The U.K. is losing business opportunities in the life sciences sector because the government undervalues the economic and social benefits of investing in the manufacturing of innovative medicines, according to a report from the Cambridge Economic Policy Associates (CEPA).
The study, which was commissioned by the Association of the British Pharmaceutical Industry (ABPI)—a trade organization for U.K. drugmakers—indicates that the UK is missing out on the productivity growth that can be afforded by retaining and attracting life sciences businesses.
The report emerges as AstraZeneca, the country’s largest company as measured by market cap, is planning to invest $50 billion in the U.S. over the next five years, while pulling some of its investments in the U.K. The company is also reportedly considering a move of its stock listing from London to the U.S. after years of jousting with U.K. regulators over taxes and drug policies, with AZ claiming that the government doesn’t reward innovation.
The CEPA report comes as the U.K. is conducting a review of its HM Treasury Green Book, a document that provides guidance on how to appraise public sector spending. New guidance is expected to be issued early next year.
According to the ABPI, because of the design and application of the Green Book, the benefits of investing in life sciences manufacturing are not fully captured within the current appraisal process of the Life Sciences Innovative Manufacturing Fund (LSIMF), an engine designed to attract life science investments in the U.K.
Based on the report’s findings, CEPA and the ABPI are recommending a more comprehensive framework to reduce the over-reliance on cost-benefit analysis and to recognize the non-monetary benefits that can be brought by life science manufacturing. They are also urging for increased transparency and timeliness of investment decisions.
“We urge the government to use its existing review of how it values investment as an opportunity to improve how this country values and attracts future life sciences manufacturing,” Richard Torbett, the ABPI’s CEO, said in a release.
“We’ve already seen the government introduce welcome improvements to the capital grants programme, but we must go further and faster,” Torbett added. “Doing so is critical to delivering the regional growth and high-productivity jobs needed to grow our economy and support greater investment in our public services.”
Two months ago, the U.K. laid out a plan to increase the growth of its life sciences sector by 165% over the next 10 years, with the goal of becoming the third-largest life sciences economy in the world, trailing only the U.S. and China.
The U.K. has been going backwards on its life sciences ambitions in recent years, according to a report earlier this year from L.E.K. Consulting, which found that a lack of investment in the sector had cost the UK nearly £15 billion ($20 billion) per year amid an exodus of life sciences businesses to other global markets. The figure included £10.8 billion ($14.5 billion) per year lost in U.K. drug exports.