Biotech startups scoop £1.3bn in foreign capital

Nestled in the leafy, leafy triangle between London, Oxford and Cambridge lies the heart of a leading British industry.

Biopharmaceuticals and biotechnology, the sector that makes vaccines and medicines to treat conditions ranging from Covid-19 to cancer, attributes much of its success to two titans in the UK.

Cambridge is home to AstraZeneca, a £158bn giant that took in £35bn in sales last year and gained worldwide fame for its Covid-19 vaccine. And Brentford, west London, is home to the global headquarters of GlaxoSmithKline, AstraZeneca’s main British rival, valued at just £54 billion.

Together, the two companies are at the forefront of Britain’s sprawling pharmaceutical sector, which uses the country’s academic and scientific pedigree to compete against its much larger global rivals.

But apart from the big hitters, the UK and the London Stock Exchange are flooded with smaller companies working on medical breakthroughs.

The UK is estimated to have the third largest biopharmaceutical industry in the world after the US and China, despite their economies being at least four times that size.

According to the UK BioIndustry Association, Britain has the largest number of start-ups in the industry in Europe and manages to raise the most investment money for start-ups.

A BIA report showed that British biopharmaceutical companies raised £258 million from international venture capitalists in the first quarter of this year, by far the most in Europe. Last year, the UK sector alone attracted a whopping £1.27 billion in international venture capital, about a third of the European total.

One of Britain’s innovative minnows is Chepstow-based Creo Medical, a manufacturer of equipment for minimally invasive surgery, who says its products are changing the way bowel cancer is treated.

There’s also Surrey-based Futura Medical, which develops treatments for erectile dysfunction. The company scored a big win last week when it signed a deal for consumer health giant Haleon, the maker of Sensodyne toothpaste, to sell its MED3000 gel in the US.

Futura boss James Barder said being a smaller biotech company is often like going uphill on a bicycle, with investors sometimes not appreciating the effort it takes to create new drugs with much lower budgets than established players.

“The market sees the top of the bike and sees it slowly go up the hill. What they don’t see is how hard we kick. There is tremendous amount of work that needs to be done to meet these milestones,” Barder said.

These views resonate throughout the city. Analyst Edward Thomason of investment bank Liberum said: ‘The UK is a hotspot for life science innovation, and while many are quick to criticize the London market, it is an important springboard for companies in the field.’

And analyst Mark Brewer of investment bank FinnCap added that Britain’s world-class universities also helped attract top talent to push the industry forward.

Young biopharmaceutical companies are among those eligible to benefit from plans announced by the government to encourage UK pension funds to invest more in homegrown start-ups.

But stumbling blocks remain for the industry. Earlier this year, AstraZeneca boss Pascal Soriot said the UK is “very unattractive for companies to invest in” and warned that it is difficult for companies to establish production bases here.

Despite some high-profile criticism, the numbers suggest that the UK is still a world-class hub and a magnet for international investors.