CEO Update | Monday 19 August 2019
On Thursday the Department of Health (DHSC) announced its procurement exercise for an express freight service contract to deliver medicines and medical supplies into the country in the event of a no-deal Brexit. This new £25m contract is intended to deliver small parcels of medicines or medical products on a 24-hour basis, with additional provision to move larger pallet quantities on a two to four-day basis. The contract will run for 12 months, with a possible further 12-month extension. The contract notice has been published in the Official Journal of the European Union and potential bidders have until August 21 to submit proposals, with the successful provider or providers likely to be announced in September.
The announcement of this process is welcome and similar to (but a development of) the work the Department put in to secure airfreight from continental Europe before the previous no-deal deadline. I expect details of how life sciences companies can engage with this process to be shared in September, however it’s clear from the DHSC press release that the Department is planning on the basis that companies will be expected to bear the cost of using this service; it says: “the taxpayer will only be liable for up to around £4m of the total value of the contract, but it is expected to be much less than this.” It’s important to note that this is a procurement of a very limited capacity of daily express freight: 30m3 for ‘parcels’ and 50m3 for ‘pallets’ and 5m3 for ‘specials’, which is only a very small fraction of the volume of medicines and medical products imported into the UK from the EU on a normal day.
This approach, for limited Department of Health emergency capacity, can be contrasted to that of the Department for Transport where it was interesting to hear Grant Shapps, the new Secretary of State for Transport, telling the BBC’s Today program last Tuesday that the new UK Government hasn’t actually spent any money (from his Department) on no-deal Brexit emergency freight tenders thus far. He said that so far, Department for Transport planning: “is actually a contract, actually an invitation to tender, but not spending a penny at this stage at all”. This also contrasts with the no-deal ferry planning under the previous Government which did secure actual space on ferries for medicines and other essential goods ahead of the previous deadline for no-deal Brexit. So, if some government departments are championing “not spending a penny at this stage” on no-deal Brexit preparedness, I hope any further guidance for businesses will be consistent with their own approach.
I want to also remind members of the webinar that the DHSC is holding at 12.30 tomorrow (Tuesday 20 August), which will outline their work to ensure continuity of supply for clinical trials and future plans, in the event the UK leaves the EU without a deal. It will also set out in more detail the information that DHSC would like to receive from clinical trials sponsors in the survey regarding their contingency plans and address any queries or issues they may have with completing the survey. Register here.
Against this backdrop our sector continues to generate good news stories. Bracco Imaging have completed their acquisition of BIA member Blue Earth Diagnostics, delivering a 10X return for Syncona (which is also a BIA member) and founding investor in Blue Earth. It’s great to see BIA members doing well and demonstrating that the UK sector can deliver big rewards for investors. The sale follows hot on the heels of Syncona’s 4.5X return on Nightstar. Confidence in the UK life sciences ecosystem was further demonstrated last week with the announcement that the Dutch property development company Kadans has acquired Sycamore House from GSK at the Stevenage Bioscience Catalyst site. Kadans plans to convert the a 9,640sqm industrial and warehouse building into a “modern, vibrant, multi-tenanted” R&D facility, with expected completion in mid-2021.
It’s also great to see continued government support for the sector in the form of funding. UK businesses can apply for a share of up to £3.7m for R&D projects to improve the manufacturing of advanced therapies. The Innovate UK competition, with money from the Industrial Strategy Challenge Fund, will go live on Tuesday 27 August and closes on 25 September. The Knowledge Transfer Network (KTN) is running a webinar to explain the opportunity on 3 September.
We now know that this year there will be a pared-down one-year Spending Round rather than a larger Spending Review, which would set government spending and investment for a multi-year period. The “fast-tracked” Spending Round will only allocate departmental budgets for 2020/21 to “ensure departments can focus on delivering Brexit by October 31.” Larger investment decisions, including long-term R&D funding, will therefore have to wait until next year. On Friday, I wrote to the Chancellor to make the case for funding for the MHRA to enable it to support our sector and represent the UK on the global regulatory stage and I reinforced our calls for refilling the Biomedical Catalyst. I also called on the Chancellor to keep the UK at the cutting edge of science and innovation and update the R&D tax credit scheme to boost investment. Read more about it in Eric’s blog.
As you drive home tonight or prepare dinner, why not listen to a BBC Radio 4 comedy set in a small biotech company that aired on Friday. “We’ve got a pill for that” is about a CEO trying to secure VC funding by any means and a research team more interested in their own personal pursuits. Hopefully that doesn’t sound familiar!
Finally, regular readers will know we’ve been busy building links with the Chinese biotech ecosystem in the past year. Members keen to explore R&D and business opportunities might be interested to attend the 6th BioCentury-BayHelix China Healthcare Summit in Shanghai on 18-20 November. We’ve secured a 20% discount for members, please email Miriam to get the access code.