Select Committee on Trade and Industry Appendices to the Minutes of Evidence


APPENDIX 2

Memorandum by the Department of Trade and Industry (DTI)

INTRODUCTION

  1.  The Prime Minister made clear the Government's commitment to the UK biotechnology sector when he stated in November 2000 that "Biotechnology is the next wave of the knowledge economy, and I want Britain to become its European hub" and that "the science of biotechnology is likely to be, to the first half of the 21st Century, what the computer was to the second half of the 20th Century." [7]There is enormous commercial potential for the biotechnology sector and the UK is well placed to seize the opportunities with its strong science base and thriving industry. However, it will require a continued, concerted, pro-active approach across Government, working with industry on a range of issues to ensure that the UK maintains its lead in Europe and secures the maximum benefits for the economy and society more generally.

  2.  A number of Government Departments and agencies have an active interest in the biotechnology sector and work together to ensure a coordinated Government approach. Within the DTI, the Bioscience Unit (formerly the "Biotechnology Directorate") has responsibility for competitiveness issues, including sponsorship, affecting the pharmaceutical, agricultural, environmental and industrial biotechnology sectors. DTI works closely with the Department of Health, which has overall responsibility for sponsorship of the pharmaceutical industry. The Office of Science and Technology in the DTI funds the Research Councils, leads the Foresight programme and maintains oversight of transdepartmental science and technology issues. The Department for Environment, Food and Rural Affairs (DEFRA) is responsible for controls on the deliberate release and marketing of Genetically Modified Organisms (GMOs) and funds a research programme to underpin these regulatory activities. In addition, DEFRAs responsibilities include the food, farming and fishing industries and in this context supports research on the application of biotechnology to sustainable agriculture in a safe and responsible way. The Food Standards Agency (FSA) is the Competent Authority for the UK for the approval of GM foods, and funds two major research programmes which underpin the safety and safety assessment of GM foods.

  3.  The Agriculture and Environment Biotechnology Commission (AEBC), and the Human Genetics Commission (HGC) are independent bodies. Both the AEBC and HGC are tasked with providing the Government with strategic advice on biotechnology issues (see Q7 for details). The Small Business Service and Regional Development Agencies are among the organisations with an interest in the growth of biotechnology companies. This memorandum does not cover the activities of the devolved administrations.

  4.  Details about the Government's support for biotechnology, in response to the seven areas identified in the Committee's press notice, are provided below along with a summary.

SUMMARY

  5.  The Government's support for biotechnology includes seeking to ensure:

    —  that the UK remains the best place in Europe for bioscience;

    —  a stable, macro-economic framework and creation of a favourable business climate for businesses to innovate in the UK;

    —  funding of the basic and strategic research that will underpin development of products and services by industry and the wider economy;

    —  regulation of those developments to ensure health and safety, protection of the environment, and other measures to maintain public confidence in science and its applications;

    —  encouragement of knowledge transfer from the science and engineering base to industry and other users of research, including promotion of biotechnology incubators and clusters and intellectual property rights;

    —  incentives for industry and others to invest in R&D;

    —  an adequate supply of skilled people to meet the UK's needs, for example in science, technology, business and enterprise;

    —  promotion of UK bioscience and biotechnology in European and international fora.

Q1.   The contribution which biotechnology industries can make to relative GDP growth and the performance of the UK as a knowledge-based economy

  6.  Biotechnology has the potential to improve health, food and the environment, both here and overseas, as well as bringing considerable economic benefits. The potential for the growing biotechnology industry is enormous. Industry estimates suggest that by 2005, the European biotechnology market could be worth over $100 billion.

  7.  There are currently over 335 biotechnology companies in the UK, who employ some 18,400 sector specialists (compared with 13,500 in 1998) and overall sector employment has reached 40,000. While the number of employees in the sector is relatively small, they have a high added value resulting in current revenues of approximately £1.3 billion. The total UK biotechnology industry market capitalisation was £18 billion in 2000; an increase of over 100% over the previous year.

