The UK’s life science sector has been missing out on £15 billion a year over the last decade as it has fallen behind international rivals in competitiveness, according to research commissioned by SCI.
While life sciences has been identified by the government as a key sector for driving economic growth, it has been falling behind its international competition.
SCI CEO Sharon Todd said: “In an increasingly competitive global market the UK is losing out to international peers who are doing far more to keep valuable life science businesses within their borders. Life sciences have the power to fuel the green transition, accelerate the discovery of life-changing medicines and address many of the world’s great societal challenges. Government must heed this wake-up call and act to save the UK’s life science sector before it is too late.”
Life sciences contributes around £34 billion in gross value added (GVA) to the UK economy, and supports more than 300,000 jobs across the country, which is also home to two of the top ten global pharmaceutical companies, AstraZeneca and GSK. In academia, the UK accounts for 4% of researchers, 7% of academic publications, and is home to four of the top 10 universities when ranked globally.
The government has highlighted life sciences as one the key eight sectors for its forthcoming industrial strategy that it hopes will ignite economic growth.
But the exclusive research - carried out by LEK Consulting for SCI – found that the UK’s life sciences sector faces challenges in an increasingly competitive global environment. It calculates that the sector’s declining position in global rankings comes at a cost of at least £15 billion per year to the UK economy.
At its peak, in 2017, the UK ranked as the world’s second largest destination for life sciences foreign direct investment. It has now fallen to eighth place, trailing behind the US, Germany, France, India, China, Ireland and Singapore. This loss of competitiveness costs the UK an estimated to be £1.1 billion every year in foreign direct investment.
Clinical trials initiated in the UK have also decreased by 8% since 2017/18, something which the research blamed on slow regulatory timelines, poor recruitment and high costs. This loss of competitiveness has resulted in an incremental GVA loss of £2.6bn every year, the report Unlocking Value in Life Sciences calculated.
The research also found that while, in the last decade, employment in life sciences in Europe has grown by 20%, it has remaining flat in the UK. Had UK growth been in line with the European Union, it could have supported an additional 10,000 jobs and an incremental GVA of £2.6 billion.
The UK’s share of global pharmaceutical exports stood at 5.4% in 2018 but had dropped to 3.8% by 2023. SCI’s research calculated that a return to the 2018 share could drive incremental GVA to the UK of £10.8 billion every year. Given the UK government’s ambition for the country to become the fastest-growing economy in the G7, the report said urgent action is needed to create a better environment to allow life sciences enterprise to thrive.
SCI said the decline in competitiveness could be addressed in a number of ways:
- A better-tailored set of incentives for life sciences enterprises - including R&D credits and Patent Box - across the development lifecycle from innovators to start-ups and scale-ups.
- Restoring the UK’s position as a leading location for clinical trials by committing to the recommendations in the O’Shaughnessy review of May 2023.
- Ensuring that, whilst attracting new investment in the UK, the government does not lose focus on the value of retaining existing businesses.
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