Explore the ScaleUp Annual Review 2021

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Building the UK as a Life Sciences Superpower

Following its response to the Covid pandemic, it has been a game-changing period for the UK life sciences sector. This year has also seen the publication of the Government’s Life Sciences Vision, which aims to make the UK the “leading global hub for life sciences.” It included the establishment of a sector scaleup taskforce – in which the ScaleUp Institute is engaged – and British Patient Capital launched its £200m Life Sciences Fund which is set to leverage £1bn of investment into the sector. 

In addition, the recent Budget and Comprehensive Spending Review will increase core science funding to £5.9bn per year by 2024-25, representing a 37% increase and meeting the full costs of associating with Horizon Europe.

So how can the UK capitalise on the opportunities ahead? 

One aspect of the Life Sciences Vision is to support cluster formation around existing sites as well as new clusters across the country. This is also a key finding of the ScaleUp Institute’s research with Arup on the drivers of local scaleup growth. How are our life sciences clusters evolving in 2021? 

Developing the UK’s life sciences clusters – from Edinburgh to Cambridge, Newcastle to Birmingham

“The life sciences sector is very buoyant,” says Derek Jones, CEO of the Babraham Research Campus. “Money is flowing both into life sciences and into the life sciences property sector.”

The Campus, which remained open throughout the lockdowns, is completely full. “We have no spare capacity, which is a challenge,” says Jones. “Tenant companies have continued to raise money and continued to grow.”

With that growth comes the challenge of physical space. “This is a UK life sciences problem,” says Jones. “As overseas money flows into these companies, we have to be very careful that they retain their ability to grow in the UK.” 

Across the country, existing centres of excellence are being expanded and new facilities are developed. For example, Bruntwood SciTech, the provider of property to the science and tech sector and which runs Alderley Park, will open the first phase of the Birmingham Health Innovation Campus (BHIC) in 2023; this will not only provide lab and office space but will also house the University of Birmingham’s Precision Health Technologies Accelerator and Birmingham Precision Medicine Centre. 

Local strategies are evolving rapidly. For example, health and life sciences form one of the four areas of strategic importance set out in the North East Strategic Economic Plan.

The report A Northern Life Sciences Supercluster from the NP11 Local Enterprise Partnerships (NP11) and the Northern Health Science Alliance (NHSA), sets out how a second UK life sciences “supercluster” could double employment and treble Gross Value Added (GVA) in the sector over the next 20 years.

In Scotland, the private sector led Opportunity North East has recently launched its third dedicated accelerator programme as part of its investment to double the size of the life sciences company cluster in and around Aberdeen. As Deborah O’Neil, CEO of Aberdeen-based Novabiotics, says in this scaleup story: “We’re passionate about developing the next generation of local science talent in what is an important growth employment sector in the north east of Scotland.” 

Demand for life sciences space in London has increased fourfold over the past five years, and demand is rising faster than supply, according to MedCity’s 2021 Demand Report, which identified “a desperate lack of provision” for wet labs for fast-growth companies, who identified “the lack of ready available property made fit for purpose, cost effectively and in locations that optimise their success as a primary barrier to growth.” Property consultants JLL estimate that the demand for space from life sciences companies in London will increase by between 1.2m and 4m sq ft over the next four to five years.

As more life sciences clusters develop, we hope that they will emulate the experiences and approach of ScaleUp Institute endorsed programmes such as the Babraham Research Campus and Alderley Park, as well as institutions such as Scale Space, to ensure they deliver sustained scaleup growth in this vital sector.

Foster collaboration, provide support

The Babraham Research Campus is a campus by name and a campus by nature. “People like the Babraham experience,” says Derek Jones. “They like the fact that we are a campus, not a science park, and we operate a community approach where we constantly ask our tenants what else we should be providing, other than a building. We are now home to 60 companies, from nascent startups to successful scaleups. It’s a micro-cluster where companies are willing to help and mentor each other.”

At ScaleSpace, it’s all about “getting the right people in the room at the right point in time, and making people aware of the network,” says CEO Mike Holmes.

That means holding events and providing networking opportunities. “We are starting to map out the researchers, academics and facilities within the Imperial College ecosystem to present that to the community. We’re putting different things in place to maximise the chances that the right people connect with each other.”

Be a source for talent

There is a lot of demand from the life sciences community for talent related support, says Mike Holmes. That could be requests for introductions to specific researchers within the Imperial ecosystem. It could be finding students and PhDs for internships, projects, or full-time hires.

“We try to foster accidental collisions and networking across the community. Obviously, until quite recently, such physical interactions were limited. But in the last few months, that has come to life and the community is buzzing.”

