Karim Budabuss, Director of Grant Advisory, ForrestBrown, explains what firms need to know about funding eligibility and the application process.
As is the case for many sectors, inflation and high interest rates are increasing the cost of doing business in the UK. To further complicate matters, global supply chain disruptions continue to test the resilience of the UK pharma eco-system and this – coupled with the opportunities that AI presents – are forcing firms to rethink their innovation strategy.
R&D investment is a critical component of any innovation strategy and, to help support that, the Government introduced a new round of the Life Sciences Innovative Manufacturing Fund (LSIMF) to enable businesses to achieve growth through the successful development of new pharmaceutical products and medical treatments.
With an allocation of £520 million over five years (2025-2030), the fund is poised to significantly enhance research and development capabilities, foster resilience and drive forward innovation. In part, this will be achieved through onshoring and fast-tracking capital investment in life sciences manufacturing facilities.
It is also hoped that the fund will address the supply chain issues affecting the UK pharma industry. Recent studies show significant medicine shortages in the UK, with drug company alerts about impending shortages jumping from 648 in 2020 to 1,634 in 2023, according to the BMJ.
Increasing investment in R&D
On an international level, the gap between the pharmaceutical sectors in Europe, the United States, and China has created a very competitive landscape, when it comes to attracting and retaining talent. The US and China have been able to offer more competitive salaries and investment opportunities, resulting in an imbalance with the UK and Europe.
The LSIMF aims to counteract this trend by providing substantial financial support, thereby creating economic opportunities through high-wage, high-skilled jobs in the UK. This investment benefits individual companies and the broader economy, ultimately positioning the UK as a competitive player in the global market.
By incentivising investment in the pharmaceutical sector, the LSIMF supports economic growth and job creation. The theory is supported by the evidence from earlier funding rounds, which have proved successful.
For instance, £151 million was invested to increase production capacity for gene therapy and vaccine components in Liverpool, which created 174 jobs and safeguarded 156 more.
Additionally, £75 million was distributed to increase the manufacturing of innovative medicines for neurological conditions in North Wales, creating 39 jobs and protecting 37.
As such, the fund’s role clearly extends beyond enhancing production capabilities – stimulating local economies and job markets. This is because pharmaceutical companies have a greater impact on jobs than the gross value-added owing to the high employment multiplier.
According to a recent report – The economic contribution of the UK Life Sciences industry – each job generates 3.4 additional jobs elsewhere in the economy. The equivalent multiplier for medical technology firms is 1.6 jobs.
The funding also prioritises the development of innovative solutions that minimise the environmental impact of pharmaceutical manufacturing, aligning with the Government’s ambitious 2050 net zero target and promoting sustainability in the sector. By championing eco-friendly manufacturing practices, the fund not only advances global sustainability efforts but helps companies lower their carbon footprints and cut operational costs.
Strengthening the UK’s manufacturing capabilities through the LSIMF increases the nation’s health resilience, which may seem an obvious benefit but is a crucial advantage in the face of global health crises.
The fund seeks to ensure a robust supply of critical medical and healthcare products, enabling the UK to respond effectively to health emergencies.
Navigating a complex process
Funding for the LSIMF is targeted towards companies (with UK presence) proposing projects that are single-company investments, product developers, manufacturing organisations, or generic manufacturers involved in human medicines, and MedTech products. Applications relating to complex medicines, innovative medical technologies, and diagnostics are particularly welcome.
To be eligible to apply, companies must hold or intend to apply for either a Good Manufacturing Practice (GMP) Human Medicines licence or an Investigational Medicinal Products Directive (IMPD) licence. Firms should prepare detailed proposals that highlight how their projects meet these criteria and contribute to the broader aims of the funding. The funding must achieve a good value for taxpayers’ money, hence why applications are so carefully considered.
Phase 2 of the Life Sciences funding closed to applications in February 2024. However, the Government announced in the 2024 Spring Budget that a further application window will open in the summer of 2024 for large-scale transformational investments, with a separate competition for medium and small-scale companies opening in the autumn.
This phased approach ensures that a wide range of projects can receive help from life science funding, supporting both large and small initiatives. Plans were put on hold in the build-up to the general election but given the importance of the fund to the UK economy, it is unlikely that these will now be reversed.
While opportunity abounds, understanding the eligibility criteria can be challenging, especially for firms whose internal teams are already stretched. A positive first step is to match the various elements of a project against the criteria to gauge its feasibility. From there, seeking guidance or support during the application process and beyond can make a real difference.
By navigating this process effectively, pharma firms can unlock the full potential of the funding – whether that’s accelerating their expansion plans, financing groundbreaking drug discoveries or developing novel diagnostic tools.
