Access to capital challenges future of UK life sciences industry - urgent Government investment required

Access to capital challenges future of UK life sciences industry - urgent Government investment required
 
 
Between 12 and 20 March 2009 the BioIndustry Association (BIA) conducted a survey on the financing of the life sciences industry including therapeutic, diagnostic and devices companies.

Results from 295 companies were analysed yielding the following key findings:

• 78 per cent of respondents found that access to finance had become more challenging over the last 12 months
• 76 per cent of companies seeking to raise equity finance over the last 12 months have experienced some level of difficulty; of these 47 per cent were not able to obtain all the finance required and a further 37 per cent were unable to obtain any finance
• The majority of companies were seeking to raise less than £1m (44 per cent) closely followed by those seeking to raise between £1-10m (35 per cent)
• The most frequently cited reasons among investors for their reluctance to commit finance included that either the company or the sector was considered too risky
• The impact of the funding difficulties being faced by companies has resulted in plans being abandoned or deferred and reducing head count

• The majority of finance was required for research and development, closely followed by working capital requirements, and protecting intellectual property.

Access to capital is the most pressing challenge facing emerging life sciences companies in the UK, and this has been further exacerbated by the current global economic environment. Although this Government has supported the life sciences sector, the global environment has become more competitive. The sector now needs a financial commitment from Government in order to reinvigorate the investment environment for SMEs.

Dr Clive Dix, BIA Chairman, said:

"In the current economic climate investors' risk appetite has declined dramatically even for relatively small sums of finance. This is having a significant impact on many of the small and medium sized enterprises in the life sciences sector. The urgency of the problem must not be underestimated. If action is not taken, not only will the UK lose a world-class industry but the development of new therapies and treatments will slow, which will delay the delivery of much needed solutions for patients."

"As the UK comes out of the recession the life sciences sector will play a significant role in helping the UK economy to grow. It is essential that potential high-growth sectors such as the life sciences industry are safeguarded through these times."

"The findings of this survey demonstrate that serious financial commitment is now needed from Government to support levels of fund raising up to £10 million. As highlighted in the recent Bioscience Innovation and Growth Team Review and Refresh of Bioscience 2015 report, a Government-backed UK investment fund matching VC investment for early stage high tech companies would help to safeguard the future of the UK life sciences sector."

The BIA is running a major event next month, BioFinance and BioInnovate Europe, to highlight some of the existing sources of finance available to companies with sessions on alternative financing models, early-stage financing, public sector finance and collaborations with big pharma.

Speakers include Sir David Cooksey, Chair of the Bioscience Innovation and Growth Team Review and Refresh Steering Group; John Aston, Chair of the Bioscience Innovation and Growth Team Finance and Investment Working Group; Kevin Johnson, Advisor, Index Ventures; and Malcolm Weir, Chief Executive Officer of Heptares Therapeutics Ltd.

ENDS

For further information, please contact Francetta Carr, Joint Head of External Relations, 020 7565 7196; mobile 07711 010 820; or via email.

Notes to editors

A copy of the survey findings is available on request.
Participating in the survey were members of the BioIndustry Association, British In Vitro Diagnostics Association, Association of British Healthcare Industries, and regional bioscience networks.

BioIndustry Association

Established in 1989, the BIA (BioIndustry Association) exists to encourage and promote a financially sound and thriving bioscience sector within the UK economy and concentrates its efforts on emerging enterprise and the related interests of companies with whom such enterprise trades.

With over 300 members, the BIA supports a wide range of sectors, majoring on the human health benefits of the technology and represents the interests of these innovative companies to a broad section of stakeholders from patient groups to politicians, advancing its members interests both within the UK and internationally to create a healthy UK bioscience sector which benefits society.

For further information, please go to: the BIA's website.

BIGT Review and Refresh of Bioscience 2015

The Bioscience Innovation and Growth Team review and Refresh report is available from the BIA website.

BioFinance and BioInnovate Europe 2009

Now in its third year, this one day event will focus on accessing finance, commercialising innovation and growing a business in today's tough climate.

Bioscience companies will hear directly from the investors on their investing wish list for 2009-2010, hear up to date information about alternative funding sources, hear directly from the biotech funding success stories and find out exactly what assets the pharma companies are looking to in-license and/or invest in.