Scale Space houses lecture theatres and the research centres for Imperial College Business School. “We have Executive MBA and management students circulating through the building – and that was done on purpose. Access to talent is a barrier for scaling. By virtue of our relationship with Imperial College London, and having its business school on site, we can connect talent with the life sciences business ecosystem.”

A bonus of having more well-funded scaleups at the Babraham Research Campus is that they become actors, not just beneficiaries. “They get involved with activities which previously they would have been less able to do. For example, they have the financial longevity and maturity so that they can commit to bringing on PhD students over three to four year periods.”

Support fundraising

The Babraham Research Campus’ capacity to convene investors was born out in the 2020 economic impact report which noted that fundraising by its tenant companies was accelerated by an average of 5.1 months, and that 47% of funds raised in the Cambridge region were to ventures located there.

“Introductions to investors is part of our proposition,” says Scale Space’s Mike Holmes. “Through Blenheim Chalcot we are connected into a rich network of investors.”

Ensure physical infrastructure is flexible

The challenge for life sciences CEOs is about three Ps, notes Derek Jones: “pounds, people, and place.” At present, the pounds are coming in. There are challenges around people but recruitment is ongoing. For many, place is the problem.

The Babraham Research Campus has submitted an application for a new 40,000 sq ft building specifically to accommodate companies as they scale up.

During the pandemic, Scale Space deliberately pivoted towards creating more laboratory space. Lab work could not be done at home, so the original designs were modified.

A third phase of Scale Space White City will come online in 2022 and Holmes says that they are actively looking at flexible solutions for innovative scaling businesses. It’s not just about lab space. Scale Space puts emphasis on all the other amenities that a scaling life sciences company might need – from meeting rooms to collaboration infrastructure to recording studios.

Scale but stay within the ecosystem

Scale Space also manages the neighbouring incubator, the IHUB. “So we have spaces that can accommodate companies at different stages of their growth just five minutes’ walk apart. The more you can accommodate that growth story, either within the same building or the same ecosystem, the better the environment you are creating for more potential scaleups.”

“The White City area is changing dramatically and quickly,” says Holmes. “In five to 10 years time, people will have forgotten that it was ever anything other than a really thriving life sciences cluster.”

Life sciences: the search for scale and pace – A perspective from Dr Andy Richards CBE, the serial biotechnology entrepreneur and investor and board member of the ScaleUp Institute.

There’s an unhealthy UK meme that innovation in life sciences takes a long time. The meme goes like this: an idea in a university lab then goes to the technology transfer team, and after which this brilliant idea received a drawn out steady drip of finance involving pre-seed and seed rounds, followed by Series A, B and C rounds – by which time there might be something in the clinic. The process can take up to 15 years.

This linear model fits the narrative of the science sector; with science and funding, so the argument goes, good things will happen in time.

But we are getting outpaced. Many Nasdaq floats are very young companies who don’t draw a direct line back to university research and yet have already got things in the clinic. They have been built up by thematic investors and entrepreneurs, raising large amounts of money from the outset. We just don’t get this non-linear growth.

Yet today’s world in life sciences is about scale and pace. You are competing to be first and fastest. Pace is vital if we are to realise the Life Sciences Vision

There has not been a shortage of early stage finance for the life sciences sector but the model has been to establish a company to be sold – to build an asset rather than a business. So we have seen companies raise really large sums of money with just a handful of people and not even a website.

If you are going to scale up a real life sciences business you need more than that; you need a broad leadership team with scientific, development, commercial, operational and financial depth. Life sciences companies always need capital. The investment to get a product to market is large; the investment to convert them into commercial products is large.

Pace means that crossover fund investors, who invest both prior to and then also at IPO, move in at an earlier stage. They are absolutely key. They dominate the US markets. They are full of cash and are also active in the UK, such as RA Capital’s investment in Alchemab.

There has been a dearth of such activity here. British crossover investors such as Baillie Gifford are active in life sciences but only in the US.

But I am optimistic. Some investors have been very successful, such as Syncona. Investors who backed AIM-listed life sciences stocks pre-pandemic will have seen good returns – and there has been a series of IPOs. There is a stronger appetite for the sector. The BioIndustry Association (BIA) has published a guide to investing in the sector.

Getting UK institutional pension funds into crossover funds to back UK life sciences companies would make a difference. It’s not unknown: M&G led the Series B investment round in Oxford-based Vaccitech and supported its Nasdaq float. If we can bring this big money at the top end of the chain, the pieces will get put together.

That’s where British Patient Capital’s £200m life sciences investment programme plays a role. It will only make a difference if it invests in a catalytic way, boosting existing rounds and crowding in and convening crossover and institutional investors.

I am extremely keen to see a buoyant life sciences market in London. The recent IPO of Oxford Nanopore has been very important in this respect but let’s be mindful that one company does not make a sector.


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