A Turning Point for London Life Sciences
In a month of news centred on record investment into the UK healthcare sector, we published data on the 400% increase in demand for life sciences real estate in London over the past five years.
Here, in the latest blog from our CEO Neelam Patel, we identify the connected factors playing into this phenomenal growth, and look to the future.
As we entered Q4 of this year, the publication of our London Life Sciences Real Estate Demand Report in the first week of October coincided with Q3 investment data confirming that UK life sciences is experiencing incredible momentum. The BioIndustry Association (BIA) and Clarivate published UK figures showing a record £3 billion raised to date this financial year, already surpassing 2020’s annual total of £2.8 billion. In London alone, VC investment into the health sector has set a new benchmark, with around £980 million raised to the end of September according to Dealroom analysis.
Real estate requirement is one indicator of how the life sciences sector is growing. As our report demonstrated, since 2016, demand for R&D space in London has increased fourfold. We found several factors fuelling this need.
Number one is investment into life sciences in London, which has almost doubled over the past few years, with most of that increase flowing into the sector in 2020 and 2021. Covid-19 and Brexit appear to have had little dampening effect, with 82.5% of the companies we surveyed saying that they needed space due to expansion (compared with 11.5% taking on alternative accommodation but staying the same size, for example).
Interestingly, most of the demand increase we found was for wet laboratory space with extract to air capability, typically used by companies working in advanced therapies and vaccine development. The UK’s strength in advanced therapies is a contributor to life sciences sector growth, as the promise of personalised medicine increasingly attracts investment attention. London is a particular focus of attention. The capital is renowned for the strength of academic research in this field, and we are seeing that many of the university spinouts and start-ups in this sector want to remain close to their roots in London, often utilising the city’s regional transport links to access the manufacturing expertise of the cell and gene therapy cluster in Stevenage. There is also a need for small-scale GMP manufacture in London, and one of our report recommendations is to develop a roadmap to support the delivery of flexible laboratory space and clean rooms, utilising the expertise of the Cell and Gene Therapy Catapult. We will be implementing this and other recommendations through a series of roundtables over the next six months.
Meanwhile, established companies with resources are building their own manufacturing facilities in London. Touchlight Therapeutics announced planning approval this month for the world’s largest capacity synthetic DNA plant in Hampton. Our company of the month, Achilles Therapeutics, is another example. Originally a Francis Crick Institute spinout, the company moved to the Stevenage cluster before returning to London earlier this year to establish new headquarters in Hammersmith, and they are now building a dedicated manufacturing facility in West London. One of their main drivers for the move back to London was the need to recruit staff. However, it is important to note that even successful companies like Achilles, who raised $175.5 million earlier this year in a Nasdaq IPO, need support to progress their technology – real estate and talent recruitment are vital but are also the largest business expenses, draining capital. Achilles was part of our grant funded Collaborate to Innovate: Advanced Therapies programme this year, enabling them to work with UCL researchers to refine the precision of their T-Cell targeting.
We also support many earlier stage companies in cementing research collaborations, securing investment, making connections with industry, and navigating the UK’s world-leading regulatory environment. We recognise both anecdotally and from the data in our Demand Report that these start-ups struggle to find affordable space with the facilities they need to progress their healthcare R&D. Therefore, among the report recommendations we will progressing over the next six months is the creation of more specialist space and operational R&D facilities accessible to early-stage life science SMEs. Parallel to this is our further recommendation to develop networking hubs in London in areas of high demand to allow for mobility and collaboration between innovators, clinicians, researchers, investors and developers —within life science clusters in London and nationally.
The need to be in London to attract talent emerged strongly in our research on demand for real estate in London. Companies are particularly wedded to the capital for the quality of university graduates. London ranks top for life sciences talent, ahead of Silicon Valley, New York, Beijing and Boston, according to the Global Entrepreneurship Network Report, September 2021. This was also a sentiment we heard during one-to-one interviews for our report, and again at the 6th London Stock Exchange Future of Healthcare Investment Forum, held virtually in the second week of October.
MedCity has been partnering with the London Stock Exchange to present the Future of Healthcare Investment Forum since the inaugural event in 2014. This year I was privileged to introduce the forum together with Marcus Stuttard, head of AIM and UK primary markets. Marcus shared with us data on the healthcare sector, a strong and growing component within the capital markets. The FTSE AIM healthcare index has risen by nearly 50% over the last five years, significantly outperforming the broader markets. And of course Oxford Nanopore’s £4 billion float on the London markets set the scene for discussions around the life sciences boom.
Investment money may be flowing but companies are telling us that it is getting harder to find the right people, even in London. Recognising the importance of talent and skill building, we will be convening roundtables to stimulate engagement between academia and industry, with the aim of fostering the next generation of life sciences employees. The UK government’s new budget has gone some way to addressing the importance of life sciences skills development and manufacturing, but at ground level we will continue to make connections across the ecosystem to cultivate talent and support sector growth. Bolstering the life sciences excellence rooted in London will naturally feed back to the rest of the UK. Again, our company of the month demonstrates how this can happen — earlier this month Achilles joined the Northern Alliance for Advanced Therapies Treatment Centre (NA-ATTC) consortium funded by Innovate UK. The benefit will be felt by patient populations across the UK.
Find out more
To find out more, you can:
- Read the full recommendations and findings of the London Life Sciences Real Estate Demand Report.
- View the video recording of the Demand Report launch, with guest speakers
- Read our Q&A with Sarah Haywood on MedCity’s history with the London Stock Exchange