UK Industry: International Competitiveness

Lord Kakkar Excerpts

Thursday 5th July 2012 Lords Chamber

[Lord Kakkar]

My Lords, I, too, congratulate the noble Lord, Lord Jenkin of Roding, on having secured this important debate. I would like to focus my comments on something that he said in his introductory remarks around the issue of the life sciences industry. In doing so, I remind noble Lords of my entry in the register of interests as professor of surgery at University College London; as chair of quality at University College London Partners, one of the five designated academic health science centres in our country; and of my collaborative activities with the life sciences industry, focused on the area of thrombosis research, my own particular science interest.

The life sciences industry—pharmaceuticals, medical technology and medical and industrial biotechnology—is described as being exceedingly important to our country, and second only to financial services in the contribution that it makes to our economy. The industry generates in excess of £50 billion a year in revenue and employs some 166,000 people. In the pharmaceutical industry, the export of medicines in 2009 generated £7 billion in excess revenues compared to our importation of medicines. Over the past 30 years the pharmaceutical industry, through sales of medicines and medicinal products, has been a net contributor to our economy.

The pharmaceutical industry employs some 72,000 of our fellow citizens in this country. The medical technology industry has a turnover of some £15 billion a year and employs in excess of 60,000 of our fellow citizens. As to the value of public expenditure in medical research, every pound spent brings a contribution of 39p in extra economic activity in perpetuity. To a simple surgeon that suggests that when we invest in biomedical research we get a 39% return on our investment for ever—which is very impressive. Conversely, it is also well noted that if we were to remove from research council funding £1 billion of annual investment in the sciences and medical research, we would lose some £10 billion of gross domestic product. It is hugely important that public investment should continue to drive this important area of economic activity.

On the broader contributions beyond public expenditure, one-third of all the investment in biomedical research comes from charities. That is really quite impressive. Some 40% of investment in research and development in this area of activity comes from foreign multinational companies. Of all the G8 countries, we receive the largest proportion of investment in our R and D from foreign multinationals, which is tremendously impressive. It is something on which we should focus and that we should bring to the heart of any policy-making.

The Government are to be congratulated on having recognised this and on having made this a particular area of focus and attention over the past two years, not only because there is huge opportunity for economic growth and development associated with investment in the life sciences industry, but because investing in this area has the important benefit of improving our ability to deliver healthcare, improving the technologies and innovations that we can provide to patients and our fellow citizens and therefore improving clinical outcomes. It is striking to see how contributions from research in the United Kingdom play across the world. Our population represents less than 1% of the global population, but 12% of all citations in biomedical sciences around the world are citations of research undertaken in our country. This demonstrates that our impact across the world remains hugely important.

The noble Lord, Lord Jenkin of Roding, mentioned the life sciences strategy that was announced by the Prime Minister on 5 December 2011. It is an important strategy that has the capacity to do a huge amount to drive forward the development of the life sciences industry in our country and also to ensure that biomedical research in the academic arena, in our universities and in the NHS, continues to grow and prosper for the benefit of patients.

A number of important initiatives are described in the life sciences strategy, one of the most interesting of which is the commitment to the development of telemedicine to ensure that we can better manage patients with chronic diseases in their own homes, along with a commitment to ensure that 3 million patients with chronic diseases will be provided with the opportunity to access telemedicine so that their condition can be monitored at home rather than needing to avail hospital facilities for the management of their care. There is also the commitment to a £180-million catalyst fund to help identify and provide early investment into the potential breakthroughs of the future, those that will have the greatest clinical impact and thus encourage investment into our country.

We also have what at the time was a somewhat controversial commitment to ensure that across the National Health Service as a whole, the great store of data on clinical conditions that we hold is better aligned to research opportunities and therefore able to attract greater investment into the health service for research. There is, too, the important commitment to ensure early access into the NHS and therefore early access for patients to innovations and new drugs. This will be particularly attractive to the biopharmaceutical industry in terms of ensuring that it targets its research activities in the United Kingdom because it will be better able to access rapidly the potential markets for its innovations.

In addition to the life sciences strategy, we recently saw the publication of the innovation review by the chief executive of the NHS which looks specifically at how the health service can better adopt innovation, diffuse it widely across the entire NHS and, what is particularly important, ensure that the health service is outward-looking in terms of its relationship with the life sciences industry so that in addition to achieving its primary objective of providing the best healthcare for the people of our country, it is able to contribute to the broader generation of wealth creation, thus promoting the interests of UK plc, as the chief executive puts it in this document.

However, there are also some problems. Although investment in our life sciences industry by foreign multinational companies remains substantial, over the past 10 to 12 years there has been a considerable reduction in the contribution we make to global clinical trials, the important phase 2 and phase 3 research studies that allow us to evaluate novel interventions and new drug therapies. Before the introduction of the European clinical trials directive in 2003, some 6% of all patients going into clinical research globally came from our country. By 2006 the percentage had fallen to just 2%, and by 2010 to 1.4%. That is a very worrying trend. The European Commission has recognised that this is a problem not only for our own country but throughout Europe, and is now looking at how the directive might be revised. What position have Her Majesty’s Government taken in these negotiations, in particular to ensure that, when the directive is re-presented, it is much more flexible in allowing for recognition of the national standards that apply to clinical research, which are particularly high in our country, and that any competitive edge which had inadvertently been lost in the past can be regained once again?

Some 23% of those who work in the sciences and biomedical sciences departments in our academic institutions come from outside the United Kingdom. One of the great concerns is the potential impact of the changes made to visa requirements on the ability to attract top-rate clinical and basic scientists to come and work in our country. Is the Minister able to confirm that Her Majesty’s Government remain sympathetic to the need to attract top basic and clinical scientists so as to ensure that our life sciences, and particularly our academic research institutions, are able to compete at the highest levels globally?

Finally, there is the broader question of how we can build on the initiatives of Her Majesty’s Government to drive forward the life sciences industry. There is concern that the generous settlements which have been provided in the current spending round for the research councils and for medical research in particular may not be sustainable in the next spending round. However, it is vitally important that they are maintained. As I have said, investment in medical research provides remarkable long-term returns to the wider economy. Is the Minister able to confirm that Her Majesty’s Government remain sympathetic to investment in research and innovation?

There is also a need to look at tax incentives to better ensure that this country encourages venture capital investment at the very early stage in translational medical research. We need to develop a system of adaptive licensing, combined with the advances we are going to see in genomic medicine and stratified medicine, to ensure that new innovations can come to the market quickly and benefit patients. We also need to look at the way that the National Institute for Clinical Excellence judges value in terms of innovation, looking not only at the quality of life improvement but also at the economic and broader social impact of innovation.

Finally, there must always be a careful, measured approach towards regulation of research, ensuring that patients are always protected but also that the environment for research in our country remains competitive and attractive.