Trade and Industry Press Notice 86

Session 2002-03  2 September 2003

Press Notice 86


The Trade and Industry Select Committee will publish its Twelfth Report of Session 2002-03, UK Biotechnology Industry (HC 87) on Wednesday 3rd September 2003 at 11.00 am.

Embargoed copies for witnesses and members of the press will be available from 11.00 am on Monday 1st September from the Committee offices at 7 Millbank.  If you wish to collect a copy, please telephone in advance.  Further copies may be purchased from the Stationery Office (inquiries: 0870 600 5522) and the Report will be available on our website at the address below after publication.

The Committee concentrated in its inquiry on so-called “red” biotechnology, the pharmaceutical sector, as pharmaceutical biotechnology is the dominant branch of biotech activity in the UK and the problems of “green” (agricultural biotechnology) are in any case different.

 The Committee notes that the UK has established itself as the leading biotechnology nation in Europe and as the second in the world, after the United States.  However, many other countries are investing heavily in an effort to develop their own biotechnology capacity, and the UK cannot afford complacency.

The UK’s leading position in biotechnology is based on its long-established reputation for excellence in research in the biosciences in its universities, teaching hospitals and research institutes.  However, such research is suffering from long term under-investment.  This could threaten the UK’s continued strength in biotechnology.

Many biotechnology companies have been founded on discoveries made through academic research.  For the UK to take advantage of the commercial applications of its academic research, an efficient technology transfer process is required.  At the moment that process is less developed here than it is in the USA.  Whilst there are institutions where it is done well, and a steady improvement can be expected as expertise spreads, the Committee is concerned at the variable quality. The Committee recommends efforts to improve the technology transfer process nationwide through steps to promote best practice.

Biotechnology companies in the UK are less well funded than their competitors elsewhere.  The Government’s support for commercial biotechnology is modest, whereas in many other countries government funds are targeted at the sector.  The Committee is not convinced, however, that the generous government support seen elsewhere will guarantee success, as it may simply produce a large number of infant companies that are unable to survive in the longer term.  On the other hand, the Committee concludes, an adequate supply of venture capital is crucial to the continued success of biotechnology.  The UK has a well developed venture capital sector but the timescales over which it is prepared to invest are not as long as biotechnology firms generally require.  Biotechnology across the world has been suffering from the consequences of a bear market, but there are signs that this will bring about a period of consolidation in the sector which may prove beneficial in the long run.

Many commentators have emphasized the importance of the development of “clusters” for high technology industries like biotechnology.  The positive effects of clusters can be seen in cities such as Cambridge, Boston or Munich.  Young companies, in particular, can benefit from the concentration of biotechnology activity in a relatively small area.  The Committee is concerned, however, that efforts to create new clusters risk proving expensive failures and that competition between UK regions could potentially damage the UK’s biotechnology effort as a whole.  We should be primarily concerned to reinforce the success of our most internationally competitive locations.

The Committee also raises concerns over the shortage of management and intermediate skills in the sector.  It recommends that the Government, universities, RDAs, and the trade organizations work together to improve provision of training in these areas.  Also, there is a shortage of biomanufacturing in the UK.  Whilst this is not necessarily a problem at the moment, the development of biomanufacturing in other countries may deprive the UK of the potential additional value associated with this. The links between R&D and manufacturing in biotechnology may provide an opportunity for UK-based manufacturing in areas close to R&D centres. 

Commenting on the Report, Martin O’Neill MP, Chairman of the Committee, said:

“The biotechnology industry has been successful in the UK, but competitor nations, not only in Europe but also countries such as Singapore, have invested heavily in the sector, and, judging by the number of companies established, are catching up with the UK.  At the same time, investors who had rushed into the sector in the late 1990s were affected by the reaction against high risk, high technology investments: venture capital funding was becoming more difficult to obtain and floatations on the stock market came virtually to a halt. 

“We concluded that it was not necessary for the Government to invest large sums of money in biotechnology to sustain the UK’s lead: despite significant support from government, the German biotechnology industry appears to be, if anything, in a weaker condition than our own.  On the other hand, there are areas in which government intervention may help, for example in improving the quality of support given to infant companies by university technology transfer offices, ensuring that sufficient technicians are trained, removing any obstacles to the establishment of biomanufacturing plants, and, above all, by ensuring sufficient funding to universities and other institutions to maintain the UK’s excellence in academic research.  

“We are pleased to note that there have recently been signs of a return in investor confidence in  biotechnology, together with a consolidation in the sector which may leave fewer but stronger companies.  We believe that the UK can continue to be a centre of excellence in biotechnology.”

For further information or to request a copy of the Report, please contact the Trade and Industry Committee Office on 020 7219 5777.