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Medicines Manufacturing Industry

Volume 828: debated on Monday 27 February 2023


Asked by

To ask His Majesty’s Government what steps they intend to take in response to the report by the Medicines Manufacturing Industry Partnership Fulfilling the potential identified in the Government’s Life Sciences Vision, published on 23 January, which found that medicines manufacturing and employment has declined in the United Kingdom over the last 25 years.

My Lords, the Government recognise the valuable role that medicines manufacturing plays in the UK economy. This enables us to capitalise on our world-class research and development, creates jobs, and contributes significantly to growth. Life sciences pharmaceutical manufacturing was responsible for more than £20 billion of exports in 2021. Our Life Sciences Vision set out the Government’s ambition to create a globally competitive environment for manufacturing investment. Last March, we launched the £60 million life sciences innovative manufacturing fund to encourage manufacturing investment in the UK and will announce the fund’s winners later this year.

My Lords, the Minister is absolutely right to stress the importance of this sector to our economy and the value of our exports, but since 2010, the volume produced has reduced by 29% and in the league table of countries with trade balances relating to pharmaceuticals, we have gone from fourth place to 98th place. Now the sector, like others, is having to face up to increasing corporation tax and, remarkably and peremptorily, the Treasury decided to reduce SME R&D tax credits for life science companies. This will, in effect, reduce by half the value for loss-making SMEs. Given that SMEs are at the heart of the life science industry, will the Government reconsider that decision?

My Lords, the UK is a prime location to research, develop and manufacture pharmaceutical products, particularly complex medicines. The Life Sciences Vision acknowledges that there has been a long-term decline in medicines manufacturing in the UK over the past quarter of a century, as the noble Lord highlighted in his Question, but official statistics from the Office for Life Sciences show that employment in core biopharmaceutical manufacturing has increased by 5% in the two years from 2019. The UK holds the number one spot for life science investment in Europe, and globally is second only to the US, so there are reasons for optimism as well.

My Lords, is not the situation outlined by the Minister rather belied by a recent article in the Financial Times by Dame Kate Bingham, who did so much to deliver the Covid vaccine? She said:

“Big companies are also retrenching. The pharmaceutical giants AbbVie and Eli Lilly have pulled out of the UK’s pricing agreement with the NHS. Bayer’s pharmaceutical arm is reducing its UK footprint and cutting jobs. Our own domestic titans, GSK and AZ, have chosen to build new factories in countries more friendly to business”,

such as Ireland. Is this not all down to government policy? How are the Government going to get back on the front foot?

I echo the tributes that have been paid in this place today and elsewhere to Kate Bingham for the work she did during the pandemic. The Government have invested more than £405 million to date to secure and scale up the UK’s vaccine manufacturing capabilities to ensure a robust response to Covid and potential future health emergencies. We recently announced a 10-year partnership with Moderna, which will invest in mRNA research and development in the UK, and other examples include Fujifilm, which announced in 2021 a £400 million investment in its site in Billingham, on Teesside, which will more than double the site’s existing development and manufacturing, anticipating the creation of up to 350 skilled jobs.

My Lords, one of my frustrations when I was briefly one of the Ministers for life science was that we would have meetings on life sciences between two or three departments, when in fact many parts of government were working on life sciences. I and other Ministers asked for anyone working on life sciences, whether that be in No. 10, the Treasury, DIT, DHSC, et cetera, to all get together in one room, whether virtual or real, to fully co-ordinate across government. I have recently been told that we are no longer co-ordinating across departments. I ask my noble friend to go back to his department to make sure that we continue to co-ordinate with everyone who is working on life sciences in government, so that we do not have one discussion and then have to talk to people outside the room.

I certainly shall, and through the creation of the Department for Science, Innovation and Technology, the point my noble friend makes is highlighted. This is an area where the UK has a globally unique offer, because we have already established a network of medicines manufacturing innovation centres which the industry can use to develop its own technologies, giving it a competitive edge, so the point he raises is important.

