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UK Life Sciences Investment: The battle for BioTech funding

The government says the UK’s life sciences sector is “the envy of the world”. But with a mixed fundraising picture in 2023, what are the investment challenges facing Britain’s biotechs and how can they plot a course through in 2024?

British biotech investment – the state of play

The latest published figures for biotech financing in the UK present a mixed picture for the sector. After a period of normalisation in 2022 following the biotech boom of the Covid years, the second quarter of this year saw steady growth in venture capital investment to £338m, a 31% increase on Q1 and up 22% on the same period last year. The UK remains far ahead of the rest of Europe and second only to the US in biotech VC financing.

But challenging conditions on public markets persisted. No IPOs were launched in Q2 and only £44m was raised in follow-on financing – the lowest amount for any second quarter on record.

These figures speak to a broader period of flux within the UK’s biotech and life sciences sectors, the “moment of truth” the Association of the British Pharmaceutical Industry warned in June was approaching.

The bigger picture

The UK is undoubtedly a global leader in life sciences and home to Europe’s largest biotech hub. The success of the Covid vaccines demonstrated the strength of a sector built on the foundations of our world-class universities and scientific research base, the world’s largest centralised healthcare system in the NHS (and population-scale digital database of patient records), as well as historically strong levels of public funding.

Successive Conservative governments have also been keen to back the sector with rhetoric and public money, particularly amid sluggish growth in much of the rest of the economy and concerns about the economic impact of Brexit. Beginning with the 2017 Life Sciences Strategy numerous plans have been put forward promising millions of pounds in investment, from the 2021 Plan for Growth to the Life Sciences Vision. And in May, Rishi Sunak added his own £650m Life Science for Growth package, with money to improve commercial clinical trials and incentivise pension schemes to invest in promising firms.

Despite this seemingly rosy funding picture; it is also true that UK biotechs have, in general, struggled to make the transition from the discovery phase (where on average they outperform their global peers in innovation) through to IP and commercial products.

Fundraising plays a significant role in the journey towards commercialisation. So what are the challenges facing biotechs looking to scale up and where do the opportunities lie in the year ahead?

The challenges and opportunities for British biotechs for 2024

Standing out from the crowd is an obvious challenge for companies looking for investment. There are thousands of innovative biotechs in the UK pursuing ground-breaking science all competing for a limited pool of capital. Specialised biotech investors with the experience and expertise to accurately assess opportunities are scarcer in the UK than in the US and accessing funding across the Atlantic, whether private or public, brings its own set of challenges.

It’s vital therefore that biotechs have a compelling story to tell that resonates with investors and communicates their value proposition effectively. Messages must be clear, and life sciences firms must balance the need to communicate often extremely complex science in an easily digestible way across different audience groups. This can range from sophisticated investors and analysts through to media, medical partners and patients. This messaging also needs to be delivered within stringent regulatory guidelines without losing the human element of the story. A clearly defined and compelling mission, purpose and values can pay substantial dividends.

Delivering these messages in the right way presents a challenge of its own. Investor pitching can often feel like a conveyor belt and with limited time to make your mark, how businesses tell their story is often just as important as the story itself. So proper presentation training for senior leadership to effectively communicate value, who may have limited experience of this kind of presenting, could be the difference between securing funding and leaving with nothing.

Finally, a strategic approach to communications strategy will help support fundraising efforts. A carefully calibrated media strategy can lend additional weight to the picture biotechs want to paint for potential investors. Strategic engagement with the right industry associations to communicate the strength of the UK biotech sector to foreign investors is an area worth attention too, particularly with biotech FDI falling 47% from 2021 to 2022. And with the war for talent in the sector continuing apace, comms can play a major role in attracting and retaining the discovery and development talent that’s key to supporting maturing portfolios in the longer term.

Get in touch if you’re interested in finding out more about how we could support your biotech on its fundraising journey.

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