Written evidence submitted by LabCorp (IGR0020)
Response to the House of Commons Science, Innovation and Technology Committee – ‘Innovation, Growth and the Regions’
Our organisation and reason for submitting evidence
Labcorp is a global leader of innovative and comprehensive laboratory services that helps doctors, hospitals, pharmaceutical companies, researchers and patients make clear and confident decisions. We provide insights and advance science to improve health and improve lives through our unparalleled diagnostics and drug development laboratory capabilities. The company’s more than 67,000 employees serve clients in over 100 countries. Labcorp has a presence across England with sites in Harrogate, Eye, Huntingdon and Shardlow.
We employ more than 3,000 people in the UK, a high percentage of whom are highly skilled researchers and scientists helping transform the way care is delivered. We have more than doubled our UK headcount since 2016 and continue to invest in our UK businesses year-on-year. As such, we deliver extensive economic opportunities across the UK and contributing to the UK’s wider life sciences platform through providing comprehensive clinical laboratory and drug development services as well as Crop Protection & Chemical research and development services.
Thank you for your time in considering the details in our response. If you have any questions or require any further detail on our submission, please do get in touch using the contact details above.
Response in full
Question 1 – How does the Government drive research and innovation in our regions?
Commercialisation operates at both national and international levels – markets for sectors such as life sciences are not confined to regional boundaries but are inherently global. Consequently, regional initiatives are often less impactful than national government programmes that empower and support regional contributions. For example, providing funding to regional areas can enable them to achieve international reach and influence.
At the regional level, local government can play a crucial role by offering coaching, investing in commercial preparedness, and facilitating market enablement. This could include assistance with national and international go-to-market strategies and the development of market entry frameworks.
However, a locally focused approach must be underpinned by the requisite expertise and a thorough understanding of both the sector and the market to ensure that initiatives and local infrastructure are effectively leveraged for maximum impact.
These factors have a significant impact on the success of start-ups, spin-outs, and other innovation-driven businesses. One key challenge is the lack of long-term funding, which constrains sustained growth and innovation. Access to talent is another critical issue, compounded by the need to build a greater risk appetite and an entrepreneurial mindset. Questions remain as to whether UK-based entrepreneurs are as ambitious as their US counterparts, who serve as prominent global role models. Furthermore, the extent to which UK entrepreneurs are supported – both financially and strategically – remains a topic for consideration.
In terms of Intellectual Property Rights (IPR), the UK’s system, including the Patent Box regime, generally functions well and provides valuable incentives for innovation. However, the flow of venture capital (VC) funding into start-ups is inconsistent and often insufficient, limiting the ability of businesses to scale effectively. Further, specifically within the research community, it is very difficult to qualify for the Patent Box regime since companies like Labcorp are providing a service vs. producing a product.
The recent changes to the UK R&D tax credit regime, specifically the New Merged Scheme, are negatively impacting many businesses within the research and clinical research organisational (“CRO”) space. The primary beneficiaries of the RDEC tax scheme changes are the large pharmaceutical companies based within the UK. While the intent was to curb abuse of the tax credit system, the changes are creating a material impact on research companies due to the reduction in tax credit. These factors are causing companies to reassess if it can continue to operate within the UK. As noted above, we operate our research organisation at a global level and are not restricted to only needing to operate within the UK. Without proper incentives, it will be difficult for CRO’s and/or research businesses to continue to operate within the UK, which could potentially negatively impact UK economies at both the national and regional levels.
Additionally, access to a skilled workforce and infrastructure that supports innovation, such as incubators, accelerators, and research facilities, remains crucial for creating a thriving ecosystem. Addressing these challenges requires targeted support and policy adjustments to strengthen the foundations for business growth and commercial success.
Question 2 – How does research and innovation in our regions drive growth and prosperity in those regions?
In regions where innovation hubs and clusters are well-established and have achieved critical mass – such as Oxford, Cambridge, and London – they play a significant role in driving regional growth and prosperity for local communities. However, many other areas require additional support to build the necessary critical mass, extend their supply chains, and ensure the sustainability of their innovation ecosystems.
