutical industry, which has provided a substantial benefit to the UK economy. The newer bioscience sector has the potential to follow this success.

The economic fundamentals of the sector are strong:

• High growth: Biopharmaceutical drugs account for 8% of total pharmaceutical market sales, and are the fastest growing part of the market. (4) They will be an increasingly important part of the healthcare landscape over the next decade. One third of all drugs in development are now biologics. (5) While pharmaceutical company growth is expected to slow, due to patent expirations and pipelines of incremental innovation, biopharmaceuticals are widely expected to deliver both improved R&D productivity and strong growth.
• High margin: EBIT (Earnings Before Interest and Taxes) margins among successful biopharmaceutical companies are high, ranging from 20% to 38% of sales among the top global pharmaceutical companies, and from 22% to 42% among sustainably profitable bioscience companies, reflecting the high risk of bringing new products to market. (6)
• High value-added, knowledge-based: Value creation in bioscience relates directly to the quality and quantity of intellectual property generated, and the value added by highly educated, skilled employees during research and product/drug development. Most employees in bioscience companies have tertiary education and many have doctoral and post-doctoral qualifications. In the absence of bioscience-specific data, the pharmaceutical industry shows significant value creation: value-added in the pharmaceutical industry is approximately 3.5 times that in the economy as a whole. (7)

The economic benefits of this sector will be felt in many ways:

• More jobs
• Improved preventative medicine
• Healthier population
• Increased taxation revenue