Written evidence submitted by the
Association of the British Pharmaceutical Industry (BER0062)
A1. The Association of the British Pharmaceutical Industry (ABPI) represents innovative research-based biopharmaceutical companies, large, medium and small, leading an exciting new era of biosciences in the UK. We represent companies who supply more than 80 per cent of all branded medicines used by the NHS and who are researching and developing the majority of the current medicines pipeline, ensuring that the UK remains at the forefront of helping patients prevent and overcome diseases. Globally our industry is researching and developing more than 7,000 new medicines.(1)
A2. The ABPI welcomes the Government’s focus on the life sciences sector and ambition to grow R&D investment to 2.4% of GDP by 2027 and 3% subsequently. This is an ambitious target which will need the support of the life sciences sector to achieve it. As a sector, pharmaceuticals is the largest R&D investor in the UK, spending £4.1 billion in 2016.(2)
A3. The life sciences ecosystem is complex, and its success is reliant on funding from several interdependent sectors: industry, charities and the public sector. Increasing or decreasing investment in one of these sectors impacts the effectiveness of funding in the others. Public investment of R&D is instrumental for fostering areas of emergent and cross-disciplinary science research and is crucial for leveraging further investment through partnership and collaboration.
A4. Following the UK’s decision to leave the EU, the ABPI’s priority has been to ensure that the outcome of Brexit negotiations maintains patient access to new medicines, protects public health across the UK and EU and ensures that life sciences companies remain in the UK. The continued support of Government for life sciences, and its commitment to increase R&D spending, is helping to provide reassurance to the global life sciences industry. Continued efforts to improve the UK’s attractiveness for high-value jobs and investment through targeted incentives are needed to leverage private investment in support of public funding and to maintain the UK as a world leader in life sciences.
A5. We welcome this inquiry from the Science and Technology Select Committee and would be pleased to give oral evidence to support it.
B1. Total R&D spend is dominated by private investment, with just over two-thirds of R&D spend coming from the private sector.(2) Together with funding streams from Government and the charitable sector for the basic research, this funding underpins the research and development cycle in many industries. In the life sciences, collaboration between the private and public sector has delivered ground-breaking research which, in many notable instances, has led to the development of new treatments and technologies for the benefit of patients.
B2. The life sciences sector relies on long-term investment and a stable science and research environment. For example, developing a new medicine takes on average 12 years from discovery to market; creating stability and consistency in research and development investment and developing mechanisms for collaboration between the academic research base and industry is essential.
B3. Collaboration between partners in academia, charities, the NHS, Government and the life sciences industrial sector has led to the development of new treatments for patients. However, since the private sector bears the biggest weight in the cost of translating research findings into new technologies; the commitment of public sector investment into basic research and creating a favourable environment is essential to attract and maintain continued private sector investment.
B4. The many, and varied, funding streams within the life sciences sector are important because they provide a practical vehicle to foster collaboration in R&D between the private and public sector. It is essential that these avenues of collaboration are maintained and, where possible, increased.
B5. The life sciences sector makes a significant contribution to the UK economy. As an industry we have over 64,000 employees (3) and the highest productivity of any other high technology sector at £372,000 GVA per employee.(4) Each direct life sciences job supports 2.5 jobs elsewhere in the UK. Investments and support for R&D deliver returns to both the wealth and health of the UK. Evidence from the Campaign for Science and Engineering (CaSE) shows that every £1 of public investment in R&D raises private sector output by 20p each year in perpetuity.(5)
B6. In the context of securing a vibrant, research-based life sciences sector in the UK post-Brexit and ensure that we reach the government ambition of 2.4%, ABPI recommends the continuation of policy levers already in place. We also propose exploring further additional potential levers to encourage continued growth in UK private sector spending on R&D. Fiscal incentives, including R&D tax credits (RDEC), the availability of skilled employees and a strong science base are all key to the UK’s competitiveness for the sector.
B7. The access and uptake of medicines in the NHS is intricately linked with the UK’s ability to attract and leverage investment in R&D. The access and uptake of medicines plays a pivotal role in supporting patients, the NHS and wider life sciences ecosystem. For every 100 patients in comparable countries with access to innovative medicines only 18 patients in the UK have the same.(6) The UK must improve the uptake of cost-effective medicines to support R&D investments in the UK.
C1. Government spending on life sciences R&D provides the foundation upon which private investment is leveraged and the life sciences sector is supported and encouraged to thrive.
C2. The benefits of increasing Government expenditure in science and research are manifold. A 2014 study identified that putting money into UK public sector R&D attracts private investment from overseas and increases private sector investment. It also calculated that if the Government made a one-off increase in public spending on R&D of £450 million, market sector output would rise by £90 million per year, every year. Discounting this flow of extra output at 5% per year gives a total boost of £1.8bn to business sector output over time.(5)
C3. A further report demonstrated that maintaining the publicly funded science budget in real terms had leveraged an additional £1.2 billion of private sector investment that would not have occurred if the budget had been cut in line with other government departments.(7) One of the consequences of this sustained support of both the public and private sector in scientific excellence is that the UK has been very successful in securing funding from EU research programmes, having won 22.7% of the research funding available from the 2007-2013 European Framework Programme 7 (FP7), despite having only 12.6% of the EU 28 population share.(8)
D1. Collaboration is integral to the success of the life sciences sector. A number of key funding organisations and arrangements support R&D in the life sciences sector in the UK. For example, the MRC has played a role in funding and creating new organisations to improve the research and development environment in the UK i.e. the Farr Institute, HDR UK, Francis Crick Institute.
