Life Sciences Industrial Strategy (Science and Technology Committee Report)

Lord Bilimoria Excerpts

Tuesday 23rd October 2018 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, in December 2017 the Government announced:

“Government and life sciences sector agree transformative sector deal … Business Secretary Greg Clark and Health Secretary Jeremy Hunt announce a Sector Deal with the life sciences sector”.


What happened when the committee produced its report? I shall give one example of a story in the press:

“Lords slam government’s delivery of Life Sciences Strategy … The government’s delivery of its Life Sciences Industrial Strategy is ‘wholly inadequate’, overly complex and incoherent, conclude the House of Lords Science and Technology Committee in a damning report published yesterday”.


Life sciences—what a huge and important area. If you look up on the internet what life sciences cover, you will find the following: anatomy, biochemistry, botany, genetics, immunology, microbiology, neuroscience, biotechnology, fermentation technology—that is relevant to me in my industry, and I will come on to that—food science, genomics, immunotherapy and pharmacology, and I could go on. I have touched on just a few of the life sciences.

I shall give one example from my own world. The fermentation of beer and biochemistry are important because our consumers are demanding. We manufacture hundreds of millions of bottles of Cobra beer a year, but the consumer expects every bottle to taste exactly the same as the one before. You are using yeast, a natural ingredient, and the natural process of fermentation. The ingredients change with harvests over the years, yet the consumer expects it to be the same. Our master brewers are highly trained scientists, constantly trying to perfect and innovate, whether that means producing a double-fermented beer or a gluten-free beer that tastes as good as the normal one. That is really difficult from a life sciences point of view. So I know from my own world how important this issue is.

I thank the noble Lord, Lord Patel, and his committee for the report that they have produced. It is hard-hitting, and it is for the Government to respond to it today—not the official response that has been given that the noble Lord, Lord Hunt, referred to. The noble Lord also mentioned that Andy Haldane, the chief economist of the Bank of England, is now chairing the Industrial Strategy Council. He is a hugely talented individual, so that is very good news.

The noble Lord, Lord Patel, also referred to the letter today. It is serendipitous that just today we received this letter written by 29 Nobel Prize winners written to both Prime Minister May and President Juncker. I quote from the letter:

“Scientific research and innovation are crucial for tackling the many shared challenges we face … to meet these challenges for everyone's benefit, science needs to flourish and that requires the flow of people and ideas across borders”—


the noble Lord, Lord Mair, spoke about that—

“to allow the rapid exchange of ideas, expertise and technology.

Europe was the home of the Enlightenment and the birthplace of modern science, but partly as a result of two devastating internecine wars in Europe in the 20th century, it suffered a decline relative to the USA … this decline has been reversed in the last few decades as a result of the ease of collaboration nurtured by the EU through its many initiatives and programmes, which have greatly benefited European science. Creating new barriers to such ease of collaboration will inhibit progress, to the detriment of us all. Many of us in the science community therefore regret the UK’s decision to leave the European Union because it risks such barriers”.


There is regret.

“It is widely recognised that investing in research and innovation are increasingly crucial for shaping a better European future… We must not allow the UK or the EU to become more insular in our approach to each other.


By deciding to leave the EU, the UK has given up its right to participate in EU research and innovation programmes”.


Does the Minister agree with that?

“It must now step up its commitment to those programmes if it wants to remain involved … The challenges we face must be tackled in a manner that benefits everyone and those challenges are better faced together. Only a deal which allows the closest possible cooperation between the UK and the EU, now and in the future, will make that possible”.


That is it, my Lords: 29 Nobel Prize winners, including people I know, such as Professor Paul Nurse, who has been cited several times in the debate and is chancellor of the University of Birmingham. Professor Sir Venki Ramakrishnan is a friend of mine, president of the Royal Society, fellow of Trinity College, Cambridge and a Nobel Prize winner. Professor Sir John Gurdon is a fellow of Magdalene College, Cambridge and Nobel Prize winner. Sir John Walker is a fellow of Sydney Sussex College, where I am privileged to be an honorary fellow at Cambridge, a Nobel Prize winner. These are the experts—oh, sorry, we cannot listen to experts.

