13 January 2025
Science, Innovation and Technology Committee: Innovation, growth and regions
About the Association of the British Pharmaceutical Industry
The ABPI exists to make the UK the best place in the world to research, develop and access medicines and vaccines to improve patient care.
We represent companies of all sizes which invest in making and discovering medicines and vaccines to enhance and save the lives of millions of people around the world.
In England, Scotland, Wales and Northern Ireland, we work in partnership with governments and the NHS so that patients can get new treatments faster and the NHS can plan how much it spends on medicines. Every day, our members partner with healthcare professionals, academics and patient organisations to find new solutions to unmet health needs. www.abpi.org.uk
Contents
How government policy influences the UK’s life sciences ecosystem
Diffusion and adoption of innovation
How the pharmaceutical industry drives regional growth across the UK
Contact: Oliver Buckley-Mellor | UK Competitiveness Senior Policy Manager, ABPI
How government policy influences the UK’s life sciences ecosystem
Research and development
The combination of a world-leading academic science base and the NHS is a major strength of the UK’s global offer to life sciences investors, attracting £9 billion of R&D investment from the pharmaceutical industry in 2022.[1] The UK has a long-standing history of enabling large scale public-private research collaborations, such as the Industrial Strategy Challenge Fund established in 2018, bringing together expertise from academia, industry and the NHS to tackle shared ambitions. This ‘triple helix’ collaboration between industry, academia and the NHS, is predicated on public sector investment in R&D, so it is vital that public R&D budgets are maintained. To build on this strength, the government should commit the UK to achieving the highest level of public R&D investment in the G7 by the end of this Parliament.
The UK’s R&D tax incentives system, including the ‘Patent Box’ that rewards and incentivises companies to commercialise innovations in the UK, plays a complementary role in attracting and retaining industry R&D investment. The ABPI welcomed the government’s commitment to maintain the current system’s rates and structure in the Autumn Budget, and we encourage government to build on this strength by expanding the scope of R&D tax credits to include capital expenditure. Investments in capital and infrastructure are crucial to raising the rate of productivity growth, and the immobility of these investments helps to anchor business activities in the UK, attracting even more investment to the UK in the long run. A 2023 CBI survey found that 19 per cent of firms said including capital into R&D tax credits would have the greatest impact on their innovation investment in the UK, increasing to 30 per cent among manufacturers.[2]
The UK’s robust intellectual property (IP) framework is a bedrock of the pharmaceutical industry’s investment and innovation in the UK. Successive governments have understood that the complex and risky process of developing medicines and vaccines can only occur in the knowledge that successful innovation will not be imitated for a period of time in which the innovator can recoup this investment. This investment is then used to help fund subsequent innovative advances. Therefore, the ABPI recommends the government negotiate agreements that include strong reciprocal IP protections and play an active and vocal role in multilateral organisations, including the WTO and WIPO, to support the preservation of a robust international IP framework.
Investment in R&D, coupled with the UK’s robust IP framework, creates the opportunity to facilitate economic growth through enabling commercialisation of spinouts from IP generated by UK universities. Life science spinouts are critical for maintaining the UK as a world leader in discovery science and attracting additional investment to the UK.[3] The UK's top universities, such as Oxford and Cambridge, are creating more spinouts and attracting greater investments than ever before (Venturing out 2024). The opportunity for economic growth created by support for commercialisation of spinouts was recognised by the Government's 2023 Independent Review of Spinouts which highlighted the challenges companies face and recommended additional funding to support proof of concept for UK spinouts (Spinout Review, 2023).
