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Lord Sainsbury of Turville

International Biotech Keynote Summit
Lord Sainsbury of Turville

Excel Centre, London


Tuesday, November 19, 2002


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Ladies and Gentlemen, I was very pleased to accept the invitation to give the opening presentation today and I especially welcome the international focus of today and tomorrow's conference, as it is of course a global market in which we all work.

I was asked to talk today about the Government's approach to biotechnology, particularly in the future.

Biosciences and biotechnology are a priority for the UK Government. The biosciences and the technology they generate will be one of the prime drivers of the 21st Century. They will impact on all our lives and provide tremendous opportunities to improve our quality of life through advances in healthcare and environmental protection and through their ability to generate the wealth we need to implement these advances. The importance of the biosciences has been endorsed on several occasions by the Prime Minister, most recently in a speech that the he gave to the Royal Society this year on why 'Science Matters'. He said; "The biosciences are, rightly, drawing much admiring attention at the present time." And he went on to say; "I want Britain and Europe to be at the forefront of scientific advance.

The second point I would like to make is that for the future the Government will build on its current strategy, which has made the UK one of the best places in the world for bioscience. And the fact that the industry is currently going through a tough period will not lessen our support.

The UK's biotechnology sector is the largest in Europe and second globally only to the USA. There are nearly 400 businesses in the UK whose core activities depend on biotechnology employing 18,700 people and with revenue in 2001 of over £1.8 billion. And there are many more companies that provide the necessary services and supplies for these businesses.

Forty-eight of the UK biotech businesses are publicly quoted – the largest number for any country in Europe and UK companies account for 62% of the products in late stage clinical trials in Europe. Figures which I think particularly illustrate the maturity of the UK biotechnology sector and its future potential.

The Government's role in this success story is limited but important, we see it as being to create the right environment for the sector to grow and prosper. To give those – the scientists, the entrepreneurs and the investors – who create the wealth the best environment in which to work.

The right environment depends on two crucial factors:

- a world-class science base in the biosciences and the efficient means to bring R&D to the market as innovative products and processes

- a fiscal and regulatory environment that achieves the balance between necessary regulation and promotion of innovation and entrepreneurial endeavour.

There are other very important factors, such as public perception, which is particularly important in the biosciences where developments are continually challenging our existing social and ethical frameworks. Also the supply of skilled people needed to do the science and exploit it is a key factor for the industry. However, I want to focus today particularly on the Government's role in supporting the science base and its exploitation and developing the best regulatory environment because if we don't get these right we will not succeed in keeping the UK as a global leader in the biosciences.

The Science Base

The root cause of UK's continued success in the biosciences is the excellence of our science base. A clear illustration of this is the award of this year's Nobel Prize in Medicine to Sir John Sulston and Sydney Brenner for their pioneering genomics work. In the past 50 years UK scientists have been awarded 46 Noble Prizes and over 50% of these have been in the biosciences and medicine. Twelve, from scientists working at the Laboratory of Molecular Science in Cambridge where modern bioscience and biotechnology started, 50 years ago next year, with Crick and Watson.

The need to maintain and build the strength of the UK science base is a priority for the Government. This has been recognized in the last three Government Spending Reviews by the allocation of extra funds for research, education and infrastructure.

In this years Spending Review the Science Budget was increased by an additional £1.4 billion. This represents an increase of 10% p.a in real terms to the Science Budget over the next 3 years. This is on top of major increases in the 1998 and 2000 Spending Reviews.

Our science base will produce the new ideas but if we are to reap the benefits this has to be translated into new products and processes.

Promoting this process of innovation has been an important role for Government, and will continue to be so, and we have developed a number of initiatives to facilitate this process. For example the LINK programmes that support academic/industry collaboration. Notably the very popular LINK Applied Genomics programme launched in 2000 with £15 million of public funding – the biggest bioscience LINK programme to date. Also the SMART awards which provides direct support to innovative businesses. We are also providing funding to help universities transfer knowledge to industry and train the entrepreneurs of the future through University Challenge which provides seed loan money to universities, Science, Enterprise Centres, which provide undergraduate and graduate scientists and engineers with the opportunity to acquire entrepreneurial skills, and the Higher Education Innovation Fund which gives universities the incentives to transfer knowledge into industry.

We have also provided support through initiatives specifically targeted at biotechnology companies. The £25 million Harnessing Genomics programme is providing support for a range of projects that will help promote the development of the UK biotechnology sector. The DTI has co-funded Genetic Knowledge Parks with the Department of Health to help apply the developments in genetics to improvements in human healthcare. We have also supported the National Biomanufacturing Centre to be built in the North West, which will improve the availability of biomanufacturing capacity to biotechnology businesses particularly at the development and clinical trials stage. And tomorrow I will be announcing a number of Beacon projects that are being supported by the Harnessing Genomics programme. These projects aim to demonstrate leading edge, world-class areas of bioscience with real potential to impact on industry's productivity and competitiveness, as well as our quality of life.