D2. Support is also needed for medical research charities who fund essential disease-specific research which is vital as treatments become more personalised – demonstrating the need for continued support for charities to fund medical research i.e. Charity Research Support Fund.
D3. Some examples of collaborations and independencies of funding are outlined below, these are by no means exclusive:
UKRI
D4. Investing public funds in industry-relevant needs, which are determined at the outset and developed in partnership, will be the best way of achieving the 2.4% R&D target. UKRI presents a unique opportunity to simplify funding models, coordinate across disciplines and lead deep and ongoing dialogue with industry to partner at the strategic and responsive level. Complexity is a by-product of the UK’s vibrant and dynamic research environment and we should encourage government and UKRI to strategically align and simplify the many organisations operating on the research-translation-clinical spectrum.
Innovate UK
D5. Innovate UK directly supports companies in the life sciences sector with R&D funding at an early to mid-stage research development stage. This allows companies to reduce their risk burden when developing an innovative product and strengthen their business case to attract partnerships with industry or private investors. Many of our members form partnerships with other members and the wider community to bid for funding from Innovate UK, on collaborative R&D projects.
D6. One of many examples of where the Innovate UK funding model has been successful is Discuva, a biotech company developing new antibiotics. Discuva received Innovate UK Biomedical Catalyst funding to accelerate drug development. They now have a partnership deal with Roche, with agreed financial payments for successfully achieving development milestones.(9)
D7. The ABPI works directly with Innovate UK to deliver the Medicines Manufacturing Industry Partnership (MMIP) and the Advanced Therapies Manufacturing Taskforce (ATMT) via the Innovate UK funded Knowledge Transfer Network (KTN). These have proved to be effective collaborations which should be mirrored across other research councils.
Catapults
D8. The BioMedical Catalyst (BMC) is a collaboration between the Medical Research Council (MRC) and Innovate UK and an example of private matched funding being secured as a result of a commitment from Government. The scheme has awarded over £250 million to accelerate medical research. Over 180 business-led projects have been supported with funds worth over £130 million and with a total project value of over £240 million. This means that over £100m of additional private capital, in the form of matched funding, has been leveraged as a result of the BMC awards.(10) Companies and academics receiving these awards have also realised more than one billion pounds in the form of additional private finance, grant funding, via licensing or acquisition.
D9. The ABPI directly works with Innovate UK on the Cell and Gene Therapy Catapult, the High Value Manufacturing Catapult and the Medicines Discovery Catapult. These Catapults are a crucial component of the publicly funded R&D landscape because they provide a mechanism by which Government funding can unlock current scientific bottlenecks to kick start a transformation in the process of industrial R&D.
NIHR
D10. The NIHR is the sole dedicated public sector funding stream for translational and applied clinical research. The stable investment in the NIHR, which includes the NIHR Clinical Research Networks (CRNs) and the NIHR Office for Clinical Research Infrastructure (NOCRI), has been extremely valuable. The support by NIHR in experimental medicine facilities through structures such as the Biomedical Research Units and Biomedical Research Centres, are an essential component of the UK’s capabilities to connect with industry in the domain of translational medicine. The benefit of this NIHR funding is reflected by the finding that the annual industry investment in translational research infrastructure in the UK quadrupled to £33 million per year in 2009/10 to £120 million per year in 2013/14.
Place
D11. The UK should play to our science strengths by developing clusters of global excellence in research (such as the Golden Triangle) and advanced manufacturing (such as in Northern England). Being part of the very best science hubs in the world is an integral part of delivering impact for patients and the economy. By locating in clusters, large and small companies can draw from, and contribute to, a world class talent pool to shape, and share, ground-breaking discovery that can change more lives, more quickly.
E1. The UK has been one of the largest recipients of research funding in the EU. Between 2007 and 2013, the UK received a total of €8.8bn, including €1.9bn in European Structural and Investment Funds (ESIF) and €1.7bn from the European Research Council (ERC).(11) A proportion of the UK’s R&D spending is currently provided by the EU through the Horizon 2020 programme. The Horizon 2020 framework has a total budget of €75bn (2014-20) for all EU member states.
E2. The Innovative Medicines Initiative (IMI) is the world’s largest medical research Public Private Partnership, bringing together pharmaceutical companies, academic institutions, small and medium sized enterprises patient organisations and the charitable sector, to accelerate the discovery and development of new medicines that health systems need. Projects have generated significant scientific advances.
