Charles Walford, Senior Development Director and Head of Life Sciences, Stanhope PLC, considers the opportunities and challenges facing the UK’s life sciences ecosystem.
The past two years have propelled life sciences into the mainstream. The sector had already seen strong signs of growth, but the pandemic put the industry firmly at the front of the minds of governments, investors, and the public. Post-Brexit and post-Covid, the Government has made life sciences a key target for growth, pumping investment into homegrown start-ups and encouraging international companies to set up here.
As we enter 2022, the sector appears in rude health with the government and investors now acutely aware of the role that life sciences can play in helping the UK cement its reputation on the world stage. New data has shown that investor appetite for the UK life sciences sector has not suffered from the current crisis. Healthtech VC investment in the UK increased by 245% between January and November 2021 compared to 2020, making it the third most attractive location globally. The sector is clearly seen as being a cornerstone of the country’s future, which is extremely positive news for companies seeking funding.
In terms of the ‘Build, Back Better’ agenda, the varied skills needed to successfully service life sciences spaces present local communities with an opportunity for inclusive growth, further stimulating government support and other investment.But while the financial future of the sector is secure and growth will continue, there are also challenges to consider in the year ahead. MedCity, the organisation in charge of promoting the golden triangle, recently released a study into demand for life sciences space in London. The findings confirm that demand vastly outstrips supply, with a requirement of over 500,000 sq ft for London life sciences space not being met, and space provision growing at a much slower pace than is needed to sustain innovation. One of the major challenges is that London’s incubators are full, with some sites having to turn enquiries away. There is a vast amount of capital in the sector, but not enough space to accommodate the industry.
Whilst there are many proposed life sciences development projects across the country, the complex needs of companies coupled with the lack of industry data means that building speculative sites remains challenging. The sector is also highly location-sensitive. Companies need to be near research and academic institutions and teaching hospitals, which are usually in cities where finding the appropriate land in the right location is difficult. In addition, turning commercial spaces into lab-enabled buildings is costly.
Significant demand for space comes from smaller start-ups who require specialist spaces they can occupy easily. Unlike managing a co-working office space, these science incubators require a high level of expert servicing. As these start-ups grow at a rapid pace, property developers need to provide spaces that can grow with them and support businesses throughout their life cycles. The presence of start-up companies also generates demand from mature corporates, who want to collaborate with or even acquire the intellectual property of those who have discovered on the cusp of developing something great but who may be in need of more capital to realise their potential. The presence of businesses at all stages of growth is what helps to create a supportive life sciences ecosystem.
The established and emerging clusters in London such as White City Place, King’s Cross, Whitechapel and the South Bank are proof that building a life sciences ecosystem is complex, but can be done. White City Place, for example, which is next to an Imperial College London campus, fosters an environment where life sciences companies at different stages are thriving.
As with many other industries, the life sciences sector faces challenges, but overall, it remains on an upward trajectory. A continued positive trend will however rely on collective support from central and local government, investors and the wider industry to make it easier to deliver the required R&D spaces. The current shortage is clearly an issue that will need to be addressed if the UK to sustain its standing as a world leading destination for life sciences.