Pharma and biotech dominate UK university spinouts

The life sciences sector has been responsible for 8 out of 10 of the most successful UK spinout companies from the last decade, according to a new report published by GovGrant.

GovGrant’s University Spinouts Report 2021 analysed 958 spinouts that had launched between 1998 & 2018. The report intended to find out the most successful companies and which industries attracted the most spinout investment. The report’s sample of companies represents a total of £19.20 billion in invested capital, 4,495 deals and 1,907 investors.

The report shows that pharma and biotech companies within the top 10 have a combined value of £3.63 billion, making those sectors the most attractive for investment. Indeed, 11 spinout pharmaceutical and biotech companies are featured in the report’s top 20 companies founded since 2000.

In the last 20 years, the pharma and biotech sectors accounted for over half (£6.1 billion) of all capital raised by university spinouts in the UK. This is followed by computer hardware (9.5%) and healthcare devices and supplies (8.7%). 

Of those pharma and biotech spinouts, 119 drug discovery spinouts account for £3.6 billion of capital raised, whereas 114 biotechnology spinouts account for £2.2 billion of investment. In the healthcare industry, diagnostic equipment spinouts raised £666 million and therapeutic devices spinouts raised £183 million.

In the last decade, the most successful spinout is Exscientia, which was founded at the University of Dundee and is now worth £784.5 million. Recently, the spinout signed a research collaboration and license agreement with Sanofi in a deal which could be worth up to $5.52 billion.

The University of Oxford had the largest value of spinouts over the last two decades with spinouts from the University being valued at £6.4 billion. This was followed by Imperial College London with £2.7 billion and University College London with £2.6 billion.

Adam Simmonds, investment research analyst at GovGrant, says it’s no surprise that UK pharma and biotech companies are so successful.

“This report highlights the huge value to the economy of UK universities, as well as their incredible depth of creativity and talent. The UK is particularly renowned for innovation in these areas. You only need to look at the recent development of Covid-19 vaccines in the UK to see how accomplished we are in pharmaceutical innovation,” he said.

David Richardson, chief entrepreneurial executive at Heriot-Watt University, added: “Universities are a rich source of cutting-edge research, which enables new learning, discovery, and innovation. Cutting-edge research and the ability to develop and understand how new technologies advance industry and society are critical factors for ensuring future prosperity.

“Success comes from building on research specialisms, and using these to catalyse new collaborations, investment, and jobs through the development of dynamic ecosystems focused on advanced R&D, talent development and commercialisation.

“In addition to investment, spinouts attract skilled graduates and high-performing academic researchers from across the globe to the UK. On average, they recruit around 12 employees per company. Between 2016 and 2018 alone, UK university spinouts employed over 23,000 people.”