The Office for Life Sciences (OLS) was pleased with a set of measures put forward in last week’s Budget which will have a positive influence on the operating environment for life sciences companies and which recognise the importance of supporting the life sciences industry as a key strategic sector of the future
Lord Drayson, who is leading the work of the Office, said:
"It is an important achievement for the newly formed Office for Life Sciences that the Budget included a commitment to explore the tax treatment of Intellectual property to enhance the competitiveness of the UK. This idea was proposed in Sir David Cooksey's Review and Refresh of Bioscience 2015 and the Office for Life Science has worked in partnership with industry representatives and the Treasury to understand the implications of potential changes. The Government is committed to making the UK the destination of choice for life science companies to locate their R&D and manufacturing facilities and this is an important step forward to increase our attractiveness in the face of global competition. I would now encourage industry to play a full part in the consultation.
There was also further good news in Budget for the life sciences industry - the Technology Strategy Board will invest £50m in strategically important industries, such as life sciences, which will help the UK through the recession, and ensure we are in a strong position following the economic upturn."
The following sections of the Budget are particularly relevant to the life sciences industry. The full text of the budget can be found at http://www.hm-treasury.gov.uk/d/Budget2009/bud09_completereport_2591.pdf.
The UK life sciences industry and the OLS
Life sciences research presents significant potential for new applications and markets in advanced economies with ageing populations. The Government has created a new Office for the Life Sciences (OLS), which will work with industry to make further improvements in the operating environment for the pharmaceutical, medical biotechnology, and healthcare technology industries in the UK, culminating in the publication of a Life Sciences Industrial Strategy this summer. As a first step, the Government will publish its response to Sir David Cooksey’s Review and Refresh of Bioscience 2015 in May 2009. This will set out action in a number of priority areas, including stronger incentives to support participation in clinical research and steps to promote innovation in the NHS, and action to tackle regulatory barriers and skills gaps.
Increased life sciences funding by the Technology Strategy Board
The Government will set aside £50 million as part of the new Strategic Investment Fund to enable the TSB to increase its capacity to support innovation in areas which have high potential to drive future growth, such as low-carbon technologies, advanced manufacturing, and the life sciences.
Government commitment to examine balance of taxation on Intellectual Property
As part of the Government’s commitments to examine the challenges facing the UK tax system and ensure its competitiveness, and its focus on supporting the high-value added priority sectors in which the UK can excel in the future, the Government will consider the evidence for changes to the way the tax system encourages innovative activity and the relative attractiveness to global firms as they make decisions on where to locate their research and development and other innovation activities.
Working with representatives across the business community, the Government will examine the balance of taxation of innovative activity, including intellectual property. The Government will assess the evidence on the potential impacts of any reforms on economic activity, such as the development and exploitation of patents and other intellectual property, location of manufacturing, research and development, investment and employment (as well as where intellectual property assets are held), and on tax receipts.
The Government will consider further with industry and set out its assessment and proposed approach before the 2009 Pre-Budget Report. This assessment will draw on the expertise of the Business-Government Forum on Tax and Globalisation and on existing analysis such as the Review and Refresh of Bioscience 2015 report, as well as a wider range of stakeholders.
The OLS has received very positive feedback from the Trade Associations we are working with and their companies.
Dr Richard Barker, director-general of The Association of the British Pharmaceutical Industry (ABPI), said "The announcement of this consultation demonstrates the commitment of the UK government to life sciences in Britain and represents an important first achievement for the Office for Life Sciences. It could have significant impact on how companies make their investment decisions. We welcome Government's resolve to create winning strategies for key industrial sectors, with life sciences being one of these. Work continues with the OLS to address other dimensions of the UK’s competitiveness in this key knowledge-based sector. The ABPI will play a full part in the consultation announced today."
Andrew Witty, CEO of GSK said: "I am very pleased that the Government will consult with business on the tax treatment of income attributed to intellectual property (IP). The tax regime is an important factor that drives the location of investment and jobs by global companies such as GSK. Countries like Singapore, Belgium and Ireland have been extremely successful in attracting high-tech manufacturing and R&D investment through their tax regimes with Belgium recently introducing a highly competitive tax regime that targets income from IP specifically. If the UK introduced a similar system to Belgium this would have a positive impact on the investment decisions of GSK. We look forward to working with the Government on taking this important agenda forward and making the UK a truly world class location for bioscience R&D and manufacturing."
The BioIndustry Association (BIA) "welcomes the introduction of a £750 million Strategic Investment Fund for emerging technologies, including biotech, announced by the Chancellor of the Exchequer in the Budget today. The fund is designed to "...promote research and development and harness commercially our world-class science base". This could make a significant contribution to supporting and building a successful and sustainable bioscience sector in the UK."
Michael Hunt, CEO of ReNeuron, said "Pre-revenue bioscience companies in the UK are currently experiencing real issues in raising funds, meaning that groundbreaking research projects and clinical trials using novel therapeutics are under threat. Additional funding for the sector is desperately needed and I hope that the Strategic Innovation Fund announced today will go some way to meeting the requirements of these companies. Whilst the announcement of the fund is encouraging news, it's important that the fine detail is clarified as quickly as possible."
The British In Vitro Diagnostics Association (BIVDA) "welcomed the support for both technology and for SME businesses in today’s budget. With a large group of SME companies in its membership, and significant export base, BIVDA were pleased to see the practical help set out today and in particular the additional investment in both the Technology Strategy Board and in UK Trade & Investment."
