The UK needs to pick up the pace on life sciences

The writer is managing partner at SV Health Investors and former chair of the UK Covid Vaccine Taskforce

The UK’s Life Sciences Sector Plan may be bold — but it’s destined to disappoint unless we pick up the pace. It sets out 33 government-backed actions to ensure the UK becomes Europe’s leading life sciences economy by the end of this decade, and the third largest globally (behind the US and China) by 2035. We’re a very long way off. To have any chance of realising this goal, we must embrace innovation rather than focus relentlessly on low drug costs.

There is a clear shift in global R&D and drug innovation to the US and China. Europe and the UK’s pharma market remains half the size of America’s due to pricing pressure despite a larger population. Up to 40 per cent of new drugs are never launched in the UK. Since we are routinely denied timely access to breakthrough medicines, it’s hardly surprising that our health outcomes are worse than those of many other countries.

China has implemented a transformative life-sciences strategy over the past 10 years. Its sweeping regulatory reforms, rapid innovation, cost advantages, speed of trials and emerging platform technologies have resulted in 30 new drugs being approved, discovered domestically in 2023-24. Thirty per cent of large pharma’s licensing deals now involve a Chinese biotech, with UK pharma giants such as AstraZeneca entering multi-billion-dollar AI-driven partnerships across Beijing, Shanghai and other hubs.

The UK’s strategy, while laudable, is not enough to compete. Increased funding for the British Business Bank (BBB) is welcome but insufficient. Unlocking billions in UK-based finance is crucial if we want to build bigger, better British biotechs and keep them here, rather than them being sold to multinationals. Life sciences investments outperform the wider market in realised returns, but UK pension funds’ fixation on keeping costs low restricts investment into high-potential biotech, which could increase returns for pensioners.

At SV, we have seen enthusiasm for UK biotechs from US investors and others. Cardiff’s Draig Therapeutics recently raised $140mn for severe depression drugs while Cambridge-based Alchemab has struck deals potentially exceeding $1bn for neurodegenerative disorders.

UK investors are missing out on such deals — we need to mobilise domestic finance to scale up and hold on to our homegrown champions. And pharmaceutical companies aren’t investing here because they can’t sell their drugs to the NHS.

The UK’s punitive and unpredictable price caps on novel drug sales stifle investment and innovation. This year the government, through the voluntary pricing and access scheme, is demanding an astonishing repayment of up to 33 per cent of innovative drug sales from manufacturers, prioritising cost over patient benefit. This will lead to declining growth in the life sciences and biotech — as we’ve seen elsewhere.

The UK’s policy of extreme drug rationing is short-sighted. Nice must modernise its drug evaluation framework and speed up. The UK should adopt more sophisticated assessments that reflect both therapeutic benefit and disease severity, allowing higher prices for genuinely innovative treatments. Exceptional therapies should be exempt from rigid affordability caps — including the annual NHS spending threshold — to avoid rationing medicines that save or transform lives.

We must build on what works: streamlined regulation, dynamic pricing, targeted public-private investment and patient-centred innovation. While some costs will go up in the short term these will be vastly outweighed by medium to long term gains in productivity, growth and patient outcomes.

If the UK is serious about maintaining leadership in life sciences, now is the time to act — before global competitors leave us behind.

Letter in response to this article:

Why higher prices for new drugs are no NHS panacea / From Sally Gainsbury and Huseyin Naci