Dear One Nucleus members and esteemed readers
As many of you will know, the British Government launched a Green Paper for wide consultation regarding its future Industrial Strategy.
One Nucleus is delighted that at least 3 of the 10 pillars of the draft strategy reference sectors, the importance of place and clusters. With this in mind, I decided that it was important for One Nucleus to input to the draft strategy.
Below you will see my letter/response to the Government in this regard. It is written after lengthy discussions with members, key stakeholders, regional and national Government and others. I do hope you feel it is appropriate and reflects the needs and interests of our much treasured One Nucleus membership.
Letter to BEIS (dated 3 April 2017)
As Chief Executive of One Nucleus and one of the Prime Minister’s Business Ambassador’s for Life Sciences, I am delighted to send you the One Nucleus input to the Industrial Strategy.
One Nucleus is the largest membership organisation for the life science and healthcare sector in Europe with over 470 organisations as members. Full details are at Annex A below.
This response is formed of three parts:
- Firstly, the role of Regions and Cities
- Secondly, what One Nucleus believes the UK life science and healthcare sector needs from the Industrial Strategy and
- Thirdly, what we believe the specific needs of the life science and healthcare sector across the Cambridge/London corridor are now and into the future (80% of our membership is based in this area).
I am intentionally not including a significant raft of data about the strengths of the UK life science and healthcare sector or the axis of Cambridge/London as these are very well known to HM Government. However, for ease of reference and background I attach:
- a brief summary of the Cambridge ‘cluster’ – Bidwells (March 2016) (via e-mail)
- a short overview of the UK sector compiled by UKTI (now DiT) that I use as core briefing in my Business Ambassador role (via e-mail)
- a report compiled by the Growth Commission for the London Stansted Cambridge Consortium – LSCC (July 2016) plus a range of life sciences specific reports to which One Nucleus has contributed for the LSCC (all links below):
The One Nucleus response is written after consultation with Cabinet Office and BEIS during recent meetings I attended. The feedback from BEIS team members was clear – to focus a response on tangible actions that can be taken. I have therefore adopted that approach but am very happy to discuss any or all of the content of this submission in more detail with HM Government.
The Role of Regions and Cities
It is heartening to see the Prime Minister’s significant emphasis on ‘place’ in relation to the Industrial Strategy and her plans for the UK’s growth. As an organisation that has most of its members in a ‘region’ ie: the Cambridge/London corridor, One Nucleus believes that clusters/regions play a pivotal role in the economic development of and commercial advantage for the UK.
That said, I would also like to emphasis the role cities play in enabling growth. The establishment of Local Enterprise Partnerships (LEP’s) and City Deals are very welcome. More needs to be done though. I would suggest localisation of a proportion of innovation funding to cities to enable them to more proactively plan and support business growth across life sciences and other sectors.
Cities are better placed than central government to respond to locally specific market failures – drawing on close relationships with local business leaders and local institutions, having a better understanding of the unique environment local firms operate in, and an enhanced insight into where future opportunities may align.
Devolving, or ‘localising’, a proportion of existing innovation funding to provide cities with a flexible innovation pot would enable them to support greater coordination within and across sectors and cities, and enable the business leadership required to meet the growth ambitions set out in the industrial strategy. By ‘innovation funding’ – One Nucleus means early stage R &D and importantly also broader business-based innovation/process innovation/market innovation for scientific/healthcare products.
What does the UK sector need from the opportunity afforded by the Industrial Strategy:
- Patient capital and funding:
- Patient capital – must play a pivotal role – supporting the key themes of the (East of England) Science and Innovation Audit (SIA) as well as the emerging fields of eg: Artificial Intelligence; robotics; digital health; the Internet of Things. The recent collaboration between Syncona and the Wellcome Trust is an excellent blueprint for what can be achieved
- Funding: The BioMedical Catalyst Fund has worked very well – continuation of it/enhancement of EIS to encourage investment/an even more robust R & D tax credit system (particularly in light of BREXIT)/even more competitive levels of corporation tax
- HM Treasury to create a model to fill potential gaps with the demise of Horizon 2020 – HM Government has announced it will safeguard this funding but details are yet to be provided
- Broad reform of EIS and VCT reliefs to lock in cash for longer in return for enhanced tax reliefs to encourage enforced patient capital. It is our view that the tax system is the key way for universal behaviour change to be effected. In addition, if the scale threshold (the point at which EIS relief is lost) were increased significantly, it could allow a greater flow of new funds into EIS protected scale-ups. We also ask the Industrial Strategy to consider reliefs for small (innovative) businesses, which will support growth in new R & D sectors and regenerate geographies in the UK in need of growth
