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The rise of  biotechnology: How biotechnology is contributing to regional development

The rise of biotechnology: How biotechnology is contributing to regional development

SMITH, D.J., ROSSITER, W. and MCDONALD-JUNOR, D., Nottingham Business School, Nottingham Trent University

How a city creates new development paths when faced with declining industries, is one of the most pressing questions of our time. We’ll fasten our colours to the mast and say that as a publisher based in the North East of England, where many of our traditional industries have declined, we were intrigued to find out how one city is forging a new path.

You may associate the UK biotechnology sector with the golden triangle of London, Oxford and Cambridge, but in this issue of BioScience Today, we take a look at another city which is making its mark in the sector.

The challenge

Prior to the millennium, Nottingham showed all the hallmarks of a city region trapped on a path of decline, but read on to find out how the city turned its historic strengths (and assets) to new purposes. Discover how biotechnology and bioscience more widely, are contributing to a new model for regional development.  In order to understand better how this came about, we must first take a step back in time:

The background

Look back to Nottingham in the 1960’s and you’ll find that Boots, Raleigh and Players, were mainstays of the local economy, with each company employing almost 10,000 people in the city. Boots had developed into one of the UK’s leading pharmaceutical companies, having invested heavily in new research facilities and among its major achievements was the discovery of ibuprofen at their Pennyfoot Street laboratory.

Move forward a decade or two however, and you’ll find a different story. Nottingham, like other centres of industry was going through a steady process of de-industrialisation, with manufacturing employment contracting and the balance of the economy shifting towards the service sector.

Raleigh was hit by the growth in car ownership, whilst Players were affected by the growing awareness of the detriment to health posed by smoking, while Boots, as we shall see, also suffered a change in fortunes.

Household names once associated with Nottingham were fast restructuring, going out of business or moving out of the city and the future looked bleak. By 2000, Raleigh had ceased their operations in the city, and around the same time, another manufacturing plant, Royal Ordnance – owned by British Aerospace, also closed.

What then were the factors that led to Nottingham finding a new development path based on bioscience and health? Drawing on Kingdon’s multiple streams framework, we identify three key streams of activity which ultimately led to a turnaround in Nottingham’s fortunes.

Changes in the pharmaceutical industry

Firstly, changes in the worldwide pharmaceutical industry, saw a succession of high profile mergers in the 1990’s and at the same time, as part of this consolidation, the model of R&D used by many pharmaceutical companies changed due to the inherent cost of drug development.

In-house development was being replaced by outsourced and external R&D – leading to a rise in the number of specialist biotechnology companies offering these services. Closed models of innovation were being replaced by more ‘open’ and outward looking models, and these changes in themselves were to prove an opportunity for Nottingham.

Changes to individual firms

Secondly, the changing fortunes of individual firms was a contributing factor to the adaptation of the local economy, and in the case of Nottingham, what happened to Boots was crucial. Having become one of the UK’s leading pharmaceutical companies, by the 1990’s, Boots was facing several challenges including leadership changes and regulatory problems, for example, one drug they had developed, manoplax, was withdrawn.

By 1995, the decision had been made by Boots to sell their prescription only drug business to BASF, yet within four years BASF themselves were conducting a review and made the decision to sell their Knoll Pharmaceuticals business to Abbott Laboratories in 2001. Abbott wanted the Intellectual Property rights, but not the Nottingham site and around 450 highly-qualified scientific staff were made redundant.

Institutional changes

The adaptation of Nottingham’s economy was influenced by a third factor – changes to local institutions – including both scientific and administrative organisations. This was to prove critical in developing the capabilities necessary to take advantage of a window of opportunity when it arose.

The opening of the Medical School at the University of Nottingham in 1970, followed in 1977 by the Queens Medical Centre (QMC) – the first purpose-built teaching hospital to be constructed in the UK – both acted to boost the local science-based labour market and stimulate demand for health related bioscience services.

Also, contributing to the city’s science-based economy was the development of the two universities. Nottingham University was to become one of the UK’s leading research intensive universities, with major departments in bioscience and healthcare, whilst the former polytechnic was fast developing,  gaining university status in 1992 – becoming Nottingham Trent University (NTU).

In addition, Nottingham City Council was awarded unitary status in 1998, giving them a greater say in strategic planning, whilst the establishment of regional development agencies (RDAs) across the UK, including the East Midlands Development Agency (EMDA) in Nottingham, was another important factor in the development of the local economy.

A Window of Opportunity

It was the convergence of these three streams; industry, firms and institutions, which served to create both a major economic challenge and a means with which to respond. The catalyst or ‘focusing event’ as Zahariadis terms it, which drew attention to the decline Nottingham’s industrial base was the closure of the former Boots research laboratory and the redundancy of the staff in 2000.

It soon became clear that selling the site was not an option, for as one former employee noted, “nobody wanted the site when we tried to sell it for its existing purpose – that was clear”. A second option mooted was the development of the site for alternative purposes – but this too was not feasible as much of the land was badly contaminated through earlier industrial activity.

A third possibility considered, given its proximity to their campus, was that NTU should take over the site, and turn the space into lecture theatres and classrooms, but both funding difficulties and the reluctance of the former owners to agree to a whole sale conversion of the site, meant that this option also wasn’t feasible.

A fourth option soon became apparent when former research scientists from the Boots/BASF site asked to rent space at the facility in order to set up their own companies and an idea took shape that  the laboratories should be turned into some form of incubator housing small start-up bioscience businesses.

