Letter from UKRI CEO gives hope to future of the Biomedical Catalyst

Eric Johnsson, Policy and Public Affairs Manager at the BIA, provides an update on the Biomedical Catalyst (BMC) in 2021 and the BIA’s recent lobbying activities.

The Innovate UK-run BMC is a key grant programme for supporting the life sciences sector and has been instrumental in building the UK’s capabilities to respond to public health crises that we now see utilised in the COVID-19 pandemic. The programme enables early-stage companies across the UK to de-risk their technologies and attract private investment.

The BMC has been a leading campaign focus of the BIA for over a decade and since its launch in 2011 has been used by many BIA member companies to build world-leading British life science companies. However, because it has not been part of Innovate UK’s core budget, the BIA has constantly had to fight for its continuation.

What happened with the BMC in 2020?

Last summer, following a successful BIA campaign, the BMC was refilled with £30 million and a competition was launched in July. We know many of our members applied and we expect the winners to be announced shortly. However, while the BMC’s summer refill was very welcome news, it was a one-off round instead of the long-term funding which would allow regular BMC competitions to be held. The Government could have delivered this long-term funding through the Spending Review in the autumn (as the BIA called for), but unfortunately Innovate UK only received a one-year settlement and there was no mention of the BMC (see our analysis of the Spending Review here).

What has the BIA been doing to secure a long-term settlement for the BMC?

In response to the Spending Review, the BIA quickly organised a sector letter to Business-turned-Vaccines Minister Nadhim Zahawi MP and UKRI CEO Dame Ottoline Leyser. The letter urged them to refill the BMC and increase its budget to boost economic recovery and biomedical discoveries. The letter was signed by over 100 senior leaders from companies and organisations from across the sector, including biotech SMEs, big pharma, charities, and academia.

The letter emphasises that the signatories are proud to be part of a sector which has responded competently, quickly, and collaboratively to the challenges posed by COVID-19, but that the sector’s ability to rise to the challenge was not built overnight, but rather a result of continuous public investment in innovative businesses by successive governments. While not all of the signatories have applied for BMC funding, they all recognise the positive affects across the life sciences ecosystem that the programme has had in the last few years.

We also used a Freedom of Information (FOI) request to find out how over-subscribed the BMC is. This revealed that less than 4% of projects that were ranked as worthy of investment received funding, showing a strong case for increasing the BMC budget.

What are UKRI’s plans for the BMC?

Dame Ottoline responded to the BIA’s letter on behalf of UKRI and agreed that the BMC “is an important funding mechanism for UK life sciences SMEs”. She explained that UKRI is in discussions with the Department for Business, Energy and Industrial Strategy (BEIS) about the final allocation of funds to Innovate UK’s core budget. Once this was been decided, Innovate UK will set out how its core budget will be used.

However, the BMC is not funded through Innovate UK’s core budget, but rather via ring-fenced budget that’s approved by the Treasury. While the reason for this was to protect the BMC’s budget, it also means that Treasury approval is needed every time UKRI and Innovate UK wish to extend the BMC. This has contributed to the uncertainty around the long-term funding of the BMC.

Dame Ottoline explained that UKRI’s ambition is “to provide greater long term stability and certainty for companies by moving away from a time bound ring-fenced funding approach, incorporating programmes such as Catalysts into the Innovate UK core budget.”

While this means that there may be a short wait for another BMC funding competition, it’s still good news. It’s not that long ago that the BIA was concerned that UKRI and Innovate UK were moving away from sector-specific Catalyst programmes, such as the BMC, in favour of funding programmes open to all sectors – something we strongly opposed. So it’s good to hear that UKRI recognises the importance of long-term Catalysts to innovate SMEs. The BIA has championed the BMC since it was established in 2011 and we look forward to working with UKRI to secure its long-term funding within Innovate UK’s core budget.

What’s the plan for innovation funding more broadly?

As the Spending Review provided three-year settlements for academic research funding compared to a one-year settlement for innovation funding, some in the sector were worried that UKRI would scale-back innovation funding.

As such, it was great to see Dame Ottoline confirm that in the coming year, UKRI “will be seeking a multi-year settlement for innovation that enables us to continue to provide crucial financial support to innovative UK SMEs”. The BIA is keen to work with UKRI and Innovate UK to make this case to the Treasury, No10, BEIS and other key stakeholders to ensure that the life sciences sector can drive economic recovery while contributing to the health of the nation.

Will EU state aid rules still apply to the BMC and other innovation funding?

A state aid rule preventing companies defined as “Undertakings in Difficulty” receiving grant funding has been a problem for BIA members and other R&D-intensive companies applying to Innovate UK grant competitions in recent years. With the UK and EU operating under a new framework that involves different state aid rules, there is hope that this inappropriate definition will no longer be applied to UK companies. 

Yesterday the Government published a consultation on a new state aid regime, which notes our concerns about the UiD rule on page 29. The BIA will be responding to this consultation but is also seeking clarity from Innovate UK and the Government on how the rule will be applied between now and when a new regime is implemented. Any companies that are faced with this rule should contact BIA’s Head of Policy, Martin Turner, who would be happy to help.