Speech by Life Sciences Minister George Freeman at the Future of Healthcare Investor Forum.
Well Xavier, thank you for that very kind welcome and for pulling this event together. When we first spoke 18 months ago and you expressed a strong interest in helping to bring on this sector and to bring the public markets to the very exciting development that’s been happening in the private markets in the UK, I didn’t foresee how quickly it would have an impact on the sector and I’m going to say something in a minute about the extraordinary successes of 2015. I’m not complacent for a minute but this country is traditionally not very good at celebrating success so I think today is a moment to look back at some of the highlights of last year and some of the extraordinary things coming. I wanted to thank you and your team for the work that you’re doing hosting this conference, the second, I hope it becomes an annual fixture and the work that you’re doing on the ELITE programme to prepare some of the most exciting companies to come to market.
Can I just also thank the companies and the investors that are here - your time, your commitment to meet the companies and to take part in this is an important signal of this sectors commitment to itself and to leadership and it’s hugely important, this event, and the issues and themes that come out of it. I can assure you that last year there were several policy points that came from this event that we’ve picked up at No.10 and we’ve fed through both into the manifesto and some of my policy making.
I wanted to say something this morning about the government’s commitment to this sector and to the strategy and to share with you some thoughts about where we go next, to announce some very exciting latest figures and data on what’s going on in the sector and to share with you some thoughts on where it and we go next in the next few years. Let me start by saying that it’s an incredible pleasure and privilege to be back as the UKs first Minister for Life Sciences. A year ago we were looking down the barrels of a quinquennial democratic accountability moment and I was perfectly prepared to be the last Minister for Life Sciences. I would say that I have tried to pursue this agenda in a very non-partisan way, not least for this for this sector’s benefit. It needs cross-party support and it needs a 10 to 15 year policy horizon and I’m delighted at the level of support we’ve had from all parties in support of what we are doing.
I would just say this, it turns out there is a global conference of life sciences ministers this year, I’ve joked in the past that it would have been a very small event with me chairing it, opening it giving the plenary, the lunchtime warm up act and taking the minutes. It turns out that other countries are rallying and I’m very much looking forward to attending the world’s first conference for life science ministers. It is a tribute to this country’s expertise and the recognition of our leadership on science, but also on finance and policy as well.
In an extraordinary year one of the highlights for me was being invited to the White House to brief the Obama team on what we’re doing on genomics and on informatics and on precision medicine and on digitalisation and on unlocking the NHS as a research engine. Any of you who’ve been to the West Wing will imagine my disappointment, I arrived expecting to find CJ and the sofa and the bustle of a very small family of high power. The West Wing, it turns out, is a building that makes our Ministry of Defence look like a drawing room, it’s a vast concrete building of about 20 storeys with flags on every corridor. And when we left the meeting and I said “where’s the West Wing? When do we have the brush by with CJ?” they said “Minister, this is the West Wing” and brought me to the door and down the stairs was the White House like a little toy house, it’s tiny, and they said “Minister, the West Wing is the administrative wing of the President, the West Wing you think of is our drawing room”. But interestingly President Obama, that Sunday in his State of the Union speech, announced a very ambitious programme, matching our commitment here in precision medicine, in genomics, in informatics and that I think is an important reassurance to this sector and I’m working with cross party Congress and the Senate and White House policy chiefs on accelerated access and regulation so that we build a transatlantic and integrated regulatory pathway so that companies can have confidence we’re building something that works for them and for you.
So let me just say something about the commitment and why it’s so strong, it isn’t just that this country is brilliant at biomedical research and deep science and that we need the financing activity and the growth, all of which is true and that we’re good at it and some of the most exciting companies, that in the last decade have raised a lot of money in the US, were incubated here. In the genomics programme it’s very striking to me that Illumina, our technology partner sequencing 100,000 NHS genomes, is using technology developed in Cambridge, by a Cambridge spin-out that was acquired by an American company and we’re now paying for it back, proudly I’m delighted we are it’s Cambridge technology, but boy would I like it if the company was able to raise money here and it was a UK company all the way through and that is part of our challenge to make sure that we keep these great technologies and build them here.
Our strategy at the beginning was more than that, it was how we embrace innovation and make our NHS not a late, reluctant procurer of ever more expensive innovation but a partner in the development of that innovation and how can we drive an integrated healthcare innovation economy.