The committee’s report was so hard-hitting and positive, saying:

“The life sciences sector is the flagship for the Government’s Industrial Strategy”,


but, it says,

“So far, Government action has been wholly inadequate”.


However, it is optimistic. It says,

“all is not lost. Prompt and vigorous action by the Government can save the day”.

It talks about how we do so well in translating basic science into innovation, but that it has heard time and again that we are less successful in growing SMEs into larger companies.

“Sir John Bell sets the aim of four massive UK life sciences companies being created over the next 10 years”.


I will come back to that.

The noble Lord, Lord Patel, spoke about the size of the sector: £30 billion employing nearly 500,000 people. The committee heard evidence time and again about how the success of the sector would be measured. The noble Lord, Lord Patel, mentioned this, but I think it is important to restate it. Sir John Bell said:

“The … people I have interacted with … want to see the health service deal with [the uptake and spread of innovation]; … The problem is … it is not clear who is driving the bus … Whoever is driving the bus, the windscreen wipers do not work and the exhaust is falling off”.


That is not just in the committee’s report; Sir John Bell corroborates it in his report. He said that one of the reasons why the NHS struggles with adopting innovations is because it is struggling to do even the most simple of things. This is really serious. The noble Lord, Lord Fox, also spoke about this. The committee report states:

“Unless the NHS’s ability to adopt and spread innovations, it will not be able to play a full role in the implementation of the Life Sciences Industrial Strategy”.


As chancellor of the University of Birmingham, I know that we partner very closely with the Queen Elizabeth Hospital, the largest hospital in Europe. Our medical school is one of the top rated in the country. Dame Julie Moore, chief executive of University Hospitals Birmingham NHS Foundation Trust, told the committee that financial incentives, such as best practice tariffs for trusts that show rapid adoption of innovations, could be a way forward. Does the Minister agree?

Then we come to R&D and innovation. I have stated time after time, in debate after debate, that this country underinvests in R&D and innovation. We invest 1.7% of GDP. I am very happy to hear the Government say that they will have a target of 2.4% of GDP by 2027. If you look at the chart of expenditure across the world, we are at 1.7% and the OECD average is 2.4%, which is where the Government want to get to. The USA is at 2.8%. Israel, one of the most innovative countries in the world, spends approaching 4.5% of GDP. No wonder so many amazing tech innovations come out of Israel.

The noble Baroness, Lady Neville-Jones, spoke about the difficulty of growing companies, and the report agrees that,

“the UK’s historic poor performance in this area is a concern because real economic value comes not from funding start-ups but enabling scale-up”.

Scale-ups are the challenge of business. I know that having grown a business from scratch. Sir Paul Nurse, the report writes, said that the UK lacked individuals who understood both science and finance. That is normal. In many industries, you have experts, but they are not necessarily financial experts as well.

The tax system can be used to incentivise investment in particular areas of the economy. The BIA, cited in the report, said that the inherent flaw in the EIS scheme, which I have used in my business, and the venture capital trust scheme,

“is that investors cannot follow their money in future non-qualifying fundraises. This penalises early investors as they become dilutive as a company progresses.

The BIA suggested that continued tax relief for EIS and VCT investors when investing further in companies they have backed at an early stage and preferential access to further fundraises would,

“inventivise greater and longer-term investing”.

Does the Minister agree?

Professor Chris Lowe, director of the Cambridge Academy of Therapeutic Sciences at the University of Cambridge—where I chair the Judge Business School advisory board—emphasised the importance of entrepreneurship. We have a centre for entrepreneurship at the Judge Business School, now, I am proud to say, one of the highest-rated business schools in the world. Professor Chris Lowe said:

“if you are going to generate a lot of new ideas which will eventually feed through to a large multinational industry, you need the entrepreneurs to set that up and get it running. It is a matter of culture”.

Then there is the elephant in the room: the Brexit uncertainty. The noble Lord, Lord Mair, spoke so clearly about worry about freedom of movement: allowing people to reside and work freely. It has been such an advantage in the life sciences sector, but Brexit poses a potential barrier for us to access that talent from the EU. One member of the Cambridge Judge Business School advisory board is Dr Menelas Pangalos, who is executive vice-president of innovative medicines and early development at AstraZeneca, which is headquartered in Cambridge. The report quotes him as being,

“Worried about the impact of Brexit on our employees … the fact that we have no idea what is going to happen is a real problem. We are starting to see people turn us down now in the UK because they do not know what the outcome will be for future employment”.


