We explore recent investment trends in life sciences, looking at the pessimism created by the loss of EU funds and the optimism provoked by a Europe-wide boom in growth capital investment.
The GLP Index uses an evidence-based framework to predict investment growth and demand. The 2022 Global Index found plenty of cause for optimism in the UK’s inward and outward foreign direct investment (FDI) trends. According to the Index, for example, the UK’s inward FDI increased in 2020 by £288.7bn to £1,929bn and outward stock also increased to reach more than £1,660bn.
But the Index preached caution with respect to the future. The economy is facing myriad challenges. Interest rate changes are causing unpredictability, rising inflation and a struggling Sterling are dampening confidence, and the introduction of complex and demanding regulations such as the National Security and Investment Act 2021 are reducing investment appetite.
The market is uncertain. Many areas are struggling to attract investment, facing serious downturns that are causing fear and even panic. But other areas are experiencing a boom. Life sciences is one such area. In this article, we will look at investments in the life sciences, explore the recent , and examine how investment from venture capital firms may give us reason for optimism.
The life sciences are concerned with the study of living organisms. The umbrella term accounts for a range of familiar subjects, from biology to botany, from physiology to zoology. Investment in because, among other things, the subjects broadly improve research and development, increase quality of life, and . Research performed by the life sciences, for example, contributed to the development of the COVID-19 vaccine.
Life sciences investment in the UK suffered a loss recently, as the European Union pulled 115 of the original 150 grants from the . The decision to terminate the funding followed the UK’s failure to resolve the row over the Northern Ireland Protocol. The grants are a direct result of political action, as the UK government attempted to rewrite parts of the Brexit deal. For many scientists, the loss of funding will prove devastating to their research.
The UK government has promised to provide a substitute for lost funds. The obvious problem, as of the London School of Hygiene and Tropical Medicine, remains that the UK has no apparent plans for a replacement fund, at least at the moment. In addition, McKee argues that any replacement fund would fail to compare to the benefits afforded by the EU’s scheme.
The political fallout from Brexit has thus caused problems for life sciences investment. But there is still plenty of reason to feel optimistic. That’s because venture capital investment is booming.
Consider news that growth provider have just wrapped up a €297m fund for innovative businesses working in tech and life sciences. The ‘Claret European Growth Capital Fund II’ will invest in , with a typical investment ranging from €1m to €50m. The fund will focus on innovative growth stage technology and life science businesses to support organic growth and M&A.
That is welcome news. And there is much more good news. The investment is part of a in healthtech investment, of which the UK plays a huge role. , for example, 2021 was a breakthrough year for European Healthtech and Biotech investment. There were a record number of unicorns announced in 2021, with 70 new healthtech and 28 biotech unicorns.
On top of that, while the US continues to lead healthtech venture capital (VC) investment, Europe is the fastest growing region. The European share of VC investment is at an all-time high, while China shrunk slightly and the rest of Asia is quickly catching up. And the start of 2022 remains broadly positive, as . Q2 of 2022 saw a decrease in VC investment in general, but Europe has still managed to outpace Q2 2020 VC investment.
The UK claims a huge part of that investment. Data from shows, for example, that the UK is driving rapid growth in the global healthtech sector, coming third in the world in terms of VC investment. The UK went from investment of just $420m in 2016 to $3.8bn in 2021.
The growth seems largely driven by the Golden Triangle of London, Oxford, and Cambridge, home to five of the world’s best universities for life sciences and a global hub for research and development. The three cities account for over 25% of all European healthtech investment, .
The boom of VC investment is a welcome development. It makes the loss of EU funding less painful. It is worth remembering, however, that government funding and VC investments come with . Scientists will surely welcome the boom, but the loss of EU funding aimed at improving quality of life will still sting, especially considering the UK looks unable to provide an alternative.
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