So we’re not just supporting the life sciences traditional bio-pharma from the Department of Business, but now we have a joined up strategy and at the Department of Health I’m responsible for the £14 billion drugs budget, for the Cancer Drugs Fund (CDF), for genomics, for the £1 billion a year National Institute for Health Research (NIHR) infrastructure in the NHS and now for all the data and digital policy making so we can drive a proper, integrated healthcare economy and we can unleash the power of the NHS to support 21st century research with genomics and informatics and quicker access to trials and to pull it through more quickly and the strap line is: we are absolutely determined that health and the NHS won’t break this country, it will make this country. We want to lead in the technologies for the transformation of our own system and export them around the world and it’s a model of growth that insists that the public sector has a duty to work with the private sector to support innovation and frankly needs that innovation to be a modern public service, it’s a different mind-set at the Department of Health but we’ve embedded it and locked it in not just through the minister but through the creation of a major directorate in DH called ‘Innovation, Technology and Growth’, not 3 words traditionally associated with the Department of Health over the last 50 years, despite the NHS’s extraordinary ability to innovate. I want you to understand that the commitment comes from the PM and the Chancellor and is hardwired right into the heart of government and at the next quinquennial democratic moment any incoming administration will discover an absolute commitment, its goes right to the heart of the UK government’s sense of strategic priorities over the next decade.
And we announced, you’ll remember, when we set out this strategy that as well as a commitment to the whole landscape, from deep science through translation infrastructure, business environment, NHS accessibility and reform of the pathway for innovation, we would also try and lead in 2 keys areas: in genomics and informatics. And in genomics, we set the world alight with the announcement that we’d be the first nation on Earth to sequence 100,000 entire genomes and put it together with all the phenotypic clinical hospital data. We set a company up to do it, Genomics England, and I’m delighted that the pace at which we’ve managed, after a little bit of wheel spinning in the first 6 months – it’s a big project, we are now recognised globally as setting the pace in genomics and some of the companies you see downstairs are working off and feeding off that leadership, headquartered at Sanger but we’ve launched 12 Genomic Medicine Centres around the UK NHS and we’ve built the NHS into this from day one. We are determined to lead the world in the launch of genomic medicines, mainstreamed in the NHS. This won’t be an innovation that we invented here and then was slow to procure, this will be an innovation, a whole revolution in healthcare that we lead here and then mainstreamed in our NHS, which I think gives investors a lot of confidence that this will be one that they can be confident that the UK is serious about purchasing as well as researching.
And now we’re looking at informatics, the truth is we cannot run a 21st century NHS on paper and cardboard, and I’m prepared to be very clear with patients about the risks of that, unless we are clear about the problem we have to solve, I don’t think we will carry the public and the press with us on the journey of digitalisation. Jeremy Hunt and I will shortly be making a series of announcements about how we tackle the regulatory, the political and the parliamentary issues around confidentiality and we will make sure in the next few years that we invest in patient benefits, apps on your phone so we can begin to get patients excited by a digital NHS because without that it will simply be more money for digitalisation of the system. We want to unleash patient power to drive this forward, focused on disease, focused on research and care pathways, and patients clamouring for more of these digital benefits, and it’s interesting that a number of companies you see in the UK are digital companies driving convergence in that field.
Let me say something about the progress that’s already happened and to make the announcement today that we’ve heralded. Since we launched this strategy collective government support has helped secure over £6 billion of new investment into the UK life science sector, linked to more than 17,000 additional jobs (1).There’s a reason this sector is growing and there’s a reason around the country people are beginning to realise this isn’t just in Cambridge, this isn’t just a niche sector, this is now going across the country and in my travels, next week I’m in Newcastle, I’ve been to Swindon, I’ve been to Milton Keynes, to South Wales, to Scotland, to Northern Ireland, this sector is driving economic recovery across the country. Our exports figures: In the first 3 quarters of 2015 UK life science exports are up 23%. Since we launched HealthcareUK 3 years ago to lead the international export mission, exporting NHS leadership and life science technologies, we’ve now secured £4.9 billion of exports and at the visits of the Chinese Premier and the Indian Prime Minister I signed with China a £2 billion life science exports deal made up of 17 individual deals, and with India a £1/4 billion deal and there’s another 3/4s that that will trigger. And 48% of university spin outs in the UK now are life science related but across a very broad digital and med-tech and device spread. And I’m delighted to see the pace of collaboration between industry and charities and universities and the formal launch next week of the Apollo Fund between 3 of our great companies: GSK, AstraZeneca, Johnson and Johnson and 3 of our great universities: Imperial, UCL and Cambridge, £40 million is a sign of the commitment of industry to this emerging translational infrastructure.
