Pensions industry commitment to unlock investment welcomed by biotech leaders

Life science leaders have welcomed a package of measures announced by the Chancellor and Lord Mayor of London today (10 July) aimed at unlocking pension fund assets for investment into growth industries such as the life sciences and biotech.

The package includes the Mansion House Compact, which is an agreement by pension providers to allocate a minimum 5% to unlisted equities through defined contribution (DC) pension funds, and other sources of long-term savings, by 2030. Investing a percentage of pension assets into unlisted equities, which includes venture-capital backed biotechs and those quoted on London’s growth market, AIM, offers the opportunity to bolster the retirement incomes of millions of savers, which will consequentially support the next generation of innovative, high-growth companies in life sciences, biotech, fintech and clean technology.

Dr Dan Mahony, Government Life Sciences Investment Envoy and Chair of the UK BioIndustry Association (BIA), said:

“The unlocking of pension fund assets for investment into the UK life sciences sector will enable everyone saving for their retirement to benefit financially from Britain’s world-leading strength in drug discovery and development, whilst supercharging business growth and accelerating medical progress.

“We have great science and great people, now they will be supported by greater capital from the UK, adding to what the sector is already attracting from overseas investors. More domestic investors championing our growing companies will help them to put down deeper roots here, producing more jobs and benefits for the UK economy.”

Commenting on the Mansion House Compact, Steve Bates OBE, CEO of BIA, said:

“History has handed the UK two world-leading industries: financial services and life sciences. This compact marks the beginning of a new era in which they are brought together to accelerate the delivery of innovative new medicines for patients, jobs and economic growth, and greater financial returns for pension savers.

“This significant step forward comes after many years of campaigning by BIA and critical detailed thinking by the Life Sciences Scale-Up Taskforce, led by BIA and the Office for Life Sciences. We will continue to engage closely with the signatories of the Compact to help them explore the life sciences opportunity on their doorstep. As Nasdaq sleeps, the City of London is waking up.”

Notes to Editors:

  • Dan, Steve and life science CEOs and investors are available for comment.
  • Please contact Martin Turner on 07850 518 075 and [email protected] for more information and interview requests.
  • The Life Sciences Scale-Up Taskforce was established by the Business Secretary following the publication of the Life Sciences Vision. With an objective to unlock institutional investment for the UK life science companies. Members included BIA, TheCityUK, the British Venture Capital Association (BVCA), Legal & General, and BC&E. The Government Office for Life Sciences provided the secretariat and PwC provided research support.
  • Investment in UK life science start-ups and scale-ups as risen from £261 million in 2012 to £1.8 billion in 2022, but fluctuates significantly depending on global macro-economic factors. More UK-based investment is required to complement overseas capital.   
  • Government figures show there are over 6,548 businesses in the UK life sciences industry, and approximately 70-80% are small and medium-sized enterprises. These businesses employ over 282,000 people and generated £94.2 billion of turnover in 2021. The number of businesses and the number of sites operated by these businesses have both seen an upward trend since 2009, with 23% more businesses and 32% more sites operating across the UK in 2021 compared to 2009.
  • Medical innovation is driven by smaller companies, which represent 65% of the global drug development pipeline with an additional 7% being developed by them in partnership with larger firms, according to data published by IQVIA.
  • The UK accounts for 35% of all life science start-ups created in Europe since 2012, according to data published by McKinsey.
  • A report by the British Business Bank and Oliver Wyman found that retirement savings could be increased by 7-12% for a 22-year old, for example, if their DC pension scheme made 5% of investments in the UK’s fastest growing and most innovative companies

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