UK Life Sciences Funding Breaks Record

The Covid-19 crisis has fuelled record levels of investment in the UK life sciences industry, The Guardian reports. In the first three months of 2021, private funding rounds and stock market flotations have raised £10.6bn within the industry, which is already almost half of last year’s record amount.

Medical equipment companies, drug manufacturers, and diagnostics firms in particular are attracting new investment deals, such as mergers, acquisitions, public listings, venture capital and private equity. Last year, investments totalled nearly £20bn, and a new study predicts that in 2021 the amount will increase substantially.

UK life science companies have proved their world-leading status during the coronavirus pandemic, developing vaccines, and carrying out research and trials into the novel virus. This has attracted the interest of new investors who may have looked elsewhere in the past.

There is also a growing social and corporate governance agenda which is creating a supportive environment for scientific research and development. The Health Secretary Matt Hancock recently announced that the government intended to build on the acceleration of progress in the sector, with new funding and a pledge of commitment.

The research was conducted jointly between property group Savills, the design practice Perkins & Will, and the policy advisory firm Blackstock Consulting. The report also predicts that life sciences real estate will experience a boom.

The UK has 1,226 life sciences firms, which are mostly located between Oxford, Cambridge and London. However, there has recently been development further north, in Manchester, Leeds, Birmingham, Liverpool and Newcastle. These emerging companies are attracting investment in labs and estates, which Savills predicts will reach £550m in 2021.

If the current pace of growth continues, the report forecasts that investment in UK life sciences property markets could reach up to £2bn by 2025, which is 10 times more than in the past five years. US investors including private equity firms are thought to be driving this, as they are keen to back thriving and expanding sectors.

Andrew Teacher, editor of the report, said:

“This may also lead to a flood of new players entering the sector, especially if the real estate investors and developers who have had their fingers burned in virus-ravaged sectors such as offices and retail, look to either repurpose existing stock, or change tack to take advantage of the booming demand for life sciences real estate.”

In the past, taking on life sciences investments was seen as a long haul, as the discovery, development, trialling, and market approval of a drug typically takes 10 to 15 years. However, the recent rapid development and rollout of the various coronavirus vaccines has proved that the process can be expediated when necessary.

It is also possible that investors and developers are waking up to the environmental and social benefits of the life sciences industry, with companies such as AstraZeneca acting for the greater good. Its not-for-profit Covid vaccine, developed in collaboration with Oxford scientists, can be easily distributed and rolled out to the poorer countries of the world.

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