Pharmaceutical Industry

Chi Onwurah Excerpts

Wednesday 21st March 2012 Commons Chamber

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I grew up in Newcastle just 100 yards from the Fawdon plant, and I congratulate my hon. Friend on bringing this important subject to the House tonight. Does she agree that a city such as Newcastle, whose university has real strengths in health care and medicine, needs more active Government intervention to ensure that that research and development is translated into manufacturing capability in the region?

[Catherine McKinnell]

I thank my hon. Friend for that question. This is a subject that I feel strongly about. We have heard some positive noises from the Chancellor today in his Budget, but I am already hearing concerns being expressed in the science community in Newcastle over how those proposals will be translated into action. People are concerned as to whether the full weight of support will be provided, rather than just small tax breaks. Serious efforts need to be made to encourage research and development in science, particularly in the light of what we can see, if we look closely, is a real-terms cut in the science budget. The science community is still concerned that it does not have the full backing of the Government.

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[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)]

I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this debate on an incredibly important subject. I fully appreciate the concerns she raises.

I shall begin by addressing the specific issue that prompted this evening’s debate. We in the Government are extremely disappointed by the news of the planned closure of Sanofi’s Fawdon site. I should like to express my sympathy to the work force and their families, who are, obviously, going through a very anxious time. She did absolutely the right thing in raising their concerns with us.

I recognise the challenges in regions such as the north-east, where unemployment is high, but in a sense that is exactly why the Government are seeking to rebalance the economy and rebuild manufacturing and exporting, while taking advantage of the north-east’s incredible assets—it has a skilled work force and is a wonderful place to locate. We absolutely agree on the need to do that.

I want to be clear that Sanofi’s decision was not in any sense based on a judgment of the UK as a location for life science investment. It was no reflection at all on the radical measures that the Government have taken to support the industry. I shall come on to those measures shortly, but we understand from Sanofi that the decision was made entirely for its own commercial reasons. The hon. Lady talked about the major restructuring that many such companies are undertaking globally. We have to recognise that that is a force in play.

Of course, that does not in any way lessen the impact on Fawdon’s employees and the local community. BIS Local has spoken to Sanofi’s local management, as well as to Newcastle city council and the North Eastern local enterprise partnership. We will examine how we can ensure the most effective local support for those directly affected by the proposed closure, as well as plans to support sustainable economic growth in the affected area—plans that recognise the skills of the work force. Naturally, the first priority will be to ensure that those affected by the proposed closure have access to the very best support available for redeployment and, if necessary, retraining, but I absolutely recognise that a consultation is under way; we must let that take place before determining the future course. We will work closely with the company to secure its support at this very difficult time for the employees affected.

The hon. Lady reflected on the closure of AstraZeneca’s Charnwood site in 2010 and the scaling back of Pfizer’s Sandwich site last year, which involved some 1,200 and 2,400 direct jobs respectively. Decisions on how best to respond have to be based to some extent on the economic impact, time scales and most suitable response for the local work force and the local area. The decisions were hugely disappointing to Government, but they were based on the companies’ global restructuring strategies, and were not a judgment on the UK as a location for life science investment or as a location for research. Indeed, both companies have gone on to make substantial investments in the UK.

The hon. Lady highlighted the positive impact of the taskforces we put in place following these decisions. She referred to the taskforce established in Newcastle, and I applaud that local work; it was absolutely the right thing to do in the circumstances. The taskforces have been exemplary and have largely mitigated the impacts.

Let us first consider Pfizer’s Sandwich site. Some 800 jobs were retained or created on the site. The Discovery park has been designated an enterprise zone, offering a package of business rate discounts and planning flexibilities, thus supporting its attractiveness as an investment location. That has encouraged 20 new life science businesses to locate at Discovery park. Some £35 million was secured through the Government’s regional growth fund to provide grant and loan finance to business through the Expansion East Kent programme, with the aim of creating, or safeguarding, 5,000 jobs. I acknowledge the points made in this regard by my hon. Friend the Member for South Thanet (Laura Sandys).

AstraZeneca employees were similarly supported in securing new roles and opportunities, with about 90% of leavers securing their future. My hon. Friend the Member for Loughborough (Nicky Morgan) is also present this evening. She was very active in working to support staff and in finding new uses for the site.

The hon. Member for Newcastle upon Tyne North has rightly expressed the genuine concern that is felt about the potential closure. However, even if the site closes, given the skills of the work force there is some hope that there will be a brighter future than some can see at present. I have every confidence that Sanofi, Newcastle city council and the local enterprise partnership will be able to work well together.

I want to turn now to the broader concerns raised this evening about the status of this key industry in the UK. I am, of course, alive to the challenges we face. The UK has seen a reduction in the number of large pharmaceutical manufacturing sites, as have many other developed markets. However, I wholeheartedly disagree with any claim that this is a weakening industry or that the Government are not providing enough support. The UK continues to have one of the strongest and most productive life sciences sectors in the world, contributing to patient well-being as well as supporting growth.

In the last decade, the UK life sciences industry—pharmaceutical, medical technology and medical biotechnology companies—has not only continued to be strong, but has shown continued growth. It has grown faster than any sector of the economy apart from finance and insurance. It employs more than 166,000 people, many in high-tech, high-skilled jobs, and it has an annual turnover of more £50 billion. It is therefore a very important sector for the British economy.