E3. To date, the UK has received 28% of total IMI funding, the largest of any country. This totals €302.8 million. Furthermore, UK academic institutions and SMEs receive the highest levels of IMI funding of any country, 30% and 21% of total IMI funding respectively. The UK has leveraged particularly high proportions of funding in respiratory diseases, vaccine development, infectious diseases, and diabetes.(12)
E4. The ABPI welcomes the UK Government’s commitment to underwrite EU research funding beyond the date the UK leaves the EU for all Horizon 2020 projects approved while the UK is an EU member (13), and the extension of this guarantee, in a ‘no-deal’ scenario, to provide funding until the end of 2020 for successful bids where UK organisations are involved.(14)
E5. We also welcome the agreement with the EU that the UK will continue to participate in EU programmes financed by the Multiannual Financial Framework (which includes Horizon 2020) until their closure. Maintaining access to access to EU R&D funding is important to our members and the wider life sciences R&D community. Under Horizon Europe, the successor to Horizon 2020, UK should seek to negotiate that UK academics are able to take leadership roles in projects and cross country collaborations, and go further than just a ‘third country’ participant.
What should the Government consider for the 2019 Spending Review to leverage an increase in private sector R&D spending in the UK?
F1. Deliver the Life Sciences Sector Deal. We welcome the Government’s commitment detailed within the Life Sciences Sector Deal to work with industry to boost spending on R&D to 2.4% of GDP by 2027, which could increase public and private R&D investment by as much as £80 billion over the next 10 years.(15) The Government proposed making an extra investment of £2.3 billion in 2021/22, raising total public investment in R&D to £12.5 billion for that year. As a long-term aim, the ABPI would welcome an even greater commitment from the Government to make R&D investment the 3% of GDP spending that is seen in comparator countries.
F2. Ensure that the sector has access to a pool of talented people to support its aims. The sector needs a continuous supply of high-quality scientists, engineers, doctors and many other specialists, to meet the demands of an evolving and more technology- based world. Establishing a skills pipeline remains crucial, even more so after Brexit. We welcome Government’s focus on developing skills in the Industrial Strategy, this should be an area of focus for future Sector Deals.
F3. Increase support for industry through Innovate UK. Innovate UK has a strong reputation with industry. The reason for this is that they are highly effective at delivering government support for strategically important areas of science and technology that are also of interest to industry. The investment in Innovate UK has also proven to be an excellent use of public funds. Increasing grant funding through Innovate UK as a proportion of the overall R&D spend in the years ahead will strengthen the UK’s industrial science base and help to ensure that the UK remains a very attractive environment for inward private sector R&D investment.
F4. Use the Industrial Strategy Challenge Fund mechanism, under the remit of UKRI, to develop 4 Grand Challenge Centers as announced in the Government’s Industrial Strategy. This would make it much easier for industry to engage with these important scientific fields to and help deliver the Government’s ambition.
F5. Ensure the additional funding provided to the British Business Bank (BBB) is targeted to innovative industries, such as the life sciences. The BBB provides valuable support for the bioscience sector, particularly through the Angel Co-Fund and the Enterprise Capital Fund. Significant new investment through the BBB was announced at Autumn Statement 2017, with £2.5bn for an incubated fund and £1.5bn for a fund of funds. This was welcome. The Government must ensure the additional funding is targeted to innovative industries, such as the life sciences, to strengthen the sector in the coming years, post-Brexit.
F6. We note that the Government committed, in its response to the Patient Capital Review, that it would invest further in the BBB if UK access to the European Investment Fund (EIF) is lost. However, we believe that retaining influence and access to the EIF is preferable.
F7. Continue to provide tax-advantaged venture capital schemes. The Enterprise Innovation Scheme (EIS) (and its associated seed scheme, SEIS) incentives have been particularly effective at stimulating investment and are extremely valuable to bioscience companies. Venture Capital Trusts (VCT) are also valuable for raising money for later-stage companies. Both schemes were expanded following the Government’s Patient Capital Review, which was welcome.
F8. Ensure competitive R&D Tax Credit schemes. These schemes are one of the most valuable forms of innovation support. Tax credits provide a minimal-bureaucracy system that rewards and amplifies companies’ own investment in R&D. Continuing and enhancing them is critical to maintaining the UK’s attractive fiscal environment for R&D investment. Whilst the Government’s commitment to increasing the rate of R&D tax credit from 11% to 12% in the Autumn Budget 2017 (16) is welcome, in order to make these schemes attractive to larger companies globally the Government should consider further increases. Relatively modest improvements in the RDEC can result in real rewards and reinvestment by companies.
F9. The Patent Box. The Patent Box is another example of an industrial policy that has been highly effective in anchoring R&D and commercialization in the UK. It continues to be a strong draw for international industry and investors.
F10. The access and adoption of medicines has a pivotal role in supporting patients, the NHS and wider life science ecosystem. Government, academia, industry and patients have a real opportunity in the UK to leverage the potential of the NHS to drive UK science – for example, by working in partnership to harness the power of medical data; delivering more clinical trials and research; and supporting the development and greater use of precision medicines and genomics. Improved collaboration between the NHS and industry is also important for the “bench to bedside and back again” research agenda, with a virtuous feedback loop of data from the clinic informing better medicines as well as providing the best patient outcomes. The ABPI would recommend an industry- NHSE Council to support collaboration and improve patient outcomes.
F11. Negotiate continued access to European funding and collaboration through:
October 2018
References
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