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Life Sciences Businesses

Volume 836: debated on Monday 26 February 2024


Asked by

To ask His Majesty’s Government what further steps they intend to take to support life sciences businesses starting up and scaling up in the United Kingdom.

The life sciences sector is among the UK’s most globally competitive, with a turnover of more than £108 billion in 2022 and employing over 300,000 people. Supporting the sector is a priority for this Government, as demonstrated through a range of initiatives. These include a £520 million fund supporting life science manufacturing, reforms to the UK’s pension market to boost funding for companies, grants for early-stage companies via Innovate UK, export support and initiatives to accelerate the NHS adopting innovation.

I thank the Minister for that reply. We all understand the importance of the life sciences sector to our economy and to the health of our nation. Can he explain why, under this Government, the UK’s share of global exports in this sector was down from 9% to 4%, and our share of global R&D fell from 7.2% to 3.2%, between 2012 and 2020? Does that not represent a complete failure by this Government to create the stability and certainty in which life science innovators can flourish?

I am always grateful for challenge from any Peer in this House, but I have very different figures. If I look at the turnover of the life sciences sector, I find that, in 2022 alone, it was up by 13%, and it is up by 40% since 2015. There is a whole lot more that we can do, but I am proud of our record when it comes to garnering investment—FDI, which is particularly my function—into the UK life sciences sector. Over a three-year average, we are third in the world, behind only the United States and Germany. That is rather a significant tribute to the people in this sector and the Government’s support of it.

My Lords, it is well known that there is a chronic shortage of purpose-built life sciences wet lab space. Can the Minister elaborate on what measures are being taken to build more science parks and innovation hubs?

The noble Lord is absolutely right to raise this as a core issue. I am quite frustrated myself at some of our planning points, which certainly delay the building of these essential facilities. I am glad that life sciences wet lab space has been coming on stream in significant quantities, not least recently in Canary Wharf, which I hope he will join me in celebrating. However, there is more to be done; I totally agree with the noble Lord.

My Lords, the Office for Life Sciences reports to the DHSC and the DSIT. The Office for Investment is a joint No. 10 and Department for Business and Trade unit. I spoke to a major biotech investor in this country, which said that the lack of communication between these two organisations is hampering its progress in building new biotech capacity in this country. Does the Minister agree that these two organisations ought to work closely together? There ought to be an explicit link, so that when companies are trying to scale up and invest in this country there is a proper joined-up approach.

I sometimes feel that the noble Lord, Lord Fox, asks the perfect question, though we have not collaborated. Tomorrow, I have just such a trilateral meeting, between DSIT and the Department of Health, the Office for Life Sciences and the Department for Business and Trade. I totally agree with the comments made by businesses about the siloing of government, which I am afraid is an issue we all face. This working group will have enormous power in trying to drive change and there are a number of things I want it to do. First, I want it to try to identify key companies around the world that we want to bring to the UK. Secondly, it should look at how we scale up the existing opportunities we have. The noble Lord is absolutely right, and I am delighted that tomorrow will mark the first event of which he has spoken.

My Lords, the Minister referred to the position of the US as being in advance of the UK in life science innovations. Our universities increasingly recognise the critical need to put innovations and discoveries of patient benefit through start-ups and scaling. However, costs and complexity are driving start-ups to pursue regulatory approvals via the US FDA, rather than here. This means that patients get biotech and medtech advances far later than those across the Atlantic, even from UK spin-outs. What are the Government doing to remove the redundancy and repetition to incentivise UK companies to pursue NHS deployment in this very competitive global market?

I am grateful to the noble Baroness for her prompting. The Government have put more money into the MHRA, specifically for clinical trials, to assist all of our agencies to license more effectively and faster. As Minister for better regulation, it is part of my specific project to drive innovation. Clearly, this is not without risk, but, if we are to own the IP and lead the world, it is essential that we must go faster. That applies not just to the regulators but to government departments. We are working hard on this, but I appreciate the challenge.

