Findings of the 2012 UK Life Science Start up report ‘Realignment’.

Press interviews with Dr Glenn Crocker from midday at Queen Elizabeth II Conference Centre, Westminster, London, UK.

An optimistic picture of the Scottish life sciences sector emerges from today’s publication of the annual UK Life Sciences start-up report.

A significant increase in the establishment of new companies in Scotland between 2007-2011 is entirely accounted for by increased university spin-outs, up 47% in the study period.

In addition, the number of specialist pharmaceutical companies is on the increase, with Scotland standing out as a hot-spot in this field.

Across the UK, the 291 new firms launched in the study period represent the next generation of growth-focussed firms, born at the dawn of a new era for the bioscience and life science sector.

At the same time, shock waves from the seismic shifts in the way global pharmaceutical companies and investors operate have led to a realignment in the industry’s business model. Smart, innovative companies across the UK can and must take advantage of this realignment if opportunities are not to be missed, the report concludes.

The overall picture is of an industry shaping up well to capitalise on strong UK geographic bioscience clusters, the shift to more specialist service companies, new models for R&D collaboration and the introduction of a raft of new funding initiatives. Scotland emerges as the leading location for life science start-up companies, assisted in part by strong public sector support and investment as well as an extensive Angle investor network.

The UK Life Science Start-up report 2012 is the third comprehensive study of early stage life science firms. This new study considers companies formed in the period 2007-2011 and allows a comparison with the findings of the 2010 report which looked at the period 2005-2009 and the 2011 report of the period 2006-2010. The analysis of extensive data provides a valuable insight into where the new life science start-ups are coming from, what fields they specialise in, apparent barriers to growth and the investment climate they operate in.

Author of the report and CEO of BioCity, Dr Glenn Crocker will explain these findings in his presentation to the gathering of life science industry experts at the 2012 Genesis conference in London on 13th December. The report findings add to the considerable weight of evidence now available to Government, regional authorities, financial institutions and the life science industry itself to make important informed decisions.

Key report findings:

• At 291, the number of new companies formed in the 5 year period to 2011 remains flat compared to the period ending 2010.

• The number of university spin-outs fell by 30% between 2005-09 and 2007-11.

• This trend is bucked in Scotland where the increase in start-ups is entirely accounted for by increased university spin-outs, up 47% in the study period.

• The number of specialist pharmaceutical companies is on the increase, with Scotland standing out as a hot-spot in this field.

• Medical technology and diagnostic start-up company numbers are falling across the UK.

• Over 25% of the most recent start ups are located in a UK bioincubator, and another 15% in a bio or science park. BioCity Nottingham is the busiest in terms of housing new start-ups.

• 24% of start-ups obtained investment in the period 2007-11, compared to 37% in the period 2005-09. This decline could reflect a greater use of “under-the-radar” funding from grants, friends and family.

• The largest fall in investment activity was seen in smaller-scale sub-£500k amounts, down by 23% in number and 17% in value. This is possibly caused by the end of the regional venture capital funds (RVCF) and the University Challenge Funds.

• Although the number of deals over £2 million has fallen by 17%, and amount of money going into the deals has increased by 8%.

• The top 10 investments in the period 2007-11 represent around 70% of the total invested in life science start-ups.

• 86% of total investment into life science start ups went to companies in London, the South East and East of England. This is an increase of 11% compared to the period 2005-09.

• The raft of new investment schemes announced in 2012 include the £200 million Wellcome Trust fund, the £50 million Cancer Research Technology Pioneer Fund, the Index Ventures £120 million Life Science Fund, the £40 million Nottingham Technology Fund and £180 million UK Technology Strategy Board Biomedical Catalyst fund.

Report author Dr Glenn Crocker believes further success relies on companies attracting the right level of funding; building strong management teams, and exploiting the latest technology.

“Realignment, as I’ve described in the report, will enable the life science business model to evolve. I believe we can expect more focussed activity between big pharmaceutical companies and investors working together on specific projects. This will require the direct involvement of universities, partnerships with venture capital funds, the provision of incubation facilities, sharing of R&D expertise and Open Innovation.

“It is our role as experts in the sector to help small start-ups to spot the opportunities from this realignment. We must also be ready to brief investors about new market opportunities and the potential returns. Despite much hand-wringing in the UK, we have an excellent research base and a strong entrepreneurial ecosystem populated by people who genuinely want to make a difference. We can be encouraged by renewed government interest in the life sciences as well as the emergence of new funding streams. We truly have strong grounds for optimism.”

BioCity Scotland MD Fraser Black adds: “Just a year since we launched BioCity Scotland we are housing some of Scotland’s most impressive start-up stars. These include Select Pharma’s Biolab, named as Scotland’s Best Start up company, as well as the University of Strathclyde spin-out Insignia Technologies. It is clear from the report findings that a strong Scottish government commitment to the sector, combined with the highly-focussed support infrastructure provided by the likes of BioCity Scotland, BioDundee, the Edinburgh BioQuarter and the emerging Glasgow BioCorridor provide the makings of a global life sciences region. On the back of this we are already attracting significant levels of European investment into the sector. This must put us in a very strong position to compete for major inward investment and project funding.”

The UK Life Science Start-up report will be published each year based on a rolling five-year period in order to undertake further trend analysis. To receive a copy of the 2012 report email marketing@biocity.co.uk and join the debate on LinkedIn BioCity Group.

ENDS

Press enquiries for photography, company case studies and to request a pdf of the report:
Louise Third
Integra Communications
T: 0115 912 4350 / 07773 288342
E:louise@integracommunications.co.uk

For a Genesis press pass please call or email Richard Hayhurst
T: +44 (0) 7711821527
E: Richard@richardhayhurstassociates.com

Photo: Dr Glenn Crocker, CEO BioCity and report author.

NOTES
Dr Glenn Crocker is Chief Executive of BioCity Nottingham Ltd and BioCity Scotland Ltd.
He is a director of a range of early stage life science companies and of the Mobius Life Sciences Fund. He was previously author of Ernst & Young’s Annual European and US Life Science Reports.
Mobius Life Sciences Fund
The Mobius Life Sciences Fund is the first investment fund in the Midlands region dedicated to the life sciences sector. It is operated by a subsidiary of BioCity Nottingham Limited and receives its investment funds directly from BioCity.
Mobius provides seed level equity investment into early stage bioscience, pharmaceutical, medical technology and healthcare businesses.
The Fund leverages this early stage investment through a collaboration with Nottingham City Council, which provides unsecured loan finance to investees, and by supporting businesses to use the investment to match against grant and other funding.
Mobius adds further value to investee companies by taking a seat on the Board of Directors and using an extensive industry network to access advice and support to the business.
Mobius will also co-invest alongside other early stage investors, including business angels, and will act as a feeder to later stage funds.
www.mobiuslifesciences.com
www.biocity.co.uk