- Industrial Strategy Challenge Fund – market it well and in a timely fashion
- Support for Scale-up companies: a tailored package of support/incentives for companies that are seeking to remain and grow in the UK – rather than exit-sale or merger. This includes consideration of diversity of funding – helping SME’s to navigate late stage development and commercialise products without ‘selling out’ to big pharma
- Government funding to support academic GMP manufacturing and cell processing capacity
- Greater involvement of charities/patient groups in the creation of innovation funds (eg: a comparator for the Citizens Innovation Fund that is available in France)
- People and Skills
- Creation of a UK BioPharma Academy – with graduate entry, external mentoring and coaching, growing the next generation of scientists and C level talent. One Nucleus would suggest this is an academy that industry is intensely involved in/supports in terms of funding and training resource
- Creation of a fast-track life sciences and healthcare visa scheme
- Support local institutions to maximise local strengths – and assess current networks and organisations on the basis of proven ability and reputation before creating new ones – against a clear set of criteria
- Establish a ‘National Recruitment Fund’ to grow the UK’s life sciences talent pool by supporting the attraction and retention of overseas and home-grown scientific and entrepreneurial talent
- Regulation and Pricing/NHS
- Reinforcement of the Accelerated Access Scheme (AAS) to create new ways of addressing regulatory issues and encouraging the faster uptake of innovation by the NHS. The Innovation and Technology Tariff is a case in point – this needs to be truly capitalised upon for maximum patient benefit. Vitally getting the AAS to work smoothly and effectively should help keep the UK at the forefront of getting new, innovative drugs to patients
- The Early Access to Medicines Scheme (EAMS): this is an excellent mechanism from the MHRA/NICE and needs to be taken further. We suggest some products should qualify for EAMS sooner (perhaps in specialist clinical centres) so real outcomes and commercial data can be garnered for NICE assessment. Consideration to be given to granting EAMS on well conducted exploratory studies in areas of high unmet medical need and run in parallel with confirmatory clinical studies – with patients directed to the latter in the first instance. This would ‘telescope down’ the process of regulatory approval, NICE decision making and NHS adoption. Paying SME’s a nominal price for their product while under EAMS would also help bridge the funding gap for regulatory development
- Better access to clinical networks
- Establish a ‘UK Innovative Medicines Initiative (IMI)’ to ensure that UK companies and researchers do not lose out on opportunities to establish pre-competitive collaborations, which aim to speed up the development of better and safer medicines for patients
- New Technologies
- Encourage the development and convergence of technologies
- A UK strategy for digital health – with the NHS better expressing what it’s needs are and assessments done to assess the market for mobile applications for health monitoring and companies and the NHS working more closely together
- Department for International Trade (DiT)
- A clearly defined and well-resourced international trade and investment offer which recognises the importance of supporting SME’s, harnesses the abilities of our commercial teams in our overseas Embassies and Consulates for company benefit and markets opportunities for UK companies in a timely fashion eg: far better notice of upcoming missions/conferences required
- Recognition by the Department for International Trade (DiT) of the importance of SME’s both in biotechnology and medical technology (including devices and diagnostics). Business Plans from the Life Sciences Organisation (LSO) in DiT I have seen in the last several years have been very thin on actual practical support for SME’s in these areas. I am fully supportive of the ABHI (Association of British Healthcare Industries) response to the Industrial Strategy which I have been asked to contribute to, and have done so, by ABHI
What are the needs of the life science and healthcare sector across the Cambridge/London region:
Life Sciences is thriving in this ‘region’ with exciting growth, relocations, company formations (and exits), academia-industry strategic collaborations and a strongly entwined ecosystem. 25% of the UK total of biotechnology companies and 38% of all primary UK R & D companies developing novel therapeutics or diagnostics are in this region.
The innovation strength of this cluster is of national and international importance and a reflection of the entrepreneurial ecosystem that exists locally where seasoned life science entrepreneurs interact seamlessly with more recent science graduates and PhD’s with high aspirations and appetites to learn.
AstraZeneca locating its global headquarters in Cambridge, next to the world renowned Addenbrooke’s and MRC LMB is no coincidence: a testament to the strength of the science being developed in and around the City and also the deeply collaborative spirit.
In London of course we have the ‘jewel in the crown’ of scientific endeavour which is the Crick Institute – globally appreciated for what it is seeking to achieve in developing better drugs and outcomes for patients through collaboration and partnership.
Cambridge Points to Make:
Whilst Cambridge is experiencing faster growth currently than China (at 7%), the city and its environment has challenges that the Industrial Strategy could help address.