The high cost of establishing a business in places like Oxford underscores the need to strategically develop new hubs in regions where there is both economic potential and existing infrastructure to support growth. These new hubs shouldn’t be in competition with the existing hubs but focus on a specific scientific area. This requires a coordinated national approach to ensure that investment and resources are allocated effectively, building balanced regional development and creating a more interconnected and resilient network of innovation hubs.
Regional cluster growth can best be measured, mapped, and monitored through key metrics such as the number of direct and indirect jobs created, the revenue generated within the region, and the growth of organisations and companies linked to the cluster, including those within the supply chain.
For example, challenges in areas such as Huntingdon and Eye highlight the need for a thriving local trade ecosystem to support workforce availability and retention. By tracking such indicators, local leadership can identify gaps and opportunities, enabling evidence-based policymaking in Whitehall that strengthens regional economies and enhances cluster sustainability.
Yes, unlocking investment at scale for innovative science and technology companies would support regional growth. However, a more effective approach may be to target specific regions and concentrate investment in disciplines where a foundational core already exists, rather than adopting a "shotgun" approach by attempting to create innovation hubs from scratch.
It is also important to avoid creating unnecessary competition between UK regions. Instead, efforts should focus on ensuring that regional contributions complement and strengthen the national innovation ecosystem as a whole, promoting collaboration and mutual benefit across regions.
Yes, there should be region-specific innovation and growth policies. The Government’s role should be to enable and support regional initiatives while ensuring that inter-regional competition is minimised. Instead, the focus should be on building collaboration and mutual reinforcement across regions.
Incentives should be provided across the innovation ecosystem, including support for key enablers such as universities. For example, universities in Leeds and York should be encouraged to collaborate rather than compete, recognising that hubs like Oxford are competing on a global scale with cities such as Boston, rather than with other UK regions like Manchester.
Question 3 – How is research and innovation diffused or supported to drive productivity and growth in the regions, wherever it may come from?
To ensure that innovation investments deliver tangible outcomes for both local and national economies in terms of productivity and growth, it is essential to identify and address the key barriers to growth and implement measures to mitigate them. Investment strategies should focus on regional strengths, securing specialisation in areas where clusters already show potential, while also promoting collaboration between regions to maximise collective impact. Further, there should be changes made to the RDEC regime to encourage more science and innovation in the research area specifically applicable to CRO’s and not only large pharma organisations.
For example, supporting the development of biotech or diagnostic clusters can enhance both regional capabilities and national competitiveness. Progress should be assessed through metrics such as job creation, regional revenue growth, increased collaboration between institutions, and the commercialisation of research outputs.
Catapults have supported national growth effectively; however, due to their specific locations, they have naturally clustered activities around them. This targeted clustering is beneficial, as it avoids a diffuse, unfocused approach. For example, the Cell and Gene Therapy Catapult in London and Stevenage demonstrates the advantages of concentrating resources in strategic hubs, rather than duplicating efforts with multiple, redundant centres.
Similarly, the establishment of a cluster, for example in Manchester for New Approach Methodologies (NAMs) or biomarker development highlights how focused regional hubs can act as enablers, driving both regional and national growth. The government would need to put a framework in place of what part of NAMs (e.g. subset of NAMs) the large Universities should focus on to avoid competition across universities. This would drive deep innovation rather than a “shotgun” approach. The breadth of NAMs would provide enough projects for each university.
More needs to be done to enhance coordination between universities and businesses in developing and commercialising research, as universities often operate independently rather than collaboratively. A more strategic focus is required to bridge the gap between academia and industry, building partnerships that enable access to both UK Research and Innovation (UKRI) and venture capital (VC) funding for collaborative efforts.
An example of a more collaborative approach is Midlands Mindforge, where eight universities in the Midlands have come together to pool resources and expertise. Similar initiatives could be explored in other regions, such as between universities in York, Sheffield, Leeds and Bradford, to strengthen research outputs and increase the commercialisation potential of spin-outs and collaborative R&D projects.
By creating frameworks that support long-term partnerships and funding pipelines, universities and businesses can accelerate innovation, translating research excellence into commercial success and economic growth.
13 January 2025