  8.  The UK biotechnology industry currently leads Europe and is second only to the USA in the world (see Annex 1 for further details). Considerable efforts have been made by government departments to help achieve this position. However, many other countries are making strenuous efforts, through substantially enhanced Government-led investment in biotechnology to capture the economic benefits of the life sciences. In order to maintain the UK's position and secure the maximum benefits from biotechnology, the Government's pro-active approach to supporting the sectors needs to continue.

  9.  Agriculture, food and drink, agrochemicals, environment, health services and other health care products are considered the most likely initially to benefit from the application of biotechnology. These sectors already contributed over 11.4% to UK GDP in 1999.

  10.  Given the close overlap and synergy of the biotechnology and pharmaceutical industries, the UK has the advantage of a long and prosperous history of pharmaceutical investment. All the world's major companies maintain a presence, with two of the largest—GlaxoSmithkline Plc and AstraZeneca Plc—having corporate headquarters in the UK. The pharmaceutical industry is very important to the UK economy, contributing around 0.7% to GDP in 1999. With almost half UK production being exported, it is the UK's third-highest earning sector by trade surplus—£2.3 billion in 2000—a figure which is expected to continue to rise.

Q2.   The relationship between industry, higher education and research, including the effectiveness of the Government's Science and Technology programmes in creating a positive environment for the industry

  11.  The pivotal role that Higher Education plays in providing the UK with a highly qualified workforce and a world-class science and engineering base has long been acknowledged. The Government also recognises the importance of setting up effective mechanisms to foster closer links between publicly funded research and industry. A range of programmes exist to create a favourable environment for scientific exploitation and ensure the investment in the science base is translated into economic success.

  12.  The Government has set out fully in two White Papers[8] its policies for science and technology and the relationship between the science and engineering base and industry. The DTI's Science and Innovation Strategy was published in August 2001. The following comments of the Committee's questions highlight just some of the related activities.

  13.  LINK is the Government's principal mechanism for supporting collaborative research partnerships between industry and the research base. Its objective is to accelerate the transfer of knowledge and the exploitation of technology in areas of particularly high potential benefit for industry, with Small and Medium Enterprises (SMEs) being especially encouraged to participate. DEFRA, the Biotechnology and Biological Sciences Research Council (BBSRC), the Medical Research Council (MRC) and DTI have been major sponsors of a number of recent LINK programmes in the biosciences. Since 1989, DTI has committed around £26 million to eight LINK programmes which have supported around 130 projects involving over 170 companies. DEFRA currently runs four LINK programmes—HortLINK (Horticulture), SAPPIO (arable) and two in food technology in the biosciences—involving over 350 companies, and has committed over £18 million to these programmes in the last five years. This commitment is currently set to continue. In response to the completion of the first full draft of the human genome in June 2000, the DTI announced the Applied Genomics LINK programme. This major new programme combines £15 million of government support with an equivalent from industry, and is designed to capture the commercial potential of the revolution in genomics.

  14.  Many biotechnology companies begin as spin-outs from universities; hence there is often a very close relationship. In recent years across the sciences, universities have spun out far more companies than in the past (199 in 1999-00 compared with an average of 70 per year in the previous five years). 12.3% of university research in the UK is now paid for by companies—in the US it is only 10.1%. Whilst these figures are not specific to biotechnology, they provide good evidence of a successful shift in culture at our universities and an increased level of entrepreneurial activity. DTI has helped to drive this culture shift through support for biotechnology exploitation initiatives. The Research Councils have also been active in ensuring effective exploitation of new ideas developed in their own research institutes (see paragraph 42).

