British life sciences corporate investment worth £11bn in Q1 2021

British life sciences companies were involved with £11 billion of corporate investment over the first quarter of 2021, over half of the record amount raised in total during 2020, a new report on the sector has found.

In 2020, UK life sciences companies completed £20 billion of corporate investment - the fourth highest globally. During the first quarter of 2021, £10.6 billion has already been completed, with £9 billion of this Q1 total accounted for by the specific pharmaceutical or biotechnology sub-sectors according to Life Sciences Innovation: Building the Fourth Industrial Revolution, co-authored by global architects Perkins&Will, Savills, and policy advisory firm Blackstock Consulting.

Venture capital funding for UK life sciences firms over the first quarter has also been strong, with £1 billion raised. During 2020, a total of £2.4 billion of VC money was pumped into the sector.

A third of the monies raised from VC over the first quarter of 2021 were for biotech firms specifically, with another half poured into drug discovery firms.

Life sciences are a major component of the UK economy. In 2019 the sector contributed over £70 billion in turnover and employed an estimated 240,900 people across the country.

Delivering more space for the life sciences sector will be vital in helping the UK retain its title as a global exporter of medical innovation, research and discovery. In 2019, the UK life sciences sector generated almost £81 billion in annual turnover and employed over a quarter of a million people across the country. It is predicted that by 2025, the sector will contribute an extra £8.5 billion to the economy, helping to create 31,400 more jobs.

While the pandemic has hit traditional commercial real estate sectors, such as offices and retail, life sciences stand apart. The sector offers institutional investors such as pension funds long-term leases as due to the complexity and expense of fitting out a laboratory, companies tend to take longer leases on space in order to realise a return on investment. Comparatively, long leases in retail and offices are proving a thing of the past thanks to the pandemic.

Investment into European and UK life sciences real estate is expected to grow over the next half a decade, with the report predicting that investment in European life sciences real estate will hit £800 million in 2021, while in the UK it will reach £550 million.

That is a substantial increase compared to the amount invested previously, given that between 2016-2020, the average annual investment into European life sciences real estate was £685 million, while in the UK it was £247 million.

High levels of investment from the private sector are already supporting the Government’s innovation agenda. Rishi Sunak announced last March that research and development spending will increase from 1.7% to 2.4% of GDP by 2027, while in this year’s Budget, the chancellor announced the creation of a £375 million fund that will invest government money in fast-growing UK science and technology companies.

Steven Lang, director, commercial research at Savills, said: “The scale of capital raising by UK life sciences companies during the past year is staggering and shows that the adage of ‘follow the money’ is particularly true when it comes to the life sciences sector. An analysis of the flow of capital raising provides a clear indication of the potential scale of corporate and sector growth in the UK, illustrates the geographical distribution of ‘hotspots’, and shows where strengthening markets exist or are strongly emerging, including the development of the ‘Northern Arc’ in the UK.”

Ed Cordes, principal, science and technology at Perkins&Will, added: “The potential scale of the life sciences real estate market is huge, and while the market is relatively mature in North America, with a number of world-leading science and tech clusters, the UK’s mature markets are relatively confined to the Golden Triangle. It’s exciting to see so many early-stage clusters developing across the UK. There is a real opportunity to bring our learnings from, and experience in, the US to encourage the development of appropriate laboratory space in the UK which can drive the growth of the life sciences sector.”

You can read the report in full, here.