Another bedrock of the pharmaceutical industry’s investment in the UK, enabled by government policy, is a predictable, well-resourced and reliable regulatory environment. In an increasingly competitive global life sciences market, national regulatory frameworks are a key consideration when companies make decisions on where and when to locate their activity. It is therefore vital for the UK to provide a globally competitive regulatory system that is proportionate and committed to ensuring patient safety while also being attractive to inward investment and industry R&D. To achieve this, the government must ensure the Medicines and Healthcare products Regulatory Agency (MHRA) has the resource, focus, and expertise needed to offer innovative regulation that is attractive in a globally competitive market. Further recommendations for how policymakers can develop a distinctive globally competitive regulatory offer for the UK that will promote confidence and growth in the life sciences sector can be found in the ABPI’s recently published report.[4]
The government is also responsible for NHS data, which has immense potential to improve health and grow the economy by offering unique cradle-to-grave health insights on the UK’s diverse population. However, despite past attempts to unlock the potential of NHS health data, its potential to accelerate research and improve population health is yet to be realised. This is because the existing health data landscape is fragmented and difficult for researchers to access. Industry relies on timely access to health data right across the product development cycle from discovery, to post market safety surveillance. The global pharmaceutical industry utilises data in countries which provide them with the data they need. Increasingly NHS data is becoming more difficult for researchers, including industry, to use for R&D as outlined in the recently published Sudlow Review[5]. One of the review’s key recommendations is to establish a health data service, and the ABPI will soon publish a position paper on how this can be achieved.
Diffusion and adoption of innovation
The UK’s ability to attract greater inward investment and jobs from the pharmaceutical industry is currently limited by slow and uneven adoption of many medicines and vaccines. As a result, UK patients are missing out on some of the best standard-of-care treatments, with high levels of variation in access and adoption across the country and low levels of use compared with our peers in the developed world:[6]-[7]
- The rate of availability of new medicines in England has fallen from 72 per cent in 2016-19 to 56 per cent in 2019-22. While this rate is above the EU country average of 43 per cent, it trails the UK’s larger economy peers like Germany, France, Italy, and Spain.[8]
- Even five years after launch, the average uptake of innovative medicines in the UK is 62 per cent of the average level of uptake in a basket of comparator countries.[9]
- Across the UK, significant regional variation in uptake persists. For example, eligible patients in the Derby ICS are three times less likely to receive new NICE-approved medicines than eligible patients in either the Norfolk or Surrey Integrated Care Systems (ICSs).[10]
Medicines and vaccines are an invaluable government investment in the health and wealth of the nation. With ONS data showing that economic inactivity due to sickness is at a record high,[11] they should be seen as playing a critical role in delivering economic growth:
- Analysis by the OBR found that the rise in economic inactivity due to sickness, combined with in-work sickness, was associated with an £8.9 billion tax loss in 2023/24.[12]
- Recent research by the TBI found that a 20 per cent reduction in the incidence of six major diseases could raise GDP by £26.3 billion annually within 10 years, with medicines and vaccines having a key role in doing so.[13]
- Research by PwC has found that if the UK were to increase the use of just four classes of medicines to NICE-recommended levels, it would deliver 429,000 additional years of life in good health for patients and £17.9 billion in productivity gains for the UK.[14]
Despite this, the UK’s medicines spend is the lowest among its peers, accounting for just 9 per cent of the UK’s healthcare spend compared to other large EU countries, including Italy (17 per cent), Germany (17 per cent), France (15 per cent) and Spain (18 per cent).[15] This limits access to new treatments that could improve health outcomes and spur productivity growth, and this effect is unequally distributed across the UK due to regional variations in uptake.[16]
These barriers to innovation correspond to a period following the pandemic where global competition to attract life sciences investment has reached an all-time high, with many countries launching targeted strategies to capture globally mobile investment.[17]-[18] This has resulted in the UK seeing a declining share of global pharmaceutical R&D investment, falling from 4.9 per cent in 2012 to 3.3 per cent in 2020.[19] To compete with other countries vying for investment, the UK must ensure that it offers an attractive and sustainable environment for life sciences companies to invest in R&D, manufacturing, and the early launch of medicines. In addition to an internationally competitive tax offer, high-quality skills and infrastructure, and a commitment to global free and open trade to support resilient supply chains, this offer must include fair recognition of the value of medicines. This is demonstrated through access, pricing and financial arrangements that are competitive with other developed healthcare markets.
