UK life sciences being held back by lack of institutional investment

Stuart Rose

CEO, OBN (UK) Ltd

UK life sciences lead in R&D, yet lag in funding. Find out how pension reform and investment shifts could unlock £50 billion to drive global health innovation.

The UK life science sector punches above its weight on the global stage. Our small nation plays host to only 0.8% of the world population but four out of the world’s top 10 universities. It also accounts for 8.2% of the global share of highly cited researchers, making us world leaders per capita in important R&D.

Unlocking venture capital potential

However, we are not very good at investing in that innovative brilliance to make it world-leading commercially. It is widely recognised that our conservative approach to venture capital investment means that the leaders of these bright companies spend most of their time on the fundraising trail, which stops them from focusing on other important leadership areas like strategy development, people and culture, regulatory and market access. When they do get some cash, it is typically modest amounts, which means they need to start all over again. 

Lack of institutional investment in UK life sciences

The key issue is the lack of institutional (primarily pension fund) investment in UK life sciences. Paradoxically, the Canadian pension industry invests more in UK life sciences than our own pension industry. The amount of capital that these funds have access to — and decide on the destination of — is significant enough to be truly transformational to UK life sciences.

The Canadian pension industry
invests more in UK life sciences
than our own pension industry.

What’s the solution?

The (previous Conservative) Government created, in conjunction with the pension industry, the Mansion House Compact, which aimed to invest 5% of UK pension funds into unlisted (private) companies by 2030. This voluntary deal has made only very limited progress since it was signed in mid-2023. Recently, the Mansion House Accord was signed by 17 pension funds and adds momentum to investing £25 billion into the British economy by 2030.

Will it work?

Life sciences (one of the Government’s eight growth focus areas identified in its Invest 2035 growth plan due in June) could fare favourably in this. If it does, the uptick in material investment could be game-changing. We have done the difficult stuff (spent almost a millennium investing in world-class education to foster innovation). Now, we just need to inject the cash that can make those brilliant ideas fly, turning them into health innovations that transform the lives of you and me.