  15.  The £9 million Biotechnology Exploitation Platform (BEP) Challenge was introduced in 1996 in response to strong evidence that the UK was not as effective as other countries in capturing, protecting, and exploiting early bioscience research outputs—to the detriment of the UK industry and the economy. Through BEP, new networks have been established involving 50 Universities and 21 NHS Trusts. These have helped generate 54 new company spin outs; £22 million private sector investment; 75 commercial licences, worth around £3.5 million; and 330 technology projects selected for commercialisation. In addition the DTI, working with the Research Councils and other Government Departments, is committed to establishing a UK-wide network of 24 Faraday Partnerships which promote improved interactions between the UK science, engineering and technology base and industry through the involvement of intermediate organisations. There are currently two in the biotechnology area, one on advanced biotechnology for the chemical and pharmaceutical industries, and one on environmental remediation by biological as well as physical and chemical means.

Q3.  The relative competitiveness of the UK as a location for R&D, exploitation of research and for manufacturing

  16.  The UK leads Europe in biotechnology and is second only to the US on the world stage. The UK's world-class science base is complemented by a supportive framework for the exploitation of advances in bioscience. This is combined with private and public investment in the bio-manufacturing infrastructure necessary to maintain a thriving bioscience industry. However, other nations are beginning to invest heavily in biotechnology and many challenge the UK's leadership in Europe.

  17.  As indicated by its record in publications, citations, and international prizes, the UK has an excellent science base in a wide range of biological sciences, supported by substantial public and private sector funding, including the Wellcome Trust. A number of world-class Centres of Excellence act as a magnet to attract high-profile world-class scientists and inward investment to the UK.

  18.  The Prime Minister has said that the science base is the bedrock of our economic performance. To make clear its commitment to science and build on earlier substantial investment in the Comprehensive Spending Review, the Government announced in July 2001 that the science budget would increase in real terms by 7% a year over the Spending Review period 2001-02 to 2003-04. As a result, substantial additional support has gone into the biosciences and the other disciplines with which they need to interact in order to remain competitive internationally. In particular, with the Wellcome Trust, the Government has invested £1.75 billion in modernising research infrastructure in universities and institutes. Annual research expenditure by DEFRA is over £32 million, with about £3 million in support of regulatory activities (risk assessment of GMOs) and the remainder to ensure that the agricultural industry has access to the technologies required to support and develop a sustainable agricultural industry.

  19.  Following the Spending Review, the Government has also made available an additional £110 million to the Research Councils for genomics research, and the biosciences are benefiting from the additional sums for e-science and "basic" technology. "Biotechnology" remains a difficult term to define, but grant-in-aid to BBSRC and MRC alone will total over £600 million in the financial year 2002-03 and an approximate figure for the Councils' total annual investment underpinning "biotechnology" would be some £650 million a figure matched by the UK specialist biotechnology companies. The Engineering and Physical Sciences Research Council (EPSRC) is also involved in biotechnology through its Life Sciences Interface initiative. The Economic and Social Research Council (ESRC) supports work on the social impact of the science, and the Natural Environment Research Council (NERC) has interests in certain environmental areas of biotechnology.

  20.  In February 2001, the Government's second Competitiveness White Paper "Opportunity for All in a World of Change" recognised the importance of science and innovation and included the announcement of a major DTI flagship programme worth £25 million over five years. "Harnessing Genomics" has been designed specifically to help a thriving UK biotechnology industry take up the exciting developments in bioscience, particularly genomics, and apply them to a whole range of new commercial products, processes and services. The programme focuses on: (i) stimulating industrially-relevant R&D and enabling technologies, together with the associated training; (ii) the development of a successful UK bio-manufacturing capability; and (iii) mentoring and incubation support for new companies and encouraging the development of business and entrepreneurial skills.

  21.  One pioneering project to arise from "Harnessing Genomics" funding is the joint venture between Department of Health and DTI to establish a £15 million nationwide network of Genetics Knowledge Parks. These aim to pull through science into real benefits for NHS patients and will provide a forum for public debate on the social and ethical issues surrounding genetics. Other activities supported under the "Harnessing Genomics" programme will be covered later in this memorandum.

