The Mayor wants the capital to complete a ‘golden triangle’ with Oxford and Cambridge. What does it take to create a successful biotech cluster?
Boris Johnson is ready to reveal his grand plan to secure London’s place in the resurgence of British bioscience. The Mayor of London wants the city to complete a ‘golden triangle’ with Cambridge and Oxford by creating a new life sciences cluster in the capital. He hopes that bringing the city’s scientists, companies and investors together, can replicate the success of Shoreditch’s ‘Tech City’, which now houses thousands of hi-tech start-ups.
The comparison will be lost on no-one. He has christened the project ‘MedCity’. The Mayor’s timing could not be better. The UK is tentatively emerging from a biotech funding drought that started to take hold when the dotcom bubble burst in 1999 and was drastically worsened by the 2008 financial crisis.
Last month, Circassia, a company in the advanced stages of developing a cure for cat allergies raised £200m in what is thought to be London’s biggest ever biotech float. This was closely followed by a successful fundraising by Horizon Discovery, a company which produces collections of tailor-made cells for the purposes of drug research. It raked in nearly £70m when it debuted on Aim last month.
Stock market listings alone do not give a full picture of investor appetite in this sector, but according to veteran healthcare investor Dr Vishal Gulati, venture partner at DFJ Esprit, a healthy pipeline of IPOs has a powerful ripple effect on earlier-stage funding.
“Once you know you have several options of listing or selling a business you become more forthcoming with investment,” he said. Investor expertise will also develop as more biotech companies list, he said. “You get specialisation in the US because there are hundreds of companies listed. In the UK it’s tens. More companies listing in London will create that kind of critical mass that you need for fund managers to also specialise.”
MedCity could be coming along at just the right time to leverage increased investor interest in the sector. “One or two companies listing is really encouraging but we are not yet at the point of saying we’ve got critical mass,” said Russ Cummings, boss of Imperial Innovations, which invests in companies spun out of university research. “There’s still a way to go to get the kind of vibrancy in the London stock market that equivalent companies get in the US.”
British bioscience is also going through something of a renaissance thanks to a string of government initiatives designed to support the industry. These were partly in response to Pfizer’s shock decision to sharply downsize a major research and development facility in Sandwich, Kent three years ago. It is little wonder the coalition took fright at the first sign of Britain losing its allure for the life science industry. The sector employs around 167,500 people and generates more than £50bn in revenues across 4,500 companies in the UK. Its exports account for 15pc of the global life science total.
Hi-tech ‘clusters’ of scientists, entrepreneurs and investors undoubtedly swell the chances of a plucky start-up securing the funding to grow into an innovative business. Economic development expert Chris Green, who in the 1980s led the first major study into the Cambridge cluster, said the power of a cluster is largely down to the strength of its networks. He traced Cambridge’s success to a mix of deliberate action and historical accident: the small size of the city, a willingness among academics to get involved in business ventures, and a few key figures who have championed the cluster for decades.
“The whole of cluster theory is better at describing the way in which companies interact than identifying how you actually create or nurture a cluster,” he said. Historical quirk is a strong theme among the UK’s existing clusters. It was the low rent in Shoreditch that attracted tech start-ups to the area years before it earned its TechCity moniker, and critics say that branding the area will ultimately have a detrimental effect by driving up costs.
Still, the Mayor is not starting with a blank slate.
“London has all the components that make up a strong cluster: a very strong research base in bioscience, financial and business services, a lot of expertise, and a strong labour market. It’s a matter of knitting them together,” said Green.
Instead, it could be the fierce and long-fought rivalries between London’s heavyweight universities that prove the biggest barrier to creating a successful cluster. “Imperial and UCL are both very powerful and historically extremely competitive. I would worry that they are more likely to compete rather than collaborate. In Cambridge and Oxford you just have one dominant university,” said Green.
MedCity is nonetheless touted to be as much about linking London with Oxford and Cambridge as building networks within the capital.This is crucial for the champions of UK life sciences. Completing the so-called ‘golden triangle’ would give Britain the biggest life sciences cluster in the world.
“By linking UCL, Imperial and Kings, and their associated NHS Research Hospitals, with Cambridge and Oxford, the MedCity cluster triangle becomes the number one life science cluster in the world: beating the Boston Bay Area on all the key metrics of research spend, academic excellence, and number of companies and patients,” said conservative MP George Freeman, one of the architects of the coalition’s Life Science Strategy.
For Steve Bates, chief executive of the BioIndustry Association, MedCity is as much about selling brand Britain as it is about nurturing new collaborations.“Boris waving the flag for us will shine a light on UK excellence and put into greater profile what is one of South East England’s best kept secrets,” he said.
Placing MedCity at the corner of a triangle also helps build a stronger business case for the initiative. Young biotech businesses may struggle to meet London’s expensive rents as they scale up and are likely to look beyond the city once they have become established.
And with the UK’s major rivals for bioscience dominance across the pond, the golden triangle area starts to look more like a single cluster, says Bates. “It all looks like pretty much the same point on the map if you’re taking the view from San Francisco”. Green agrees: “The cluster should be seen in a broader geography than just London. If you look at classic clusters in North America: Silicon Valley, Greater Boston and San Diego, all of those are much bigger geographically.”
“But seen as one, the UK’s golden triangle is probably most important cluster of bioscience companies and research in the world.”
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