Sector Review: Pharma and Life Sciences
The pharma and life sciences industries make up one of the most highly regulated, visionary and ever-emerging sectors. Companies that operate across biotechnology, medical devices, nutraceuticals, cosmeceuticals, biomedical technologies and any other company that are focusing their efforts to create products to improve the lives of organisms fall within the intricate make up of this complex and compliance heavy industry.
HMRC official statistics show that the UK Life Sciences industry employed over 268,000 people across 6,330 businesses and was valued at almost £100bn in 2020. The Core Biopharma and Core Medical Technology (Med Tech) sectors contain businesses involved in the discovery, development and marketing of therapeutics, and medical devices respectively. The Core Med Tech sector is the largest by employment (106,500 or 40% of the industry) and Core Biopharma is the largest by turnover (£40.7bn or 46% of the industry).
Med Tech is undoubtedly one of the largest, growing industries in the UK, namely because the sector is looking to bridge the gap between traditional diagnostics to harnessing the power and insight that can be gained through technology and goes wider and deeper than diagnostics. These companies that are focused solely on development and research rank highly as beneficiaries of R&D tax relief. After all, this is the very fabric of the industry and without their contributions, the future developments across the industry would never materialise.
R&D Tax credit claims for R&D focused companies, at the most basic level, need to satisfy two core tests:
- An advance of science or technology
- Scientific or technological uncertainty
Essentially, R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology. Our Group company, randd has a 100% success rate for helping UK businesses successfully claim back millions using the R&D Tax Credits incentive and have a free online calculator to see what could be due back to you in a matter of minutes. https://randduk.com/rd-explained/
Healthcare and Life Sciences Supply Chain
Both the core Biopharma and Med Tech businesses are supported by large specialist UK based service and supply chain sectors. Supply chain issues have been ongoing in the sector. For example, unexpected, urgent purchases throughout the pandemic, and unexpected import/export restrictions as a measure to protect local populations during the pandemic and, the implications of Brexit.
Below is an overview of the Life Sciences supply chain and the strategic considerations within each stage to ensure shareholder value can be achieved.
- Talent attraction and retention – Aside from strengthening supply chains, life sciences companies have other challenges that lie ahead. Globally, there is shortage of people with the expertise needed. To combat this ongoing issue, companies need to be able to offer quality talent long-term incentives and even look at the implementation of retention strategies. Talent desire more than just financial incentives, it is equally important to be part of a company that has a clear vision and purpose surrounding positive change, this is particularly true with the younger generation of workers within the sector.
- Inflation – Having reached a 30 year high across the majority of economies, life sciences companies, along with others need to be able to respond quickly to circumstantial changes with input costs and even look to integrate flexibility into contracts that reflect the current potential uncertainties around prices.
- More effective and efficient Technology – there are various government grants and incentives available for life sciences companies designed to aid or introduce fit for purpose technology that effectively increase efficiency.
M&A in the sector
Fuelled by a boom of private equity investments, M&A within life sciences reached peak levels due to industry appetite for growth as the M&A market moves closer to pre-pandemic norms. Dealmakers focusing on the rationale of securing new treatments and product pipelines capitalised on the accelerated pace of R&D that stemmed from the pandemic. Not only did these factors drive deals but they also prompted the pursuit of partnerships and collaborations as well as development and licensing deals.
In July this year, American company, Syros Pharmaceuticals, a leader in the development of medicines that control the expression of genes, and TYME Technologies Inc, announced that the companies have entered into a definitive merger agreement pursuant to which Syros will acquire TYME, including its pipeline assets and net cash at closing which after accounting for wind-down and transaction expenses is currently estimated to be approximately $60 million.
July also saw the acquisition of UK based provider of vitamins and supplements, Nutri Advanced Ltd by American life sciences company Metagenics. A strategic acquisition, as Nutri Advanced was a partner and exclusive distributor of Metagenics products in the UK and Ireland for years prior.
In May this year, Calibre Scientific announced the acquisition of Serviquimia, a high-quality distributor of consumables, chemicals, lab equipment and lab furniture headquartered in Tarragona, Spain. Serviquimia represents Calibre Scientific’s entry into the Iberian market and will further enhances Calibre Scientific’s growing distribution platform in Europe.
KBS Corporate oversaw the sale of Kalon Biological, a specialist in the development and production of medical diagnostic kits and commercial enzyme immunoassays EIA kits to the healthcare industry, to Calibre Scientific Inc, a Los Angeles based diversified global provider of reagents, tools and other products to the healthcare, laboratory and biopharmaceutical industries.