Health, wealth and growth: a sector strategy to transform the economic and societal benefits of UK HealthTech
File(s)
Author(s)
Bannister, Peter
Davies, Andrew
Devereaux Phillips, Richard
Green, Daniel
Moore Jr, James
Type
Report
Abstract
Executive Summary
HealthTech is a hidden gem of the UK economy. It contributes £13bn
Gross Value Added (GVA, equal to biopharma) thanks to the UK’s
strengths in medical innovation.i But its potential remains barely
tapped. Growth in UK HealthTech is limited by shortages in capital
and skills, partly because HealthTech investment has been damaged
since Brexit by uncertainty about regulatory arrangements.
Given the importance of HealthTech in patient care, as
described in the Appendix “HealthTech vs MedTech”,
the sector has a too-distant, transactional relationship
with the NHS, which should be its biggest partner in
clinical trials and adoption of technologies that deliver
more cost-effective healthcare.
Fixing these problems will add to the nation’s economic
growth and help ensure that the NHS delivers better
health and wellbeing to everyone in the UK.
This report presents specific policies with short,
medium, and long-term benefits that:
• strengthen investment flows into UK HealthTech
companies from domestic and overseas investors
through tax and regulatory incentives, alongside
measures to address skills shortages.
• boost investment by UK HealthTech through tax and
regulatory incentives to fund clinical trials in the UK.
• increase the attractiveness of the UK for HealthTech
companies by providing a collaborative framework for
the adoption of HealthTech by the NHS.
• address skills shortages through the establishment
by industry of a HealthTech Industry Partnership (HIP).
• achieve sustainability and NetZero goals by
incentivising innovation with a UK kitemark,
supported by specialised training delivered by HIP.
• boost exports through a programme of overseas
customer engagement events supported locally by
the Department of Business and Trade (DBT).
These will be achieved by fast-acting and relatively
simple measures including:
1. Recognition of regulatory approvals by the FDA,
EU, and other trusted jurisdictions as sufficient to
grant UKCA approval. This incentivises companies
to invest in NHS clinical trials and ensure that
the choice of clinical trial participants reflects
the UK population. Experts consulted during the
development of this proposal said this would also
encourage North American and Asian companies to
establish their European operations in the UK.
2. Specific R&D tax credits for clinical trials
conducted with the NHS. The UK has fallen from
4th to 10th globally in the number of large clinical
trials conducted, and this measure will restore the
UK’s competitiveness in clinical trials. More trials will
bring more cash to the NHS and boost corporate
recruitment of HealthTech specialists in the UK.
3. Changes to Capital Gains Tax (CGT) and Enterprise
Management Incentive (EMI) rules to reward
employees of high-risk early-stage companies such
as those in HealthTech. These employees generally
have lower cash earnings and higher share-based
remuneration than comparable roles in established
companies. Without a lower tax rate for sharebased
incentives in high-risk private companies,
experienced managers and engineers are
discouraged from taking jobs with entrepreneurial
innovative companies.
4. Industry to establish and support HIP, endorsed
by Government. It will address the skills shortages
in the sector. It will integrate this with Office of Life
Sciences (OLS), UKRI, and other bodies such as the
Health Innovation Networks.
With these and the other initiatives set out in
the main body of the report, Government and
Industry can transform the attractiveness of the
UK to HealthTech investment and unlock growth
of high value employment. Just as importantly,
HealthTech can make the NHS more cost-effective
with products ranging from new diagnostics and
treatments to AI in patient care. With few exceptions,
new medical devices both improve patient care and
save healthcare systems money. HealthTech is a
means to improve NHS productivity and the quality
of the care it provides to the UK population.
Staged delivery for GVA growth
Growth in the short term will fall to existing companies,
primarily SMEs. Large corporates often operate in
more mature categories with growth rates in single
figures. Therefore, we have modelled an evolving
contribution from the sector today (represented by the
ABHI’s membership) to what we consider to be the
likely composition of the sector 5-10 years from the
execution of the proposals in this report.
• 0-2 years “quick wins” in three categories:
First enabling young companies to attract more
VC (and other) investment. Second is to incentivise
those companies themselves to invest in highly
skilled employees, clinical trials, and specialist
manufacturing. Third is to support those high skill
R&D and manufacturing companies to sell overseas.
• 2-5 years – above-trend CAGR rate for GVA and
employment growth, initially generated by SMEs
but increasingly by global corporates attracted by
the changes in the UK environment for HealthTech.
• 5-10 years – transformed growth in GVA and highskill
employment, taking advantage of the UK’s
world-leading innovation and the rapid growth of
both SMEs and large corporates in the first 5 years.
We forecast a 50% increasing in global R&D
HealthTech spending in the UK with an increase
of 50,000 skilled jobs within 5 years leading to an
overall doubling of sector GVA over 10 years.
