• Additional investment critical to foster growth of capital’s life science sector in a competitive global landscape
• Most UK life science companies still at early stages of business growth, with more support needed to ensure spinouts secure funding and mature as businesses
• A shortage of talent with 31,000 jobs needing to be filled by 2025, and UK companies competing for talent globally
• An estimated 56% of planned life science developments in the Golden Triangle (Oxford, Cambridge and London) is yet to secure planning due to delays in the system
Urgent national action is required to ensure that London’s life sciences sector continues to grow, according to research from London Property Alliance (“LPA”). The report, titled London’s Knowledge Clusters: From Emerging to Maturing, highlights the necessary private and public sector measures for London to realise its potential as a life sciences superpower. This includes addressing funding gaps for university spinouts (companies emerging from universities), lack of incubator facilities to support growth and national policies to help recruit local and international talent.
LPA represents over 400 of London’s leading real estate companies, including its investors, developers and professional advisors. The new research states that investment to grow knowledge clusters – geographical locations attracting innovative healthcare and scientific occupiers – is key to London’s success as a global life science hub, which would foster national economic growth and prosperity.
Across London, successful blueprints include King’s Cross and Euston (known as the Knowledge Quarter) and White City, as well as, emerging clusters such as Canada Water, Canary Wharf, Whitechapel, Southwark and Lambeth (known as SC1 innovation corridor running through these two boroughs) and Sutton.
In order to fulfil the Prime Minister’s ambitions for Britain to become a “science superpower”, London’s property industry body is urging the UK Government to advance tangible plans that would help strengthen the spin out eco-system, given that the UK is still proportionately weak at fostering scale-ups. This is required, despite the Chancellor’s £520m life science injection announced in the Autumn Statement. US life science companies were 17 times more likely to raise funding rounds of more than £30 million. The length of time taken for spinouts to raise funding in the UK is an issue which needs to be addressed, with 56% of spinout deals taking over six months to complete and 22% longer than a year.
The current development pipeline for laboratory space across London stands at 2.7 million sq ft, creating a steady supply of life science workspaces to house companies. However, an additional 2.6 million sq ft of laboratory space is still awaiting a planning decision, creating a bottleneck for growth and uncertainty amongst both occupiers and developers, with resourcing issues within local authorities exacerbating these costly delays. We need faster and more effective decision making which provides certainty and clarity in order to support the sector’s growth.
While UK life science employment growth is forecast to increase by 8%, compared to the wider national level of 3.5%, this is dependent on companies maturing within a conducive ecosystem that allows them to attract talent and investment. The UK’s 6,000 life science businesses are competing for global talent, and it is anticipated that more than 31,000 jobs will need to be filled by 2025. Urgently upskilling local residents and enabling highly-skilled workers from Europe and other global locations to work here – will be critical to filling this skills gap, as over half of the workforce in certain subsectors, such as biotech, is made up of international professionals.
The report argues that London has the potential to be the leading global hub for life sciences – which would bolster the health and wealth of the country and strengthen the ‘Golden Triangle’ of innovation, which encompasses Oxford, Cambridge and London. However, the report argues that the capital requires national support and greater local planning to help drive growth.
Charles Begley, Chief Executive of London Property Alliance, said: “The property industry has played a key role in the emergence of clusters across the capital, helping embed a DNA of life science innovation and bringing the world’s leading companies and research professionals together.
“But we cannot take this success for granted and without action London risks losings its momentum to the likes of New York and Copenhagen, which have put in place ambitious frameworks for growth. We urgently need to see similar packages of support in London, with clarity for planning decisions and greater investment in the sector to help unlock capital and attract talent.”
An overwhelming majority (85%) of London’s life science sector is comprised of start-ups and SMEs. However, the capital currently doesn’t have the volume of incubator spaces to accommodate these types of companies. Without action, London risks weakening its talent pipeline, as high-quality companies might seek to relocate to a hub with a more supportive environment.
The report was sponsored by several major property companies – headlined by law firm Charles Russell Speechlys – along with the developers of London’s King’s Cross estate (King’s Cross Central Limited Partnership), the British Library extension (Stanhope and Mitsui Fudosan), Precis Advisory (the company behind MSD/Merk’s new European headquarters), the Howard de Walden Estate (owner of the world-famous Harley Street medical district), along with major REITS and FTSE 250 companies including British Land, Derwent London and Landsec, and the advisory firm Gerald Eve.