London has an absolutely key part to play in this, you’ll be surprised as a Cambridge man that I’ve been vocal in getting round the country to signal this is not just about Cambridge and it isn’t, but London, I think for too long, has been underestimated, under recognised as a biomedical powerhouse and I’m really delighted that the Mayor has really recognised, and it’s great to pay tribute and see Elliot here leading MedCity. London is not just a science powerhouse, with Imperial, with UCL and with Kings, each global ranking biomedical universities in their own right, with an extraordinary patient catchment but with this phenomenal city powerhouse of finance, high net worths, angel financing and whole range of fine-tech and extraordinary companies in that space. London has even more potential to become a global financing hub for these emerging technologies, we’re doing it in TechCity and there’s every reason we could do it in MedCity and make this country and this city not just a great place to do academic science but the place to come and get creative financing and build an insurgent 21st century life science company. This last year we’ve seen some extraordinary news, Immunocore raising £200 million, that’s the second largest ever private, biotech financing. That’s a British company, built here, designed here, British science and a wonderful team leading the world and anyone who was at JP Morgan last year and this year will have seen the level of interest that that deal alone and some of the others have done and it’s a signal of some of the low hanging fruit in our sector through the less active financing period following the 2000 crash and the early 10 years following that.
We’ve got some incredible low hanging fruit now beginning to come through the pipeline, ready and properly matured and the old problem of stuff being spun out too soon has now been reversed by some incredible technology coming to the market which has had a lot of time to mature, if I can use a wine metaphor, this is ripe and has been well treated and is ready for serious financing to go to market. If you look at Circassia raising £275 million back on the main market, sending a really powerful signal around the world that the London market is open for these companies and these technologies and the UK is building these companies. In 2015, the UK life science sector raised £1.3 billion on the main markets, including AIM, and we raised £700 million in angel and private and VC financing, those are big numbers for a sector that has deemed to have been going through a quiet restructuring and a repositioning and I think it’s not too soon to say that we are now beginning to see the re-emergence of a funding continuum.
It’s not the funding continuum that I remember when I worked in this sector 15 years ago, quite siloed, the series A over the wall to series B over the wall to the pre-IPO and then market. This is led by some serious long term investors with a deep commitment to the sector and a deep understanding of it, both angels, private, some of the longer term VC, some of the corporate venturing and now some of the new institutional investor bodies, the Neil Woodfords, the Peter Keanes coming into this sector with deep pockets and building a new generation of serious companies, properly backed to go on and do global leadership. We’ve seen some wonderful companies downstairs and if you look around the country, companies like Cell Medica, Atlas Genetics, Bicycle Therapeutics, Oxford Therapeutics, but not just in the therapeutics space, it’s companies like Abcodia doing extraordinary work on biomarkers, psychology online, some of the new companies that are doing convergence of digital, diagnostics, device and taking this convergent technology into breaking open old markets, creating new products and technologies. And I think it’s just wonderful to see the LSE leading a discussion, which I am picking up with the City Minister, on making sure the markets are ready for these companies and opening up life science firms to the LSE’s High Growth Segment with a free float as low as 10%. That is a sign that this sector and this market is serious.
Let me just close by saying something about where we go next. I hope you will have seen that in the recent funding Autumn Statement, in which the government set out it’s funding for the rest of this Parliament, no sector has done better than this. I’m not trumpeting it in Parliament, I don’t want to trigger Ministerial envy but I hope you can see that we defied some of the pundits. The Chancellor has ring-fenced the science budget and made the biggest ever historic commitment to science capital and revenue. We’re also funding the Catapult programme in cell therapy, in precision medicine and we’ve also launched 2 new: in medicines manufacturing, which industry has told us is a priority and in the medicines technology field.
The Bio Medical Catalyst, which I’m really proud to have designed 5 odd years ago, we’re looking at how we can make sure we keep that very powerful, small amount of money, but very powerful for triggering those collaborations between private and public and backing industry-led, early stage businesses. We’ve announced that we will ringfence the £1 billion a year into the NIHR, clinical infrastructure at the heart of the NHS. When you go to many of our hospitals now, downstairs you find a clinical research suite doing industry led trials, 250 odd trials going on around the UK and we’ve ringfenced that funding, it’s a big commitment. And we’ll shortly be announcing, on informatics, a major commitment in this Parliament to drive the digital healthcare agenda. The figure you heard in the Autumn Statement was £1 billion, I can tell you it’s quite a lot bigger than that and we are absolutely determined, as we have been on genomics, that this will be driven by a partnership of NHS, as the flagship, working with emerging companies to pioneer new treatments.
And we furthermore announced that genomics, a further £250 million, this was never intended to be just an extraordinary technology project, which it is, and we’re building the world’s reference library for genomic medicine. With industries coming in and partnering with that company, led by Sir John Chisholm and his team, we’ve announced another £250 million and another 2 Genomics Medicines Centres, so the NHS is now leading on turning genomics into a mainstream genomics medicine service in the 21st century NHS, so increasingly you will go into the NHS and have a molecular diagnostic test and we won’t just test for one thing, we’ll test for all, we’ll integrate it properly and we’ll have a data contract with Genomics England so they tell the NHS what traits they have discovered are now linked to particular diseases and diagnostics and the NHS will supply information from it’s extraordinary diagnostic footprint. And on digital health we are making a major commitment, not just to digitise the service but to support the digital health industry in the UK, McKinsey recently forecast that that will be worth £14 billion by 2021 and we see it as a major opportunity for this country. We are the most internet connected nation on Earth, we lead on the gaming and the technology and so much of the IT, if we can connect that creativity with our health sector then we are, we think, well positioned to be a leader in digital health.