The way forward

In the event, this was the solution that won the day and regional development agency, EMDA, helped the idea to gain traction, brokering a deal which saw the city’s universities collaborate on a joint venture with them and BASF to set up a bioscience incubator.

It led to BASF announcing in August 2001 that it was gifting the laboratories in Nottingham to NTU. Valued at some £4 million the facility was comprised of more than 100,000 square feet (THE, 2001) of laboratory space. The laboratories are referenced in Hansard in 2008, as comprising the largest corporate donation ever to have been made to a post-1992 university, and it is estimated that they would have cost close to £50 million to build and equip at the then current prices.

The laboratories were to be used to house small start-up firms not only in biotechnology but also in healthcare, including several that employed former BASF/Boots staff and others founded by staff from both of the local universities.  In return BASF agreed to cover the cost of running the facility until the partners had had an opportunity to, “develop a robust business plan and secure the necessary funding” (Hansard, 2008), and the new operating company was ready to take it over.

Thus was borne ‘BioCity Nottingham’, a bioscience incubator designed to facilitate the biomedical research of universities in the region, especially at the technology-transfer stage.

The growth of BioCity Nottingham

The first phase of the development was opened by the science minister, Lord Sainsbury in September 2003, since then BioCity has gone from strength to strength and now operates over 5 sites, two in Nottingham, two in Glasgow and one in Alderley Park.

Developments which have consolidated BioCity’s position as by far the largest bioscience incubator in the UK (McDonald-Junor 2015) and have formed the basis of an embryonic bioscience cluster in Nottingham – centred on but not limited to BioCity.

Changes in industry, individual firms and authorities in the late 1990’s and early 2,000’s coalesced to create the conditions that led to a unique window of opportunity in Nottingham. The subsequent interplay and co-operation between firms, administrative and scientific institutions, saw the emergence of the necessary capabilities to take advantage of this opportunity.

A recipe for regeneration?

The success of Nottingham in finding a new bioscience development path raises the question as to whether this model could be applied elsewhere and evidence suggests that this may well be the case.

Look around the country and you’ll find a few examples where the departure of a major pharmaceutical company has led to the development of a bioscience incubator.

BioPark Herts developed at laboratories vacated by the Swiss pharmaceutical giant Roche, BioCity Scotland at Motherwell developed from laboratories vacated by the American pharmaceutical company Merck and BioHub Manchester utilizing the laboratories of the British pharmaceutical company Astra Zeneca. A fourth example, which has come to light since this research was originally published is the re-development of the former Astrazeneca facility at Loughborough as a Life Sciences Opportunity Zone.

These projects represent more than the simple reuse of vacated laboratory space, but also show evidence of policy transference/learning between agencies and authorities in different UK localities, in which the local NHS, local authorities and economic development/enterprise agencies have all played a significant part.

Bioscience and regional development

The new bioscience cluster in Nottingham is a fraction of the size of clusters in the ‘golden triangle’, such as that at Cambridge, yet it is the largest bioscience incubator in the UK and this in itself is hugely significant both for regional development and the broader economy. Why so?

Just last month, the government acknowledged that Health and life sciences are worth over £70 billion to the economy and provide jobs for almost 241,000 people across the country. Even more significant is the fact that SMEs account for 82% of these businesses and 24% of all UK life sciences employment (BEIS 2018).

Which just goes to show how important bioscience incubators – like that at Nottingham – are to the economy in supporting these SMEs and helping them to get off the ground. Moreover, these bioscience incubators, are also important in potentially representing a new model for regional development – as we see echoed in a number of similar projects around the UK.

This paper, along with the full references and bibliography, was originally published in full as:

Adaptive capability and path creation in the post-industrial city: the case of Nottingham’s biotechnology sector. SMITH, D.J., ROSSITER, W. and MCDONALD-JUNOR, D., 2017, Cambridge Journal of Regions, Economy and Society, 10 (3), pp. 491-508. ISSN 1752-1378

Selected bibliography:

Chapman, S.D. (2006) Economy, industry and employment, in J.V. Beckett (ed.) A Centenary History of Nottingham, Chichester: Phillimore, 480-512.

Department for Business, Energy & Industrial Strategy, 16 May 2018. Available at: https://www.gov.uk/government/news/uk-life-sciences-sector-brings-record-growth-as-new-life-sciences-council-meets-for-first-time [Accessed 14th June 2018]

Hansard (2008) Memorandum submitted by Oxford Innovation Ltd, Hansard, 1st October 2008. Available at: Source: http://www.parliament.the-stationery-office.co.uk/pa/cm200809/cmselect/cmberr/89/89we120.htm. [Accessed 18th June 2015]

Kingdon, J.W. (1995) Agendas, Alternatives and Public Policies, New York: HarperCollins.

Martin, R., (2005). Thinking about regional competitiveness-critical issues. Nottingham: East Midlands Development Agency.

McDonald-Junor, D. (2015) From property management to business growth: Business support in UK biotechnology incubators, unpublished PhD thesis, Nottingham: Nottingham Trent University.

THE (2001), £4m gift for innovation centre, Times Higher Education, 31st August 2001. Available at: https://www.timeshighereducation.com/news/4m-gift-for-innovation-centre/164624.article  [Accessed: 18thJune 2015]

Zahariadis, N. (2007) The multiple streams framework: structure, limitations, prospects, in P.A. Sabatier (ed.) Theories of the Policy Process, 2nd edition, Cambridge, MA: West View Press, 65-92.

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