One Nucleus welcomed HM Government’s recent commissioning of a Science and Innovation Audit (SIA) for life sciences for the East of England. It is our understanding that the findings of the audits are pivotal to Government decision making with regard to investment policy. I firmly believe that the audit will showcase the world class excellence of the East of England in life sciences – with a particular emphasis on:
- Personalised medicine (drug discovery, development and diagnostics)
- Regenerative medicine (cell & gene therapies)
- Med tech
- Food, health and microbiome
- The need for a Master Plan for the East of England to manage its growth in a way that benefits all locally and importantly (as an engine for the UK) spreads that success across the UK. Cambridge is a city based on ideas and is a ‘safe’ place to do ‘risky’ things – it’s important for Cambridge to continue to do it’s amazing science and R & D and for the surrounding areas to be further developed around it which have the skills to support that work eg: manufacturing in Harlow; and recognition of the expertise of complimentary life sciences eg: food and the microbiome in Norwich. I regularly discuss the East of England region for life sciences with local and national Government and continue to reinforce the point that the incredible life sciences cluster that is Massachusetts is not just about Boston – it’s about what the whole geography brings to the table. Cambridge and the region needs to think like that and plan for 2020 and beyond with that in mind – with investment in land opportunities eg: along the A11 to Norwich and the A14 to Bury St Edmunds
- Retention of the two major cornerstone organisations: AstraZeneca and GSK
- Infrastructure: it is vital that traffic congestion into the city centre is reduced, that there are strong transport networks between key locations across the East of England so that companies can move their teams easily in and out of the city and around the circumference plus north (to Norwich) and South (to Stevenage) and development in outlying (and important) areas of:
- Affordable housing: for all levels of staff in organisations.
- Funding: the City Deal was good but £500 million is a small amount given what needs to be done
- Better planning: Councils are addressing planning needs but more could be done to release land for development more quickly to create more and better practical space, better shared facilities
- Support for start-ups is strong in Cambridge and the region with a vibrant biotech centre and centres of excellence across the area, with entrepreneurs, investors and a very strong mentoring/coaching community. But there is a need to support companies to scale-up
- Promotion of Cambridge internationally – a far better marketing machine is needed and a far better explanation of the impact Cambridge has both on the UK and overseas. The Cambridge Phenomenon books are exemplars but a Cambridge Promotion Agency is needed if the area is to continue to compete on a global stage and continue to win high quality foreign direct investment
- A robust review of the creation/building/growth of incubator/lab space available in the ‘region’. Many reviews have been compiled about what is available but someone needs to take charge of overseeing what is going up where with a ‘helicopter view’ – an Incubator Tsar!
- Create an even better Cambridge Science Centre to encourage science education
- Better wireless connectivity across the whole region
- Have Cambridge as a future City of Culture and create an International Visitors Centre – a one stop shop for tourists, investors, traders, students
London Points to Make:
The life science and healthcare sector alone in London generates over £21 billion GVA in London and the Greater South East. It is very important to harness the strength of London’s research base and support research and business collaboration nationally, across the EU and globally.
It will be critical for Government to continue to (at least) maintain existing levels of research spending in London and the Greater South East, including the level of research funding received from the EU, post 2020. It should also be remembered that there is clear evidence that the benefits of R&D spending are felt throughout the UK economy and not just in the region in which it occurs.
Our recommendations are:
- the importance of better housing supply particularly in terms of London and the Wider South East. Median London house prices in 2016 were (for example) 14 times median London earnings, compared to four times in 1997, and this poses a significant risk to London – reducing ability to attract talented people, particularly in lower paying (but high value-generating fields such as creative industries or scientific research
- Stronger access to finance – this remains a challenge for many businesses in London. Research by TheCityUK found that the UK has been less strong in equity financing than the US for a long time: for example, banks drive only 19% of external long-term financing in the US, compared with over 80% in the UK.  London ranks behind California and New York on the availability of mid-level growth capital, with these two hubs supported by a strong, risk-tolerant investor culture
- Investment in infrastructure – to support regional growth is responsive to the specialisations and comparative advantages of regions. This includes London, where for example Crossrail 2 is essential to London’s growth as it will underwrite London’s productive central core
- Deployment of research and proof of concept funding to tackle UK city-based challenges across MedTech and digital health applications (for example), using London and UK cities as a test bed
- Trial, in collaboration with other UK cities, new approaches to supporting business to business innovation – linking innovating SMEs to corporate R&D need, strengthening innovation and collaboration across national supply chains
- Create a science and technology inter-institutional collaboration fund across London and the Greater South East, which would be open to UK wide research and business partners
- Improve the linkages and broker relationships between higher education infrastructure/equipment and expertise and business innovation need (including mechanisms to better link up foreign direct investment and domestic business growth requirements with the existing institutional offer)
- Strengthen the entrepreneurial drive across London universities to inspire students, celebrate risk taking and failure, (for example, through drawing on the alumni base to advise and support existing student cohorts) and support a more commercial mind set across academia
My comments in relation to London are the result of consultation with the Greater London Authority (GLA) and London & Partners and the life sciences elements for London appear as part of their submission on the Industrial Strategy.
Chief Executive One Nucleus and UK Business Ambassador for the Prime Minister
 TheCityUK, 2013, Alternative Finance for SMEs and mid-market companies
 EY, 2015, Fintech – on the cutting edge, 2016; Pitchbook, Annual VC Funding Report.