Sectoral Systems of Innovation and the UK’s competitiveness: the UK Biopharmaceutical Sector 2024
File(s)
Author(s)
Type
Report
Abstract
Executive Summary
The UK has a globally strong reputation in the
life sciences and a large pharmaceutical and
biotechnology industry. This report updates
our 2023 research on the structure and recent
performance of its biopharma sector, which
we define here as companies involved in
developing and manufacturing both traditional
pharmaceuticals (‘small molecule’) and
biotechnology-based pharmaceuticals (‘large
molecule’).
We investigated trends in the economic performance of
these companies and compared them to other leading
countries, along with their research and development
(R&D) capabilities and activity.
Biopharma R&D and manufacturing is one of the UK’s
leading industrial sectors, responsible for around 140,000
jobs. It contributes a gross value added (GVA) of around
£20 billion annually to the UK economy.
Over the last 15 years the sector has experienced some
significant challenges to its economic performance.
Biopharma GVA (constant prices) peaked in 2008 and
then declined for the next 10 years. Although it has picked
up in in recent years, it remains below the peak and
the UK has fallen behind other competitor countries in
international rankings.
The UK has seen a consistent downward trend in
biopharma labour productivity and has been overtaken by
other European countries.
Exports of pharmaceutical products were in continuous
decline from 2017 to 2021, leading to a negative trade
balance, although they have since picked up and the UK
had a small trade surplus in 2023.
Medicines manufacturing volume has fallen by 29%
and 7,000 jobs have been lost since 2009, partly as
manufacturing of lower value generic drugs and active
pharmaceutical ingredients has transferred to lower cost
locations.
Despite the challenging business environment, we
identified important strengths in biopharma R&D. The
UK ranks fourth in total biopharma R&D spending and
third for R&D activity when measured by the location of
inventors of patentable innovations. The UK’s two leading
pharma companies (GSK and AstraZeneca) spend around
£15 billion (not all in the UK). There is also high inward
investment by companies conducting R&D in the UK.
Public funding for life science and health sciences R&D is
around £5 billion.
There is also a large number of small UK biopharma
companies that are R&D active and raise private
investment (around $5 billion in 2021). The R&D output of
small biopharma companies tends to be at an early stage
and they often find it hard to obtain investment to move
innovations through the development pipeline. There is
concern that too many companies are bought by non-UK
players before they grow in size.
The decline in clinical trials over recent years, hampering
R&D and rapid access to innovative medicines for UK
patients, has been much discussed. Measures put in
place recently to address the decline have had some
success in reducing MHRA approval times. Funding has
also been made available to strengthen the clinical trials
infrastructure and support patient recruitment.
We believe there are opportunities to improve R&D
productivity by leveraging the rich clinical and other life
science data available in the UK, support the emerging
data science sector that is targeting drug development,
and foster small and young companies to help them grow.
There are also opportunities to gain a competitive
advantage in manufacturing high-value medicinal
products by fostering innovation in manufacturing
technologies, and supporting the re-shoring of
manufacturing capacity.
Government and industry are making efforts to address
some of the current challenges faced by UK biopharma,
especially around the clinical trials infrastructure and
decline in manufacturing. However, while there is talk
about the importance of an integrated national life
sciences R&D ecosystem, we believe that much remains
to be achieved in connecting the UK’s capabilities in drug
discovery and early clinical development with an easier
adoption environment that takes advantage of the scale
of the NHS.
Our recommendations include stimulating R&D
productivity, ensuring there is targeted support for earlyand
scale-up stage biopharma companies (including
data science specialists), continued improvement in
clinical trials capacity through enhancements to the
data infrastructure, ensuring the NHS integrated care
systems work to promote and adopt innovations, and
strengthening the biopharma manufacturing base.
The UK has a globally strong reputation in the
life sciences and a large pharmaceutical and
biotechnology industry. This report updates
our 2023 research on the structure and recent
performance of its biopharma sector, which
we define here as companies involved in
developing and manufacturing both traditional
pharmaceuticals (‘small molecule’) and
biotechnology-based pharmaceuticals (‘large
molecule’).
We investigated trends in the economic performance of
these companies and compared them to other leading
countries, along with their research and development
(R&D) capabilities and activity.
Biopharma R&D and manufacturing is one of the UK’s
leading industrial sectors, responsible for around 140,000
jobs. It contributes a gross value added (GVA) of around
£20 billion annually to the UK economy.
Over the last 15 years the sector has experienced some
significant challenges to its economic performance.
Biopharma GVA (constant prices) peaked in 2008 and
then declined for the next 10 years. Although it has picked
up in in recent years, it remains below the peak and
the UK has fallen behind other competitor countries in
international rankings.
The UK has seen a consistent downward trend in
biopharma labour productivity and has been overtaken by
other European countries.
Exports of pharmaceutical products were in continuous
decline from 2017 to 2021, leading to a negative trade
balance, although they have since picked up and the UK
had a small trade surplus in 2023.
Medicines manufacturing volume has fallen by 29%
and 7,000 jobs have been lost since 2009, partly as
manufacturing of lower value generic drugs and active
pharmaceutical ingredients has transferred to lower cost
locations.
Despite the challenging business environment, we
identified important strengths in biopharma R&D. The
UK ranks fourth in total biopharma R&D spending and
third for R&D activity when measured by the location of
inventors of patentable innovations. The UK’s two leading
pharma companies (GSK and AstraZeneca) spend around
£15 billion (not all in the UK). There is also high inward
investment by companies conducting R&D in the UK.
Public funding for life science and health sciences R&D is
around £5 billion.
There is also a large number of small UK biopharma
companies that are R&D active and raise private
investment (around $5 billion in 2021). The R&D output of
small biopharma companies tends to be at an early stage
and they often find it hard to obtain investment to move
innovations through the development pipeline. There is
concern that too many companies are bought by non-UK
players before they grow in size.
The decline in clinical trials over recent years, hampering
R&D and rapid access to innovative medicines for UK
patients, has been much discussed. Measures put in
place recently to address the decline have had some
success in reducing MHRA approval times. Funding has
also been made available to strengthen the clinical trials
infrastructure and support patient recruitment.
We believe there are opportunities to improve R&D
productivity by leveraging the rich clinical and other life
science data available in the UK, support the emerging
data science sector that is targeting drug development,
and foster small and young companies to help them grow.
There are also opportunities to gain a competitive
advantage in manufacturing high-value medicinal
products by fostering innovation in manufacturing
technologies, and supporting the re-shoring of
manufacturing capacity.
Government and industry are making efforts to address
some of the current challenges faced by UK biopharma,
especially around the clinical trials infrastructure and
decline in manufacturing. However, while there is talk
about the importance of an integrated national life
sciences R&D ecosystem, we believe that much remains
to be achieved in connecting the UK’s capabilities in drug
discovery and early clinical development with an easier
adoption environment that takes advantage of the scale
of the NHS.
Our recommendations include stimulating R&D
productivity, ensuring there is targeted support for earlyand
scale-up stage biopharma companies (including
data science specialists), continued improvement in
clinical trials capacity through enhancements to the
data infrastructure, ensuring the NHS integrated care
systems work to promote and adopt innovations, and
strengthening the biopharma manufacturing base.
Date Issued
2024-10-16
Citation
2024, pp.1-55
Start Page
1
End Page
55
Copyright Statement
© 2024 The Author(s).
Subjects
biopharma
biopharmaceutical
centre for sectoral economic performance
health
innovation
report
Publication Status
Published