The life sciences sector in the UK has established itself as a prominent player, particularly in the field of biotechnology. The thriving biotech sector contributes to 30% of the country’s overall life sciences industry.
Among the biotech companies, half of them primarily focus on research and development services, while over a third are dedicated to therapeutics and diagnostics. The remaining 15% encompass various other biotech sectors like environmental, animal health, and agribio, which do not specifically engage in medical research for human use.
While 2021 was a remarkable year for private equity fundraising in the life science sector, 2022 experienced a significant decline in venture investments, amounting to less than half of the previous year’s total. However, there is hope for recovery, as the UK’s biotechnology landscape has witnessed an impressive surge in funding in the third quarter of 2023. According to Biotech Finance, the sector received a robust £563 million ($700 million) in venture capital and public financings, marking a staggering 48% increase from the previous quarter. This surge in funding sets a formidable pace for the industry after a challenging 2023.
When looking at open vacancies, the South of England and Greater London account for 74% of all UK biotech science vacancies. However, there was a 46% decrease in total science vacancies in these areas compared to 2022. In comparison, the EU 27 saw a 39% decrease across its major hubs. Cambridge, on the other hand, maintains its position as the leading biotech city in Europe for the third consecutive year. Notably, there has been a formidable surge in vacancy activity in Utrecht, with a 68% increase in new jobs within the biotech sector.
In terms of investment figures, the UK saw a decline in 2022, with investments amounting to USD 1,920 million compared to USD 4,827 million in 2021. Despite this drop, equity financing for biotech companies in the UK remains consistent with pre-pandemic levels, indicating stability in the industry. The IPO market also experienced a notable decrease, with only four UK life science companies listed on a global stock exchange in 2022, compared to 11 companies in 2021. However, respected biotech analysts predict a potential boom in the sector in 2024, driven by falling interest rates and a stagnant 2023. They anticipate an increase in M&A activity, with large pharmaceutical companies pursuing smaller biotech firms. Neurosciences, which has grown at 9% annually in recent years, and early-stage assets within oncology and the obesity/weight loss space are expected to be particularly attractive.
Looking towards the future, the UK government’s Spring Budget for 2023 brings optimism for the growth of the country’s life sciences industry. The budget introduces R&D tax incentives and other measures aimed at attracting new investments into the UK market. This indicates a positive trajectory for the industry, with the potential for further expansion and advancements in the field of life sciences within the UK.
Yvette Cleland - CEO | Cpl Life Sciences
