Speech by: Lord Drayson
Venue: Financial Times: Global Pharmaceutical and Biotechnology Conference, London

PLEASE CHECK AGAINST DELIVERY

Good afternoon.

The UK is now the place to be for pharmaceutical or biotech companies.

That’s a bold claim. It needs some qualifying. But it’s one that I stand by.

With the sole exception of the United States, this country offers the best operating environment for the life sciences – and, in several respects, we outpace the US.

Consider the evidence.

The UK is the top performer among the G8 leading economies per unit of R&D spend. Our scientists produce 16 research papers per $1 million of research funding, compared to 9.2 papers in the US and 3.6 in Japan.

Two of our universities, Oxford and Cambridge, are ranked in the top three globally for
life sciences and biomedicine.

Our regulatory bodies and IP laws allow innovators to thrive. The UK medical technology sector, for example, has rapidly become the largest in Europe – with around 2,000 companies employing almost 50,000 people. At the same time, the UK medical biotech sector leads Europe on drugs in clinical development.

The result? Our bioscience and healthcare sectors generate over £23 billion a year in revenues.

All this without coming anywhere close to leveraging the full potential of the NHS as a driver of innovation. No other country has equivalent patient databases with which to conduct clinical trials and investigations, nor the capacity to test and then roll out cutting-edge medicines and technologies. The opportunities for collaboration between the NHS and industry are something we must exploit.

Now, I recognise – of course – the significant problems currently affecting life sciences.

The pharmaceutical sector is teetering on the edge of a patent “cliff” – valued at a $140 billion loss in sales – as several blockbuster drugs lose their licences in the coming years. It’s having to explore new business models to replenish the pipeline.

For medical biotechnology companies, the ongoing shortage of capital is putting the brakes on their ability to grow.

I’m not ignoring the warning signs – the UK’s declining global share of patient enrolment in clinical trials; the skills shortages undermining SMEs.

Nevertheless, I remain optimistic for two reasons.

First, because my personal knowledge of this industry – based on 20 years as a science entrepreneur – makes me confident that the UK has the ideas and the talent to lead on next-generation technologies.

And second, because the industry – with critical input from Government – has taken decisive steps this year to gear up for the future.

Thanks to the creation of the Office for Life Sciences and through the UK Innovation Investment Fund, we’re doing the right things to help this industry grow.

OLS – I believe – epitomises a smarter approach to supporting enterprise, with Whitehall departments, industry heads, academics and NHS leaders working together and agreeing the way forward.

Elvis Presley put it best – and most graciously: “A little less conversation, a little more action, please.”

In that spirit, the Life Sciences Blueprint – published in July – set out a package of measures to improve the UK operating environment in the face of intensifying global competition.

On the NHS, we announced the Innovation Pass, a three-year initiative that will mean patients get faster access to new medicines. A pilot will begin next year with a £25 million budget. The NHS chief executive, meanwhile, is currently leading work on reviewing incentives – including Payment by Results – to accelerate uptake of medical technologies.

To capitalise on our leading position in regenerative medicine, the Technology Strategy Board has established a new programme worth £21.5 million – with new competitions to commercialise R&D in areas such as therapeutics.

And for the first time, the UK has a single marketing strategy for life sciences, which is increasing its activities. We’re now promoting the industry with one voice.

On the most critical issue of all – finance – the UK Innovation Investment Fund represents a major bit of progress.

It’s something we’ve needed for years: a fund of the scale achieved by the biggest US vehicles which can provide patient backing to tech-based firms at all stages of development.

With £150 million of cornerstone investment from the Government, the UKIIF will be a 12- to 15-year fund of funds, seeking private sector investment on an equal basis to raise up to £1 billion over its lifetime.

We’re close to appointing a professional manager, whose job will be to invest in a limited number of top-tier technology funds and deliver top-quartile returns.

We are also exploring the possibility of co-investment – including with large pharmaceutical companies – to maximise the fund’s impact.

In the course of promoting the UKIIF and UK life sciences internationally, I’ve received some useful feedback on UK life sciences. US and Japanese companies have been positive about the sector and the work of the Office for Life Sciences, one – in particular – praising the Office’s ability to make things happen at “Formula One pace.”

That feedback is being matched by significant commitments to the UK at a time of global restructuring.

This year, we’ve seen Eisai locate their research, production and European HQ in Hatfield, and UCB Biologics open a new laboratory in Slough.

A consortium – including GlaxoSmithKline, the Wellcome Trust and my department – is investing £37 million in a drug development bio-incubator in Stevenage, which will be home to around 25 companies at the start and grow from there.

More recently, Pfizer has announced the UK as the only place outside the US where it will run a major research facility – at Sandwich.

So there are good reasons to feel confident – and we’re not going to lose any momentum.

The work of OLS continues. We’ll shortly release further details about some major Blueprint actions: the Innovation Pass consultation, the NHS Life Sciences Delivery Board, and the UK Life Sciences Super Cluster.

We’ve also been working with the Treasury on how the UK tax regime can incentivise innovative activity. We’ll say more in next month’s Pre-Budget Report.

With all of these developments, success will be judged solely in terms of change on the ground: faster clinical trials, more inward investment, new products to market, SMEs ultimately going global.

That’s all I want to say. I’m keen to hear your comments and answer some of your questions.

The only point I’d add is one I made at the launch of the OLS blueprint. Public-private partnership is the best way forward for life sciences. I therefore expect Government action to be reciprocated by industry committing to the UK; by researchers forging stronger links with industry to generate commercial value; by the NHS adopting innovative medicines and technologies.

We’re on the right path. We can’t afford any let-up.

Thanks for listening.