Let me just close with these 2 commitments: We recognise that one of the things that has held this country back has been the NHS adoption and the challenge of getting the NHS, which is a brilliant producer of innovation, to become a much better adopter of technology so that we cannot just be a great place to invent but a great place to test and prove and that sits at the heart of the strategy the Prime Minister and I set out. Let me remind you what we said in 2011, every patient a research patient, every hospital a research hospital, and the Accelerated Access Review that I launched and which is about to report to me is looking fundamentally at 3 important questions: how can we help companies get to that all important point of clinical validation in the NHS? The early ‘no’ as well as the early ‘yes’. Is this going to work? Is there any chance of you buying it? We need to make the NHS a much more powerful test bed for the life science sector. Secondly, how can we reform NICE and NHS England so that as companies bring digital devices, diagnostics, targeted precision medicines, medicines that have a molecular diagnostic attached that guarantees they’ll work in different patient groups, that we have the flexible pathways to fast track them through to the right patients and we’re creative about how we reimburse and value, we need to update NICE’s methodology for the world of genomic and informatics medicine. And thirdly, how can we get better at taking a proven innovation that saves money in one bit of the NHS and rolling it out across the system? It’s just not acceptable that some innovations, after 2 or 3 years, are still not rolled out across the system.
My final point is this, that challenge of modernising the NHS, which is being led now by the NHS itself, Simon Stevens in the Five Year Forward View set out a very powerful vision for how the NHS leadership, clinical and management, intend and want to be allowed to modernise that service and we’re backing it hard, we’ve funded it and it is our great opportunity because in that the NHS is opening it’s doors to these transformational technologies to drive modernisation for the system and I think the message for the life science sector is: come to the system with innovations that help patients, help diagnostics and help the system save money by moving from a model of late stage treatment of disease to earlier stage identification, prevention and management, and you are in business and my commitment to you is the Department of Health is in business to help build that integrated healthcare economy. This is a moment to reflect on the success of last year, some really exciting and extraordinary things beginning to happen. One of the most exciting, I went last week to see McLaren using Formula 1 telemetry, 400 data points streaming off every F1 car, McLaren provide it for the entire F1 fleet and they’re now working with the NHS on helping children in Birmingham Hospital after cardiac to have wireless telemetry 24/7, constant algorithm underpinned data feeds to the nurses so the individual child monitor beeps only when that individual child has an unexpected event. And in Oxford they’re working with NHS A&E on how they can use pit lane telemetry to improve A&E performance and that is a sign of our commitment to try and build these new partnerships.
Thank you Xavier for what the stock market is doing, I really look forward, this year, to coming back and welcoming the announcement of more floats, more fundings, more IPOs and that we can sustain momentum over the next 5 years. I hope our commitment from government is really clear and it’s wonderful that with the support of the City we can begin to bring this sector really together so that institutional investors putting their money in an ISA know that it’s going to fund British leadership in healthcare technology that will have an impact on their lives. And I think that is something we can not only be financially excited about but politically and socially excited that this country is doing something very very exciting. Thank you.
(1) The estimate includes new investment committed by the UK private sector as well as inward investment by foreign-owned companies over a four year period, from the launch of the Life Science Strategy in December 2011 through December 2015.
a. UK-domiciled investment includes an estimate of private sector investment announced over the period. The amount of UK-domiciled investment is not comprehensive. There is no means of comprehensively tracking private sector investment and routine published data sources do not adequately capture this type of information for the health and life science sector. The estimate is based on major private sector projects known to the government, as well as leveraged investment and new jobs linked to the RGF. It does not include leveraged investment and jobs from other government competitions such as Advanced Manufacturing Supply Chain Initiative, Biomedical Catalyst & Research Partnership Investment Fund
b. Inward investment refers to new investment in the UK by foreign-owned companies in order to undertake brand new activity, or to expand existing activity. These commitments are linked to inward investment projects recorded by UK Trade & Investment (UKTI) in the health and life science sector during the period. The majority of these projects were directly supported by the UKTI Life Sciences Organisation and their network of overseas and subnational partners whose role is to attract inward investment to the UK.
The estimate is not comprehensive. It does not reflect annual research and development (R&D) or clinical trials spending by established domestic and foreign-owned companies in the UK, or investment linked to organic business growth.