Therefore, the ABPI recommends the government places greater onus on the role that public sector bodies, such as NHS entities across the UK, the MHRA, NICE, and JCVI can play in catalysing economic growth through investment in innovative medicines and vaccines. For the UK to provide the right mix of medicines necessary for better population health, it must appropriately value new innovations, drive improved and equitable adoption of medicines for all eligible patients, and address the inequality of medicines adoption across all regions and nations of the country'.
Measuring performance
It is vital that the UK moves beyond its recent perceived reputation within the global pharmaceutical industry as ‘strategy heavy, delivery light’. As such, we welcome the government’s focus on delivery as it develops the Industrial Strategy, Life Sciences Sector Plan, and NHS 10-Year Plan – and as it begins phase two of the Spending Review, which will set the scope and goals of public sector R&D budgets. This focus on delivery should be underpinned with shared mission-based targets and clear KPIs to monitor progress and “measure the mission”.
To facilitate this, the ABPI has recently developed a ‘proof of concept’ UK Investment Competitiveness Framework. The Framework features metrics of the UK’s performance across a range of investment areas and can be used to monitor the government’s success in attracting investment from the global pharmaceutical industry and creating the conditions for growth. If the UK can create these conditions, evidence shows that we can:
- Drive a 40 per cent decrease in the total UK burden of disease.[20]
- Generate £16.3 billion in gross domestic product (GDP) and 85,000 new jobs from increased pharmaceutical exports.[21]
- Attract an additional £1.2 billion and 7,230 high-quality jobs annually from greater life sciences foreign direct investment.[22]
We would welcome the opportunity to discuss this Framework with the Committee.
How the pharmaceutical industry drives regional growth across the UK
The ABPI’s Pharma Impact Map illustrates the pharmaceutical industry’s significant contribution to regional economies in all four UK nations, including the benefits gained through industry clinical research in the NHS and medicines manufacturing.[23]
Clinical research
Industry clinical trials are crucial to the development of new medicines and vaccines and account for half of the pharmaceutical industry’s R&D expenditure.[24] A recent ABPI report showed that industry clinical trials in 2022:[25]
- Generated £7.4 billion of GVA the UK economy, creating a total of 65,000 jobs;
- Raised £1.2 billion of direct revenue to the NHS, supporting 13,000 NHS jobs; and
- Helped to prevent 3 million sick days, worth £0.9 billion to the UK economy, by supporting reach-active hospitals to provide better quality care than research-inactive hospitals.
While these figures demonstrate the significant contribution that the industry makes to the UK economy and productivity, reports from the ABPI show a significant decline in industry clinical trial activity in the UK over the past seven years, which is only just beginning to improve.[26] If industry clinical trial activity returned to 2017 levels, it would contribute an additional £3 billion of GVA to the UK’s economy each year, which would support an additional £486 million of NHS revenue and 26,000 more jobs, including 5,000 jobs in the NHS.[27] Furthermore, since industry clinical trials are conducted across all regions and nations of the UK,[28] government efforts to increase this activity would directly contribute to regionally dispersed economic growth.
Progress is being made to realise these benefits, with the government recently introducing new clinical trials legislation[29] and announcing a £100 million public-private investment to set up 20 industry clinical research facilities across the UK.[30] The latter was enabled by the industry-funded VPAG Investment Programme, which will invest up to £300 million in clinical research over five years.[31] To build on this progress, the government should implement the recommendations in the ABPI’s latest clinical trials report,[32] which includes investing the VPAG Investment Programme funds in line with pharmaceutical industry expectations to boost capacity to deliver industry clinical trials across all regions and nations of the UK.
