OXFORD, England, June 20 – For Ros Deegan, the thrill of raising $100 million to expand a biotech firm among the dreaming spires of Oxford was soon tempered: unable to find a bigger laboratory, she routinely had to work at home.
At the Cambridge academic center, a biochemist Catherine Elton was frustrated with similar issues in real estate and turned old offices into laboratories to expand her business.
The two businesswomen in Britain’s fast-growing life sciences industry are far from alone.
Property consultants Bidwells put demand for lab space in Cambridge at 1. 19 million square feet (110,000 square metres) – but only 7,000 sq ft are available. In Oxford, demand stands at 850,000 sq ft with just 25,000 ready to go.
The dearth of state-of-the-art labs in the cities is just one example of how a lack of an overarching strategy for Britain’s life sciences sector is throttling the growth of some of the country’s most promising companies, according to Reuters interviews with 17 people with knowledge of the challenges.
The industry figures, from biotech bosses, property developers, industry sources to investors, all spoke of a growing frustration with the lack of a coherent approach in Britain to everything from lab space to funding, talent, suppliers, affordable homes, transport, water and power.
At a time of rapid innovation, when the United States and the European Union are spending heavily to help businesses shift faster to newer technologies in the next wave of industrial transformation, they say that Britain risks falling behind.
“When you are trying to start a business and can’t find the lab you need, it’s difficult,” explained Elton. She said the latest office conversion took up more than 20% of her firm’s time in the year before it opened.
Deegan, meanwhile, counts herself lucky that OMass Therapeutics, the drug discovery company she runs, only had to wait a year from raising funds to moving to a larger site.
“I could not go to the office because I had no place to sit. You’d end up in the kitchen,” the chief executive said.
‘DEATH BY A THOUSAND CUTS’
Life sciences is meant to be one of Britain’s most important sectors. Generating 94 billion pounds ($118 billion) in 2021 and employing more than 280,000 people, it enables the government to boast Britain is on its way to becoming a “science superpower”.
According to McKinsey consultants, Britain is only behind the United States when it comes to biotech. This activity has been boosted by discoveries made by colleges in Cambridge and London, as well as a centralised system of clinical trials.
That has led to an explosion in venture capital, with much of it coming from the United States. But in the small cities home to ancient universities – and strict planning laws – the delivery of new infrastructure has failed to keep pace.
Despite developers’ claims that capacity will improve over the next few years, experts believe companies specialising in cell and gene therapy, genomics, and synthetic biology are not reaching their potential.
Diarmuid O’Brien, head of Cambridge Enterprise which works to commercialise research at the university, said the current environment led to “death by a thousand cuts” as many spin-outs were sold to U.S. companies, or moved across the Atlantic.
Humira, for example, one of the world’s bestselling drugs owned by U.S. company AbbVie (ABBV.N), was based on technology that emerged from Cambridge. Illumina (ILMN.O), a U.S. firm with a market value of $33 billion, has a DNA sequencing approach also discovered at Cambridge at the heart of its technology.
The government of Prime Minister Rishi sunak has admitted that there is a problem with real estate and wants to change planning laws. It also asks local authorities to consider research and development when they assess applications.
“Only last month we announced more than 100 million pounds to provide world-class lab space to help unlock UK researchers’ full potential,” a government spokesperson said, referring to funding designed to upgrade infrastructure and equipment.
The race to develop and retain new technologies is taking place across the world, with Western governments such as France touting cheap power and fast-track planning systems to attract next-generation industries such as battery gigafactories.
Gordon Sanghera, who was determined to list his Oxford Nanopore Technologies (ONT.L) in Britain, told Reuters he often thought the country’s success was in spite of the support available, not because of it, and Britain needed to realise it was in competition with others.
The lab shortage is not only driving up rents to record highs – Bidwells says they rose 25% for purpose built lab space in Oxford in 2022 – but it also means access to laboratories can become a defining issue in whether a company succeeds or not.
For the biotech sector to reach its potential, it is essential that small businesses have access to shared lab space at reasonable rents and flexible leases before moving to their own independent laboratories with expansion potential.
According to company founders, they also want to be located as near as possible to academic centers so that they can take advantage of the cluster effect which comes with sharing contacts and experiences. They will also benefit from existing transport connections and more easily recruit talent.
Michael Chen moved to Cambridge from the United States in 2012 to do a doctorate in chemistry. He later formed Nuclera with two PhD colleagues to improve the accessibility of proteins for research and drug discovery.
He said Cambridge offered a cheaper location for drug discovery than the U.S. city of Boston, the world’s leading hub, due to lower rents and salaries, but a lack of growth capital and space meant it struggled to scale up those businesses.
The time spent by scientists on the renovation of old buildings deters executives with experience in raising funds and launching spin-offs, according to him. “They’ll just move to Boston and make their life easier.”
‘NOT KEEPING PACE’
Laboratory developers say more space is in the works but the challenge of building vast modern labs in densely built university cities cannot be ignored.
“They’re fundamentally quite small cities, going through extremely rapid rates of growth,” said Artem Korolev, head of developer Mission Street.
Anna Strongman agreed. She leads a joint venture between Oxford University and Legal & General (LGEN.L) to build lab space and homes. Strongman stated that the industry must consider the impacts of new projects on the community, including housing, power, and schools.
But in order to move forward with the construction of more houses and rail lines, a greater level of government involvement is required.
“We don’t know how to grow in this country, but there is a solution for growth at Oxford,” said she. “There is amazing potential.”
Pioneer Group, which provides funding and lab space in Britain, said action was needed now to address the “crazy” demand. “If planning takes years to come through, then the opportunity will potentially have been lost,” Executive Director Glenn Crocker said.
Alistair Cory, a director at Oxford’s Begbroke Science Park, welcomed the government’s renewed focus on support for the life sciences sector, saying a leadership vacuum in recent years had resulted in glacial progress.
“We are not keeping up with the countries that have been accelerating more quickly than us. This includes North America and parts of Europe. It also includes parts of Asia, including China.
Back in Cambridge, Qkine’s Elton is resigned to wrestling with another real estate challenge in the near future.
“Every two years or so, if you’re successful, you need to move, and that’s just disruptive,” she said. “It affects the speed at which you can grow.”
($1 = 0. 7994 pounds)
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