This is AstraZeneca, one of the leading pharma companies in the world. Professor Sir Paul Nurse told us that the UK’s,

“image is suffering terribly at this moment”.

I keep saying this: we have not taken back control with Brexit; we are losing control and losing our standing in the world. I could go on. The life sciences sector requires,

“unencumbered access to high quality talent”,

said Sir Paul Nurse. The noble Lord, Lord Mair, mentioned the tier 2 visa. I do not want to repeat, but he said how ridiculous the system we have is. The report says clearly what is happening for tier 2 visas for non-European workers,

“including doctors and other healthcare staff, software developers and laboratory scientists. In December 2017, January 2018 and February 2018 the cap … was hit for an ‘unprecedented’ three months in a row”.

So we are just turning away talent that we need. This is absolute madness; we need to change it.

The Government response is tax incentives. They have said, “Oh well, we have increased the R&D rate of tax to 12%”. Does the Minister agree that that is adequate? If we really want tax incentives, we need to do much more.

Then there are unicorns. It was reported in the Daily Telegraph today that Britain is the home of 15 unicorns—companies worth at least $1 billion. We are much better than other European countries, outperforming France and Germany. Companies in the life sciences sector are among these unicorns. Cambridge is a great area which is a fertile ground for growing an economy, with start-ups, SMEs, scale-ups and global players such as AstraZeneca. The Cambridge life science anchor model works really well.

Birmingham Health Partners talks about collaboration, innovation and application and says:

“Finally it is now down to the UK, the EU and to Member States to ensure that the unique relationship between the UK and EU research is maintained for the benefit of medical research and ultimately of citizens across Europe. Neither the UK, nor Europe can afford a ‘Brexit’ for medical research”.


It says that, for medical research, a no deal would mean: loss of researchers from the UK; disruption to productive collaborations; reduced funding for UK medical research; barriers to clinical trials and research into rare disease. A no-deal Brexit is not an option.

I quote the Prime Minister, who said these beautiful words on 21 May:

“William Wordsworth described the statue of Sir Isaac Newton that stands in the chapel of Trinity College, Cambridge as being ‘the marble index of a mind forever voyaging through strange seas of thought, alone’. That romantic image belies the truth that the essence of scientific progress is not private contemplation, but collaboration. Nothing is achieved in isolation and it is only through co-operation that advances are made. Every great British scientist could only reach new frontiers of invention because they built on the work of others, exchanged ideas with their contemporaries and participated in an international community of discovery”.


What do we do? We Brexit.

An article in the Lancet said:

“It may be that if [the UK] have to have [their] own separate regulatory system, then manufacturers will choose to launch [their product] in Europe and the USA”.


The APG, the group of American pharmaceutical companies in the UK, including huge companies such as Pfizer and Lilly, said that,

“uncertainty over Brexit is affecting global decisions on future investments in life science and health industries”.

There are now six months to go. An article in Nature spoke to scientists about how it was affecting them. One said that:

“The uncertainty is already stunting science”.


Another said that:

“Research money is already flowing away from the United Kingdom”,


and another that:

“If it weren’t for Brexit, these people would have joined my lab”.


The head of Roche is quoted as saying that the UK is “less interesting” to pharma because of Brexit.

I could go on. These are the people at the coalface, who are running some of the biggest life science companies in the world. This country has 1% of the world’s population but produces 16% of its leading research papers. We have the best universities in the world. Oxford and Cambridge now rank first and second in a recent list; along with those in America they are the best universities in the world. Cambridge, not an American university, has won 100 Nobel Prizes—more than any other university in the world. Professor Sir Greg Winter, Master of Trinity College, has just won a Nobel Prize. Our whole life sciences sector is at stake. The only way to save it is not Brexit. A Norway-EEA model would allow the sector to carry on seamlessly, but the best way to save it would be to remain in the European Union.