As I mentioned the UK biotechnology sector competes in a global market and international collaboration is very important. Both to ensure that global markets are working as efficiently as possible and that there are no unnecessary barriers to trade and also to ensure that UK companies can develop profitable relationships with overseas organisations.

We promote international collaboration in a number of ways. We are working closely with the EU and its member states to ensure a strong European biotechnology market that will bring benefits to all its members. We do this through helping to develop the new Framework Six R&D programme which will have a very strong life sciences focus and in working with member states to implement the EU Life Sciences Strategy.

Earlier this year I announced a major UK/USA collaborative programme. We are pushing ahead with this programme, which aims to strengthen further our links to the world-class science base across the US. We are currently working with our US partners to create collaborations in academia and industry that maximize scientific research and technological development in the UK.

We also have a network of International Technology Promoters specifically appointed to help UK biotechnology companies access overseas technology. Please visit the Global Watch stand in the Conference's exhibition if you would like to learn more about the work of this team.

An important criteria for all the support the Government provides is that we create a UK biotechnology sector that is viable and has the potential to grow. We are not interested in encouraging start-up companies which will not be able to compete long-term in the market-place. This is a policy which we have consistently pursued in the past, and today's tough markets show I think that it was the right one.

Tax & Regulations

Government support can only ever be a minor, though significant part, of the investment that is needed to take a good idea through to a thriving business that can compete in global markets. The major part of investment must come from businesses themselves and external investors both from private and public markets. If the conditions are not conducive to this investment then good ideas will not be exploited.

The availability of finance particularly venture capital is very important for biotechnology companies. In this aspect the UK is in a strong position as it has the largest and most experienced venture capital industry in Europe, second only to USA. The UK is home to several of the largest specialised technology investment funds. UK companies specialising in investment in the life sciences raised over £1 billion in 2001, though today the conditions are very different.

A significant factor for UK's leading position in the financial investment markets is the relative attractiveness of its economic and regulatory environment.

This brings me to the second factor that I mentioned we need for a thriving biotechnology industry - a fiscal and regulatory environment that encourages business investment particularly in high technology businesses.

The Chancellor over the past few years has introduced several measures to encourage investment particularly in growing high technology businesses. A significant measure was the introduction of the Small Firms R&D Tax Credits in 2000 and its extension to large firms in this years Budget. This represents a £500 million investment by the Government in innovation. We have also reduced the Capital Gains Tax paid on investments in unlisted companies to 10% if the shares are held for two years.

Creating the right regulatory environment to ensure the necessary balance between prohibiting dangerous and damaging actions but avoiding bureaucracy that stultifies business formation and growth is an important function for the Government.

Regulations must be proportionate, practical, enforceable and based on sound science.

Regulations also need to provide a predictable base for industry to plan. This is particularly important in biotechnology where development of new products can take 10 to 12 years.

An area where we have been successful in adapting legislation and regulations to changing circumstances to ensure that the UK provides as favourable an environment as possible for the development of biotechnology is the use of stem cells.

The UK has been a pioneer in addressing the issue of the use of embryonic stem cells. There has been an open, well informed debate in the UK involving public opinion formers and Parliament. This has resulted in the extension of the Human Fertilization and Embryology Act to allow research into the therapeutic use of embryonic stem cells.

The approval of these regulations has put the UK in a leading position internationally and has been instrumental in attracting top scientists to the UK.

To further enhance the attractiveness of the UK for stem cell research, a National Stem Cell Bank is being set up. This Bank will provide a key facility for research by providing a supply of stem cells. The Bank will provide a framework for the controlled and ethical use of stem cells.

Conclusion

I know that at the moment with the depressed financial markets that many biotechnology companies are facing problems in raising finance and that this will mean some cutbacks in development programmes and plans being put on hold. But we do not intend to cut back on our support for industry and we have recently set up an Innovation and Growth Team in the DTI. This is being chaired by Sir David Cocksey, one of our top venture capitalists, and will look at the factors that will determine the future competitiveness of the bioscience sector in the UK. For example, the availability of investment to biotechnology companies; the future of biomanufacturing in the UK - how do we attract biomanufacturing investment to the UK; and in Europe, particularly how best can we ensure that the EU is the best possible base for global bioscience companies.

The Government sees biotechnology as a key industry for the future and is determined to create the best possible conditions for the industry to grow and flourish. These are tough times for the industry, but the Government will continue to give it, as it has done in the past, all the possible support that it can.
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