Data clearly show that we continue to be a leading destination for research and development investment, attracting £4.6 billion of pharma R and D spend in 2010 alone. Indeed, only yesterday Eisai, one of the world’s leading research-based pharmaceutical companies, announced it is expanding its British base to support the company’s growing European, middle eastern and African business, creating new job opportunities for the UK. Gary Hendler, Eisai EMEA president and chief executive officer, specifically cited

“the country’s importance as a global hub for the pharmaceutical industry”

as the reason for choosing the UK, noting:

“Initiatives to support the life sciences sector championed by The Department of Business, Innovation and Skills (BIS) have added to”

the company’s

“ability to cure and care for the health and wellbeing of more people across the EMEA region.”

That is a very recent decision to invest in the UK.

That is not to say that everything is perfect, however. At a time when we are working hard to rebalance the UK economy, we need to ensure that we keep, and grow, our key industries.

[Chi Onwurah]

I thank the Minister for the points he is making about the strength of the UK pharmaceutical industry’s research and development. The key is to translate that research and development into manufacturing capability, so that we have jobs for technicians—ordinary working manufacturing jobs. What policies are there to ensure that small biotech companies have the help to translate into manufacturing in this country?

[Norman Lamb]

Let me go on to talk about the steps that the Government are taking, because in large part this will address the points the hon. Lady is making.

The life sciences industry has seen significant changes in the commercial environment, and we have recognised that if we are to remain competitive, the UK must up its game. So I emphatically reject any suggestion that the Government are not doing enough to support life sciences in the UK. I alluded a few minutes ago to the fact that we have taken radical steps to support this important industry and its innovations, and to make the UK the location of choice for investment.

We published “The Plan for Growth” in March 2011 and followed it in December with our “Strategy for UK Life Sciences”. I understand from my hon. Friend the Member for Mid Norfolk (George Freeman) that Lord Mandelson specifically supported that strategy in his Davos speech as an exemplar of this work. We worked in collaboration with businesses, clinicians and researchers from across the sector to listen to what they had to say about the UK environment and to deliver against their needs.



The result was a package of measures that has been unanimously supported across the industry. We are delivering fiscal incentives and removing barriers to ensure that the life sciences industry is primed to operate effectively and efficiently, drawing in intellectual property and investment, nurturing small and medium-sized enterprises, and making it easier for products to reach the market. The approach includes: the patent box, which will be effective from April 2013 and will reduce the corporation tax on profits from patents and similar intellectual property to 10%—that is important in attracting inward investment; research and development tax credits offering 200% super- deduction relief for SMEs; and a £310 million investment to support the discovery, development and commercialisation of research, £180 million of which is for a biomedical catalyst to provide support to both academically and commercially led research and development, to deliver innovative life sciences products and services quicker and more effectively into health care. Ultimately, that is what we want to see.

We are creating a true life sciences ecosystem that fosters collaboration and partnerships to enable the UK to compete globally in attracting investment in research and product development. One of the measures to achieve that is the establishment of a number of academic health science networks across the country, aligning clinical research, informatics innovation, training and education, and, crucially, health care delivery. They will provide industry with clear points of access to the NHS to facilitate NHS-industry collaborations, in order to develop health care solutions. We are also addressing the regulatory barriers, to enable innovative technologies, diagnostics and therapeutics to be identified and taken up across the NHS. That will include a Medicines and Healthcare products Regulatory Agency consultation for an early access scheme for treatments that have not yet been licensed but where there is a high unmet clinical need.

Furthermore, in the most radical move in this area of any Government, we are unlocking the power of the NHS and its unique patient data to ensure that, subject to the necessary safeguards, data from research and clinical practice are available for the benefit of improving clinical outcomes and enhancing the UK’s position as the leading country to undertake research and development.

However, we have also recognised that to provide a truly attractive UK environment, we need to address the adoption and uptake of innovation in the NHS and firmly embed innovation within the NHS. So the NHS chief executive is taking action through the implementation of his review, “Innovation, Health and Wealth: accelerating adoption and diffusion in the NHS”. That will, for example: reduce variation in the NHS; drive greater compliance with National Institute for Health and Clinical Excellence guidance; facilitate work with industry to develop and publish better innovation uptake metrics; improve arrangements for procurement in the NHS to drive up quality and value, and to make the NHS a better place to do business; bring about a major shift in culture within the NHS, developing its people by hard-wiring innovation into training and education for managers and clinicians; and identify and mandate the adoption of high-impact innovations in the NHS.

Saying and doing are, of course, entirely different things, but rest assured this Government are committed to early delivery. We have appointed two independent life science champions, Chris Brinsmead and Sir John Bell, who will work closely with my hon. Friend the Member for Mid Norfolk to drive implementation against the “Strategy for UK Life Sciences”. They will report on progress direct to the Prime Minister every six months.

I conclude by reiterating that although announcements such as Sanofi’s are immensely disappointing—I understand that—the future for UK life sciences looks bright. Not only are the Government proactively delivering for the industry at a time when the environment across many other European countries is becoming increasingly hostile, but we have fantastic organisations such as the Wellcome Trust offering additional support, not least with yesterday’s very welcome news that it is to launch a £200 million fund to invest in biotechnology start-up companies in the UK and Europe. I thank the hon. Member for Newcastle upon Tyne North for raising this really important subject, and I am happy to work with her.

Question put and agreed to.