End of regional investment funds holds back East Midlands bio-tech sector
BIOCITY boss Glen Crocker believes "untapped opportunities" for Nottingham biotech businesses lie ahead, despite a huge disparity in funding for the sector across the nation.
A new report on life science start-ups shows that 86% of all investment currently goes towards companies in London, the south-east and the east of England.
This concentration has left companies across the rest of the country sharing just 14% of investment from a pot of financial resources which has itself been declining over the past five years.
The UK Life Sciences Start-up Report, the third to be produced by BioCity, said the end of regional investment funds and university investment schemes had contributed to a fall in both the number and value of investments raised by new start-ups in the sector. A league table of investment value currently places the East Midlands third from bottom.
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However, Dr Crocker, who co-authored the report, said this weighting of money towards the south of England had to be regarded as an opportunity for businesses in Nottingham and the East Midlands to reach out to investors.
"Either the market is working perfectly, which means the rest of the UK is crap, or the market isn't working very well at all and investors are simply going for opportunities in the south of England that they know they can reach," he said. "So there are untapped opportunities."
Dr Crocker said that Nottingham's £10m Creative Quarter technology grant fund for start-ups, and the £40m venture capital investment fund, offered two new opportunities for local life science businesses.
He said that this new money could "dramatically reverse" the lack of investment facing the sector.
"And all this is just around the corner, not on the never, never."
He added: "What we need is something that addresses the massive dichotomy of investment where most investment goes to the south-east. There are massive opportunities out there that aren't necessarily getting the funding they need."
The report, which offers a review of business activity in the bioscience and life science sector, shows that 291 new companies were formed in England and Scotland in the five years up to 2011.
However, since 2005-2009, the total number of investments in new companies fell from 392 to 341.
The biggest decline of resources has been in the £0.5m fund range for early stage development.
Today, public sector regional funding has "all disappeared" with the demise of RDAs while the number of university spin-outs in England has also declined.
Just over 20% of all life science start-ups in the East Midlands are now university spin-outs, one of the lowest proportions in England and Scotland.
Ironically, one factor countering these forces has been the break-up of large pharma companies such as AstraZeneca, at Charnwood, which closed in 2011 with the loss of 1,200 jobs.
Many of the skilled people released into the market went on to form their own companies, including those in the growing CRO sector – contract research organisations which are contracted by larger pharma companies to carry out research work towards the development of new medicines.