HealthTech is a hidden gem of the UK economy. It contributes £13bn
Gross Value Added (GVA, equal to biopharma) thanks to the UK’s
strengths in medical innovation.i But its potential remains barely
tapped. Growth in UK HealthTech is limited by shortages in capital
and skills, partly because HealthTech investment has been damaged
since Brexit by uncertainty about regulatory arrangements.
Given the importance of HealthTech in patient care, as
described in the Appendix “HealthTech vs MedTech”,
the sector has a too-distant, transactional relationship
with the NHS, which should be its biggest partner in
clinical trials and adoption of technologies that deliver
more cost-effective healthcare.
Fixing these problems will add to the nation’s economic
growth and help ensure that the NHS delivers better
health and wellbeing to everyone in the UK.
This report presents specific policies with short,
medium, and long-term benefits that:
• strengthen investment flows into UK HealthTech
companies from domestic and overseas investors
through tax and regulatory incentives, alongside
measures to address skills shortages.
• boost investment by UK HealthTech through tax and
regulatory incentives to fund clinical trials in the UK.
• increase the attractiveness of the UK for HealthTech
companies by providing a collaborative framework for
the adoption of HealthTech by the NHS.
• address skills shortages through the establishment
by industry of a HealthTech Industry Partnership (HIP).
• achieve sustainability and NetZero goals by
incentivising innovation with a UK kitemark,
supported by specialised training delivered by HIP.
• boost exports through a programme of overseas
customer engagement events supported locally by
the Department of Business and Trade (DBT).
These will be achieved by fast-acting and relatively
simple measures including:
1. Recognition of regulatory approvals by the FDA,
EU, and other trusted jurisdictions as sufficient to
grant UKCA approval. This incentivises companies
to invest in NHS clinical trials and ensure that
the choice of clinical trial participants reflects
the UK population. Experts consulted during the
development of this proposal said this would also
encourage North American and Asian companies to
establish their European operations in the UK.
2. Specific R&D tax credits for clinical trials
conducted with the NHS. The UK has fallen from
4th to 10th globally in the number of large clinical
trials conducted, and this measure will restore the
UK’s competitiveness in clinical trials. More trials will
bring more cash to the NHS and boost corporate
recruitment of HealthTech specialists in the UK.
3. Changes to Capital Gains Tax (CGT) and Enterprise
Management Incentive (EMI) rules to reward
employees of high-risk early-stage companies such
as those in HealthTech. These employees generally
have lower cash earnings and higher share-based
remuneration than comparable roles in established
companies. Without a lower tax rate for sharebased
incentives in high-risk private companies,
experienced managers and engineers are
discouraged from taking jobs with entrepreneurial
innovative companies.
4. Industry to establish and support HIP, endorsed
by Government. It will address the skills shortages
in the sector. It will integrate this with Office of Life
Sciences (OLS), UKRI, and other bodies such as the
Health Innovation Networks.
With these and the other initiatives set out in
the main body of the report, Government and
Industry can transform the attractiveness of the
UK to HealthTech investment and unlock growth
of high value employment. Just as importantly,
HealthTech can make the NHS more cost-effective
with products ranging from new diagnostics and
treatments to AI in patient care. With few exceptions,
new medical devices both improve patient care and
save healthcare systems money. HealthTech is a
means to improve NHS productivity and the quality
of the care it provides to the UK population.
Staged delivery for GVA growth
Growth in the short term will fall to existing companies,
primarily SMEs. Large corporates often operate in
more mature categories with growth rates in single
figures. Therefore, we have modelled an evolving
contribution from the sector today (represented by the
ABHI’s membership) to what we consider to be the
likely composition of the sector 5-10 years from the
execution of the proposals in this report.
• 0-2 years “quick wins” in three categories:
First enabling young companies to attract more
VC (and other) investment. Second is to incentivise
those companies themselves to invest in highly
skilled employees, clinical trials, and specialist
manufacturing. Third is to support those high skill
R&D and manufacturing companies to sell overseas.
• 2-5 years – above-trend CAGR rate for GVA and
employment growth, initially generated by SMEs
but increasingly by global corporates attracted by
the changes in the UK environment for HealthTech.
• 5-10 years – transformed growth in GVA and highskill
employment, taking advantage of the UK’s
world-leading innovation and the rapid growth of
both SMEs and large corporates in the first 5 years.
We forecast a 50% increasing in global R&D
HealthTech spending in the UK with an increase
of 50,000 skilled jobs within 5 years leading to an
overall doubling of sector GVA over 10 years.
Date Issued
2024-10-16
Citation
2024, pp.1-36
Publisher
Imperial College London
Start Page
1
End Page
36
Copyright Statement
© 2024 The Author(s).
Subjects
ABHI
benefits
centre for sectoral economic performance
growth
health
HealthTech
MedTech
Publication Status
Published