Medicines manufacturing
While the UK has lost around a third of its manufacturing strengths since the 1990s,[33] it still possesses an innovative and export-driven medicines manufacturing sector. Almost 45 per cent of the £36.9 billion of Gross Value Added delivered by the life sciences industry can be attributed to medicines manufacturing alone,[34] and the sector employs over 115,000 people across the UK.[35] If we get the UK’s conditions for growth right, medicines manufacturing alone could attract £15 billion worth of investment and create an additional 26,000 jobs over the next 10 years.[36]
The ABPI therefore welcomes the government’s decision to launch the £520 million Life Sciences Innovative Manufacturing Fund (LSIMF) alongside the Autumn Budget. Early responses indicate that the LSIMF will be a highly effective investment lever, so the government should consider expanding it in line with demand at a future fiscal event if it is oversubscribed, as is forecast.
We look forward to working with the government to optimise the operation of the LSIMF and attract a large quantum of manufacturing investment to regions across the UK. One way that can be achieved is if the government prioritises securing investments greater than £100 million and supporting companies through the programme to invest in late-stage manufacturing R&D, which can anchor commercial and clinical manufacturing capabilities for years to come. The government should also work with trade associations to effectively market the fund to the widest pool of potential investors and offer greater clarity on the application process and assessment criteria for grant distribution.
Another way the government can maximise the impact of the LSIMF is to ensure pharmaceutical companies can access high-quality skills across the UK, as this will enable a wider range of UK regions to compete for and benefit from globally mobile investment in medicines manufacturing. The upcoming replacement of the Apprenticeship Levy with a more flexible Growth and Skills Levy is a prime opportunity to achieve this goal. The introduction of the Levy in 2017 precipitated a period of rapid growth for apprenticeship starts in the pharmaceutical industry.[37] To build on this success and realise the industry’s potential for economic growth and health innovation, it is essential that the Growth and Skills Levy does not jeopardise the industry’s existing provision of apprenticeships and delivers the flexibility to fund shorter training courses promised to employers.
In particular, the government should not impose a blanket ban on Level 7 apprenticeships, as these vocational routes into professions requiring advanced qualifications are vital to addressing longstanding skills shortages that limit growth and opportunity across all regions of the UK.[38] If the government decides to exclude some level 7 apprenticeships from the Growth and Skills Levy, it should use the skills needs of the Industrial Strategy’s eight growth sectors as a guide to selectively retain level 7 apprenticeships.[39] For example, the ‘Through Life Engineering Services Specialist (Integrated Degree)’ and ‘Post Graduate Engineer’ apprenticeships are vital to meeting the skills needs of medicines manufacturing sites, and retaining these and other priority level 7 apprenticeships will enable UK regions to make the most of the schemes like the Sustainable Medicines Manufacturing Innovation Programme (which is funded by the VPAG Investment Programme and managed by Innovate UK on behalf of all four UK nations).[40]
ATMPs
A notable example of how the UK’s ‘triple helix’ collaboration between industry, academia and the NHS delivers innovative and regionally dispersed economic growth is the UK’s global position in Advanced Therapy Medicinal Products (ATMPs). Despite a 10 per cent global fall in ATMP trials, the UK’s global share of ATMP clinical trials stands at 9 per cent.[41] Industry-funded trials accounted for around 80 per cent of all UK ATMP clinical trials,[42] demonstrating the attractiveness of the UK’s ATMP landscape to global investors. UK ATMP manufacturing space has also grown year-on-year, totalling over 50,000 square metres.[43] Furthermore, of the ten ATMP therapies that are approved in the UK and reaching patients, two have manufacturing operations in the UK.[44]
While this recent success could not have materialised without the UK’s longstanding strengths in discovery research and medicines manufacturing, a significant level of responsibility lies with the Cell and Gene Therapy Catapult. Established in 2012, the Catapult has enabled a range of initiatives that have paid dividends for patients, the NHS, and the UK economy. To realise the full potential of ATMPs, the government should implement the recommendations of a recent report, commissioned by the ABPI, that draws lessons from other countries’ approaches to the research, development, access, and uptake of ATMPs.[45]
| 8 |