U.K. government deploys ‘Plan for Growth’

Spurred into action by Pfizer R&D center closing, British leaders seek to create friendlier environment for life sciences businesses with an optimistic budget proposal

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LONDON—Still reeling from Pfizer Inc.'s announcement in February that it will close its research and development center in Sandwich, England—eventually resulting in 2,400 job losses—government leaders here recently unveiled a budget proposal aimed directly at attracting and fostering the success of businesses in the U.K.

On March 23, U.K. Chancellor of the Exchequer George Osborne—the British Cabinet minister who is responsible for the country's economic and financial matters—presented a budget proposal that supports the U.K.'s ongoing commitment to reducing the national debt, but also provides tax-relief measures and a friendlier environment for small and medium-sized firms engaged in research and development. The 131-page proposal, optimistically titled "The Plan for Growth," also calls for increased investment in early-stage companies.

"The government's economic policy objective is to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries," the H.M. Treasury said in a statement. "This budget builds on action announced in the Spending Review 2010 and the June Budget 2010 last June to rebalance the economy from unsustainable public spending towards exports and investment. This should support the U.K.'s long-term economic potential and help to create new jobs."

Hampered by an economy that has for the last decade become "seriously unbalanced and heavily indebted," the U.K. has been focused on establishing economic stability, but in its recent budget proposal, Osborne says this "is not in itself sufficient to put the U.K. on track to deliver long-term growth. For sustainable growth to be driven by private sector investment and enterprise, the government needs to act in a way that supports growth rather than hampers it."

In particular, "private sector growth must take the place of government deficits, and prosperity must be shared across all parts of the U.K.," Osborne says. "We want to remain the world's leading center for financial services, yes; but we should determine to become a world leader in, for example … life sciences," as well as other industries.

Of specific concern to the pharmaceutical industry, the budget proposes the funding of nine new university-based "Centres for Innovative Manufacturing" in areas such as biological pharmaceuticals, novel composite technologies and intelligent automation by 2012. These Engineering and Physical Sciences Research Council (EPSRC)-funded centers would support emerging science in areas of strategic opportunity for manufacturing and feed new ideas and discoveries through to business and "Technology and Innovation Centres," helping to open up new industries and markets in growth areas.

The budget proposal notes that the U.K. life sciences sector employs more than 100,000 people, largely in highly skilled jobs. The sector invests heavily in research and development, accounting for more than 28 percent of all business R&D. Yet, even though there are large numbers of biological science graduates, "life sciences employers are reliant on workers from overseas, with a third of the sector's workforce sourced from abroad. In part, this is due to inadequately skilled U.K. graduates coupled with shortages in critical areas such as in vivo subjects. Employers have consistently reported that the poor practical and numerical ability of U.K. bioscience graduates reduces employability," according to the proposal.

To address this concern, the budget suggests that the U.K. government remove any barriers that limit the development of geographical clusters, working with industry, local government, universities, the National Health Service (NHS) and funders. The budget also calls for the government to improve market signaling by bringing companies together, to "ensure educators provide the skilled individuals the sector needs to grow."

In addition, the proposal calls for the government to launch a competition to form a "Cell Therapy Technology and Innovation Centre" to "help the U.K.'s healthcare and life sciences industry fulfill its potential by exploiting promising discoveries and supporting their development." According to the budget proposal, the center, with a focus on cell therapies and advanced therapeutics, will help support the development and commercialization of therapeutics as well as the underpinning technologies for manufacturing, quality control and addressing safety and efficacy challenges for these new treatments."

And to plant the seeds for eventual commercial success, the budget recommends the following: reducing the main rate of corporation tax to 26 percent, with a further decrease to 23 percent by 2014; reforming the U.K.'s outdated Controlled Foreign Company (CFC) rules; introducing a new 10 percent rate of corporation tax on income from patents; reforms to the regime for taxing foreign branches; and simplification of the tax system.

Much of the budget proposal attempts to tackle intellectual property (IP) protection, referred to as "long gap between an initial product idea and it reaching the market." The U.K. Intellectual Property Office is investigating how existing patent legislation can be improved, and expects to deliver recommendations by fall 2011. The U.K. government is also producing an updated IP Strategy Handbook, which will be released shortly. The government is also planning to update its IP Crime Strategy guidelines by summer 2011 to provide a framework for practical action to tackle counterfeiting and piracy, including actions to tackle counterfeit medicines.

The budget also calls for the U.K. government to set up a new health research regulatory agency to streamline regulation and improve the cost effectiveness of clinical trials. It would also be charged with making future National Institute for Health Research (NIHR) funding to providers of NHS services conditional on meeting benchmarks, including a 70-day benchmark to recruit first patients for trials, as well as opening up information about clinical trials to enable the public to get more involved.

In a letter outlining the proposal, Osborne concedes that "none of it is without controversy—all of it involves choices about our priorities."

"But the alternative," Osborne contends, "is to accept Britain's economic decline and falling standards of living for our population. That is not a future we have to settle for.

In the world's race to the top, Britain can come out first."

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