Donald Trump is back, and he is already creating commotion. Yogan Patel, head of life science at MHA discusses what this means for life sciences.
MHA
The weeks since his inauguration have been dominated by unrelenting coverage of fights and fireworks with allies, enemies and everyone in between. The world is watching Trump and waiting for his latest wave of radical policy changes.
This is especially true in the life science sector. Trump and his new health and human services secretary, Robert F Kennedy Jnr, have expressed concerns about “big pharma” and vaccinations, causing alarm within the industry.
As ever with Trump, analysing what he has done is far more useful than taking everything he says literally. And his first few weeks offer us early indications of the threats and opportunities being presented to the UK and US life science industries.
One of his first acts as president was to sign an executive order withdrawing the US from the World Health Organisation because of its “mishandling of the Covid-19 pandemic” , which had the effect of slashing the institution’s budget by almost a fifth in the process.
His appointment of Robert F Kennedy Jr is also a bit of a worry. Kennedy founded the anti-vaccination group Child’s Health Defense and has long expressed scepticism about vaccine safety. He also described the FDA, the US pharmaceutical regulator, as corrupt. When his appointment was announced, Pfizer and Moderna share prices fell which may or may not be to do with his appointment.
Add to this the tariffs and potential trade wars, and this has the capability to upend the global economy. Trump has already announced 25% export tariffs on Canada and Mexico, two of the US’ closest allies, postponing them just hours before they were due to be implemented. The threat of tariffs by Trump is to get action from the relevant countries. In the case of these two, it appears more to do with immigration and drug control. The President has also gone ahead with tariffs on China, who have responded in kind, sparking fears of a trade war.
So, where does this leave life sciences?
The picture in the US is, at least for now, uncertain. Businesses have learnt to live with the unpredictability of Trump, and his dogged focus on economic growth and streamlining regulation is welcome. However, tariffs are a concern as this is likely to have an impact on some of the domestic businesses, which is the opposite of what he is trying to achieve.
While they are designed to boost growth within the US, they are likely to restrict life sciences, due to the international supply chains and cooperation the industry relies on. There is virtually no industry which has greater international links, from research through to manufacture. Tariffs are likely to disrupt these pathways, unless they are excluded.
For Britain, the outlook is far more optimistic. Despite understandable wariness about the Trump effect, we are uniquely placed to take advantage of the current situation.
Trump has indicated that Britain may be left untouched by tariffs, unlike our counterparts in the European Union. Combined with an imminent threat of tariffs hanging over Canada, and an American pharmaceuticals sector set to be dressed down by RFK, Britain is one of the strongest life science powers standing.
At this time of global instability for the sector, I have been in regular contact with my life science counterparts from the BakerTilly network in the US, and they agree. Britain is in a good position to step into the life science breach. US investors, particularly private equity and venture capital, work cross border so will continue supporting life science businesses from both geographies.
Why? Our advantages are numerous: leading universities, ease of access to capital through London’s financial hub, and a culture which fosters innovation through the NHS. Our cohesive health system also means pharma companies in Britain have access to unified patient health records – a one of a kind asset which will only become more valuable as data becomes a larger part of our lives.
Life science is an area where Britain not only succeeds but stands out.
It is a good time to be in a strong position. As interest rates are starting to fall globally, more capital is expected to become available for investment throughout 2025, making for an especially dynamic year of M&A.
Britain is well placed to benefit from this, but we have to make it much easier and more obvious to investors that the UK is the haven of stability and innovation they are looking for.
Keir Starmer and Rachel Reeves have staked their success on economic growth and clearly see life sciences as one of the key sectors to achieving it. The sector was named as a priority growth industry in the government’s Industrial Strategy Green Paper last year and will benefit in coming years from the recently announced Oxford-Cambridge railway line, the “UK Silicon Valley”.
Of course, these moves are welcome, but they do not give the government a free pass on more prominent actions like the Employer’s National Insurance rise, which have sent a very negative signal to international investors about what to expect if they invest in the UK. A slight concern this has is the impact on inflation and the resulting interest rate cuts that are expected during the year.
If we want to take full advantage of the unique set of circumstances British life sciences has been presented with, we need to act decisively.
Fortunately, there are a few straightforward measures the government can take to send a more positive signal to investors and smooth their path into Britain, which I recently set out in a speech in Westminster.
As we have seen across other industries, Research and Development (R&D) tax credits are the most direct way to incentivise investment and drive growth. In life sciences, there is the added good of public health benefits from successful breakthroughs, which will likely lead to huge savings on public services in time. This makes ROI (return on investment) on life science R&D tax credits potentially much higher than tax breaks for other industries – the government should take note.
Elsewhere, more investment in lab space or planning reforms would facilitate improved infrastructure, allowing more companies to base themselves in Britain without the constant battle for finding suitable premises.
Other targeted incentives for this sector would also be beneficial such as grants, enhanced R&D tax credits, as this would provide the financial incentive for investment. Perhaps more importantly, it would send a concrete signal that Britain values life sciences and is open for investment.
In this new Trumpian world, we are operating at breakneck speed. Bold action to take advantage of Britain’s unique position in life sciences is needed now, with the benefits coming in years to come. Delays may result in lost opportunities as the international market is competitive!