Health Lexcomm: Life Sciences Review

05/12/2011

Health Lexcomm : Life Sciences Review (PDF)

Amid relentless gloom about the state of the economy, the Prime Minister has today announced a series of measures that he hopes will inject certainty into the health life sciences sector. Such political backing is unsurprising given that the sector is one of the UK’s longstanding success stories and a source of significant wealth generation.
The Prime Minister’s high profile support sends a clear signal that the Government is backing life sciences as an economic ‘winner’ and is open to working closely with industry to make its vision a reality. It also, however, exposes the Coalition to the potential fall out from any further job losses or significant closures in the future – factors that its opponents will use to judge the success or otherwise of the strategy set out today.

Anxiety about the retention of Britain’s advantage in life sciences has been brewing in the corridors of power following a series of widely reported decisions by global companies to reduce headcount. Concerted lobbying regarding the pressures affecting SMEs amid turbulent market conditions also added to the pressure on Government to be seen to taking action. Today’s announcements are designed to appeal to both multinationals and SMEs investing in Britain.

Appealing to industry, patients and academia
The Government has pledged to ensure the speedier adoption by the NHS of market ready innovations as well as additional help for researchers and start ups keen to turn their new discoveries into economic success stories.  There will also be some comfort for patient groups with the promise of earlier access to pre-approved treatments and a robust focus to ensure the adherence to NICE guidance.

There is a strong political consensus around the need for the UK to retain and increase the number of highly skilled professionals employed by pharmaceutical companies and the amount of intellectual capital that the sector produces. There is also a tacit recognition that without reform and support, a significant threat exists to the public sector infrastructure that these companies rely on to make investment decisions.

Academia in particular will be looking at the Government’s approach to address funding shortfalls and a potential brain drain of staff to more lucrative research sectors in emerging economies with a keen interest. The NHS, for its part, is more acutely aware than ever of the need for it to become more commercially savvy driving innovation through clinical trials to the benefit of patients and service efficiency.

Given the limited financial wiggle room available to the Government, the commitments, totalling around £500m, are not quite on the scale of previous bonanzas for research and development in the UK. Designed as a series of smart levers, the Government aims for the funding to encourage new innovations to be developed and demonstrate to companies that investment will be rewarded. Keen to avoid allegations that the package merely consists of some tinkering around the edges, the flagship announcement of £18m catalyst funding has been heavily trailed in the media in advance of today’s launch and case studies of previously announced commitments feature throughout the strategies.

“if we are to remain competitive, we must up our game in the UK. We must use our fantastic science base to its fullest potential and be at the forefront of life sciences in [the] new landscape.”

Rt Hon Andrew Lansley MP and Rt Hon David Willetts MP

A challenging wider environment
Underlying the measures set out today is a toxic cocktail of pressures. Commitments to increase the speed with which treatments are taken up and funded on the NHS will of course be welcomed by patient groups and industry alike, but this ignores the additional cost pressures that will be put on NHS Trusts already struggling under the weight of mounting demand.

Without significant efficiency savings there will inevitably be a continuation of the struggles seen to date between local formularies keen to preserve services, and nationally mandated approval processes. 

Similarly, the announcements appear somewhat at odds with the anticipated diminution of NICE’s national remit in the build up to Value Based Pricing (VBP) in early 2014 and the greater focus on localism. The lack of further detail on VBP included in today’s announcement will do nothing to alleviate the nervousness amongst biotech companies of all sizes that the designers of the new system of reimbursement have not sufficiently considered its impact on the take-up of innovation.

The Government will be acutely aware that the success or otherwise of its approach is somewhat at the mercy of global markets, in particular a European healthcare market suffering significant contraction and public expenditure pressures. Addressing depleted product pipelines and cost cutting pressures are big asks, but providing more certainty via one of the continent’s biggest customers – the NHS – will be a key test of the new approach.

Politically, Labour has made much of the promised opening up of patient data for use by private companies. Shadow Health Secretary Andy Burnham has claimed that the Prime Minister ‘sees no limit on the involvement of the private sector… he seems willing to put large chunks of our NHS up for sale’, a familiar theme from the battles fought over NHS reform. However, little has been said by the Opposition on the main economic measures included in the announcements. This is perhaps a tacit recognition that the UK must do all it can to nurture and encourage life sciences and not let political point scoring get in the way.

A sector worth £50bn to the country rightly deserves the attention placed on it by today’s announcements. The Government will hope that with little additional resource at
its disposal it has put together the right measures to help fledgling companies and global giants flourish in the UK in the face of a global economic storm.


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