My Lords, I refer to my interests, as set out in the register. When I was in the Department of Health, I had a meeting with a number of start-ups from the life sciences sector. They told me what wonderful products and services they had, but that they could not convince investors to invest in them. We looked at whether we could bring investors together with start-ups and scale-ups, so that they better understood each other—the companies could understand what the investors were asking for in returns and investors could understand the potential of these businesses. What progress has been made in bridging the gap between investors seeking to understand investing in the life sciences industries and those start-ups seeking to attract investment?

I am grateful to my noble friend for that point. This is very much the work of the Office for Life Sciences, the Department for Business and Trade, and the Office for Investment. We do a huge amount of work liaising with companies and investors. One of our missions is to get more life sciences funds established in the UK, so that we can, I hope, benefit from the home buyer. I was particularly pleased a few months ago to celebrate the opening of the Flagship Pioneering office in London, which is precisely that sort of life sciences fund. It was part of the incredible investment in companies such as Moderna. We want them here and they want to come to the UK. If we can encourage them to do this, it will have a huge advantage in bridging the gaps my noble friend mentioned.

My Lords, I wonder whether the atmosphere is too pessimistic. The University of Oxford has propelled itself to the forefront of the world in its life sciences and science parks, notably one by Magdalen College that has more than 100 start-ups and is expanding. Does this not mean that the Government should support universities, their freedom and their ability to do science? It is from that that the great success of these life sciences start-ups has come.

I totally agree with the noble Baroness. I would go further and say that one policy motor that has been successful so far is these life science investment zones, particularly in Liverpool. I had the privilege to meet with Steve Rotherham today and the metro mayors, who have been leading across the board and in Yorkshire, to find an essence of focus for the investment into these new technologies. We are doing a huge amount of work on university spin-offs as well—organisations such as Northern Gritstone and Midlands Mindforge are the absolute core of the work I am doing to get money internationally into these pools of capital.

My Lords, my question arises out of the one just asked. Can the Minister elaborate on what the Government are doing to spread the excellent work of the life sciences in this country more evenly around the UK?

I hope I have answered this to some extent. There is no limit to the amount of work that we can do to get more investment into this sector. It starts from the smallest opportunities at universities, where we can put more money into life science spin-out funds, trying to help the organisations that pool that capital, as I say. It is about trying to establish bases in London for the key life sciences funds from abroad, and working with sovereign wealth funds, the biggest pension funds and the UK pension fund industry to put money into the industry. That is an important start.

My Lords, will the Minister attend the conference on life sciences in Aberdeen on 20 March, which is designed precisely to focus on this and is being promoted not just by the Aberdeen chamber of commerce but by the Times and the industry? Will the Government attend?

I am grateful to the noble Lord for raising this. It was not in my diary, but this is an area of great passion for me and, if I can attend, I certainly will. I am sure some of my officials will be heavily engaged. Earlier in the year, we attended the key life sciences summit in San Francisco, which I had the privilege of attending the year before. We have to be out there flying the flag, so I totally agree with that prompt and I will look into it.

My Lords, I declare my interest as chair of Oxford University Innovation. Following the excellent question from the noble Baroness, Lady Deech, I am pleased to report that university innovation is going from strength to strength. At the University of Oxford, we spun out an average of four to five companies in 2015, but there was an average of 20 in 2021. Investments in Oxford spin-outs went from £125 million a year from 2011 to 2015 to over £1 billion a year now; that is more than 45% of the country. The question is not how we get the innovation started—that is easy. The question is how we scale those companies and keep them in the UK. What are the Government doing to attract that growth capital and keep those companies here?

I am extremely grateful to my noble friend for that question, and I congratulate her on the astonishing amount of work that she has done to promote the sector. I am happy to have further discussions on the technical focus of the spending and getting the right level of capital into the scale-ups. As I say, it runs from a range of university spin-outs through to the development and commercialisation of those ideas. We then have to locate funds in the UK, and, at the highest level, we need more liquidity in our stock market for the very large venture opportunities. That circles back to the Mansion House compact and the Edinburgh reforms, which the Chancellor has been absolutely right to focus on. I hope the Government will announce in the near future the result of the LIFTS competition, which is a £250 million fund specifically designed to kick-start investment from defined contribution pension savers into this industry, which will have an important impact.