UK biotech investment plunges 60% from previous year's all-time high

In all, the report states, £1.785 billion was raised during the 12 months to December last year, representing a massive drop from the £4.506 billion recorded during 2021. This reverses the 60% climb in investment levels achieved in 2021 over 2020. 

BIA CEO Steve Bates commented: “We expected a fall in investment following two bumper years, but it should still be considered a warning. There is global capital out there for us to attract, as well as finance in the City of London we need to unlock, but competition is fierce.” 

He used the opportunity as a platform to call for more clarity from Government one the future of R&D tax credits, saying these were essential for “leveraging the private investment that drives the UK life science ecosystem”.

Stated Bates: “The halving of R&D tax relief for SMEs without details of what further support will be made available leaves the sword of Damocles hanging over the UK’s start-ups and scale-ups. In a year when global markets are closed to biotech, it is vital that the UK does everything possible to attract investors and support its innovative companies. 

While disappointing, the 2022 results should be seen in the context of a decade long period when biotech investment appreciably increased from 0.261 billion in 2012. During that time, it has hit repeated peaks and troughs.

After three years of averaging 92% investment increases, the level dipped by nearly 40% in 2016 but after a further year of little increase, recorded a rise of more than 80% in 2018, followed by a 40% dip in 2019.

Spurred by the pandemic response, biotech investment hit a record increase of 109% in 2020, followed by a 60% rise to a record real terms level of £4.506 billion in 2021. At well over £4 billion, that figure remains disproportionately higher than all others, which have never exceeded £2.8 billion.

The latest report shows divergence in the behaviour of funding sources with venture capital investment performing well (£1.2 billion) and a further potential £3.7 billion accessible, thanks to the creation of new venture capital funds mandated to invest in UK biotech. Public markets by contrast provided well under £0.6 billion in 2022.

However, said Bates: “UK based life science companies are world leading in developing life changing medical innovation. This year’s data shows they are much sought after by global pharmaceutical companies looking to acquire innovative pipelines and platforms, for which they are willing to pay significant premiums.”

US companies purchases included acquisitions by Pfizer of ReViral, Gilead of MiroBio, and AbbVie's acquisition of DJS Antibodies.

The report also notes UK biotech achievements such as Verona Pharma’s Phase III trial for Ensifentrine, the first novel compound in over a decade to address Chronic Obstructive Pulmonary Disease (COPD). Also, Immunocore’s receipt of regulatory approval for KIMMTRAK (tebentafusp), the first T Cell Receptor (TCR) immunotherapy to be approved to treat solid tumours.

Global Head of Thought Leadership for Life Sciences & Healthcare at Clarivate Mike Ward, said that while the global biotech sector saw a decline in the sums raised from the capital markets, this was more a response to macroeconomic drivers than a reflection of R&D performance or potential. 

“With assets originally created within biotech labs now accounting for almost 70% of pharma pipelines, an additional $40 billion raised by life sciences-focused funds, and an asset-hungry pharma industry sitting on cash piles ready to be spent replenishing pipeline and portfolios, the global biotech sector still has the potential to see consequential growth and deliver new transformation medicines to patients,” he commented.

Pic: Chokniti Khongchum