My Lords, although I agree with the comments made by the noble Lords, Lord Hunt of Kings Heath and Lord Clement-Jones, also affecting the manufacture and development of medicines in the United Kingdom now is our ability to conduct clinical trials, particularly phase 3 trials. We are good at starting phase 1 trials but by the time it comes to phase 3, not enough patients have been recruited and so the commercial trials come to an end. That means that we are not developing new medicines for cancers, cardiac disease and rare diseases. We need much more co-ordination from the Government, from the regulatory authorities for medicine and the ethics research authority, and from integrated care boards and trusts, so that the recruitment of patients continues at phase 3.

The noble Lord makes an important point. With the change in regulation following our departure from the European Union, we have further freedom to act in this area. It is important that we continue to seize those opportunities and ensure that we are at the cutting edge of scientific exploration. I will refer his points back to the department.

My Lords, it is said that India is the pharmacy of the world. Some 50% of generic drugs are manufactured there. Is it in the interests of the taxpayer for our National Health Service to increase its purchases from India?

We want to increase the manufacture of medicines in the UK as well. I have mentioned the importance to our economy and to the creation of jobs, particularly high-skilled jobs, in the UK. As 79% of manufacturing sites and 76% of manufacturing jobs in the UK are outside London and the south-east, there is an important angle there as well to support our work on levelling up. However, these are global challenges, and we want to see global solutions to them.

My Lords, is not yet another reason why the pharmaceutical industry is getting anxious that it relies heavily on the science base in basic sciences, and the basic sciences rely heavily on international collaboration? Our ability to attract and bring collaboration from the rest of Europe has been harmed by Brexit. What are the Government doing to redress that problem?

The UK holds the number one spot for life sciences investment in Europe, second only to the United States globally. However, the noble Lord is right about ensuring that we have the skilled talent pool across the industry and from academia and our health service to continue that growth. The Life Sciences Vision sets out our commitment to developing a strong talent pool across all those areas and the Government have developed several skills programmes that are delivering against our commitments by developing a pipeline of onshore talent, including through supporting apprenticeships and improving access to talent from overseas.

My Lords, the report referred to in the Question highlights the incredible success of Ireland in establishing itself as a global pharmaceutical manufacturing hub. Can the Minister explain what steps the Government are taking to learn from Ireland’s success and apply some of those lessons to the United Kingdom?

Of course, we keep an eye on what is happening around the world to ensure that we maintain our competitive edge but, as I said, we are second only to the United States for life sciences investment. We are supported by a mature and sophisticated capital market and the second biggest hub for private equity and venture capital after the US, so we have many advantages to be proud of as well.

Does my noble friend not agree that it is not only a decline in the manufacture of medicines but a decline in the manufacture of medical devices that we see at present? As far as I can make out, most medical devices are imported from China. Will the Government consider looking at a market such as Costa Rica, a country which has as its largest export medical devices, as a friendly and democratic country that we could do business with?

My noble friend has great expertise in the economies of Latin America and South America. I will ensure that the example of Costa Rica is being heeded in the department.

My Lords, all I am hearing is “managed decline”. The MMIP report set six themes for developments in medicines manufacturing, highlighting the importance of a resilient, stable manufacturing base to supply UK and global needs. The report aims to ensure that we have a competitive edge in a world of trade bottlenecks and political instability. What steps are the Government taking to collaborate internationally to secure better regulatory co-operation and trade facilitation to enable this? While we are at it, can the Minister update the House on the Horizon programme association bid, given the progress with the Northern Ireland protocol that we have been told about today?

The noble Lord is very up to the minute with the final part of his question, so I will perhaps defer my answer until I have seen what detail emerges. As I explained in the recent Question on Horizon, it is still the Government’s desire to join the programme. We hope that the EU will adhere to the terms of the trade and co-operation agreement, which we mentioned.

The pharmaceutical industry in the UK employs more than 136,000 people, of whom more than 48,000 are in manufacturing sites. The bulk of those are across the country, outside London and the south-east. There is perhaps not cause for as much gloom as the noble Lord had in his question, but we know that there is more work to be done, hence the work of the Life Sciences Vision and the innovative manufacturing fund to which I referred. We look forward to announcing the first winners of that fund later this year.