  22.  The strength of the science base has very much helped the growth of pharmaceutical research in the UK. The UK's record in developing innovative medicines is second only to that of the US—13 of the world's top selling drugs were discovered in British laboratories. The pharmaceutical industry's annual R&D spend of £2.85 billion accounts for as much as 38% of the UK total. The UK has been very successful in attracting inward investment and indeed has the best record in Europe for attracting pharmaceutical R&D investment. The industry makes an important contribution to the UK economy through its manufacturing and export performance, its employment (60,000 directly; 250,000 indirectly[9] and its R&D effort. The UK is also the world's third largest exporting nation of pharmaceuticals, with almost half of production being exported and a balance of trade surplus of £2.3 billion (in 2000).

  23.  It is important to note that biotechnology and pharmaceutical companies need to maintain high levels of R&D investment because of the costs—typically in the order of £350m—and the timescales involved in bringing a drug to market. From the first identification of a potential candidate to market approval may take to 10 to 12 years—indeed one of the fastest developments for a recombinant vaccine took about 10 years from lab bench to patient—for Hepatitis B. To survive in a sector characterised by merger and acquisition activity, companies need a pipeline of emerging products, since with marketed drugs they have only a limited number of years to recoup costs and reinvest in research before patents expire.

  24.  Competitiveness in the UK industry is also enhanced by the NHS, which provides a base both for research commissioned by the pharmaceutical industry, and for non-commercial R&D of value to patients and the health service. In March 2001, the Prime Minister's Pharmaceutical Industry Competitiveness Task Force (PICTF) made recommendations aimed at ensuring that the UK remains a competitive location for the pharmaceuticals and biopharmaceutical sector[10]. A Working Group of the Task Force had reviewed the opportunities and costs associated with the clinical research infrastructure in the NHS. It noted the strengths of clinical research in Britain, and set out an action plan to strengthen the UK's position on the speed of starting up clinical studies, their quality of research and cost. Actions included streamlining the NHS and ethics committee approval process, setting out standards and responsibilities for all R&D conducted in the NHS, and publishing guidance on the costs charged by the NHS for commercial studies. In addition, an updated report from the Working Group[11], included details of a NHS R&D partnership with the pharmaceutical industry. The partnership will enable joint funding of trials that are non-commercial in nature, but important to both industry and the NHS. These may include studies which would be unlikely to be undertaken by individual companies.

  25.  The current UK contract manufacturing capability compares favourably with that to be found elsewhere in Europe. The presence of a well developed biotechnology sector in the UK means there is an accumulation of expertise in this area, which strengthens the prospects for accelerated future growth. The DTI announced in March 2001 that £3m would be provided to help support a National Biomanufacturing Centre (NBC) in the North West. The NBC is expected to cost between £24m to £31m with other funding being provided by the North West Development Agency and the European Regional Development Fund. This will complement the £70m Biomanufacturing Park being developed by Scottish Enterprise at the Pentlands Science Park in Edinburgh.

  26.  The Government is committed to encouraging UK manufacturing and service companies to use biotechnology more widely to improve their economic competitiveness and enhance their environmental performance. DTI's £13m BIO-WISE Programme is helping achieve this goal by providing grant support for projects demonstrating the potential of biotechnology. UK businesses have already saved over £80m through the use of industrial biotechnology.

Q4.   The importance of clusters, the characteristics of successful clusters and locational factors for the industry

  27.  The Government believes that clusters can make a significant contribution towards economic growth, and are particularly important in knowledge-based sectors like biotechnology.

  28.  In 1999, Lord Sainsbury led a study of biotechnology clusters [12] which identified the following critical factors for cluster development, which are still valid:

    (i)  Strong science base

    (ii)  Entrepreneurial culture

    (iii)  Growing company base

    (iv)  Ability to attract key staff

    (v)  Availability of finance

    (vi)  Premises and infrastructure

    (vii)  Business support services and large companies in related industries

    (viii)  Skilled workforce

    (ix)  Effective networks

    (x)  Supportive policy environment

  29.  Currently the largest concentrations of biotechnology companies are Oxford, Cambridge, London, the South East, and Central Scotland. These clusters are well established and continue to develop. Many other parts of the UK are also in the process of developing clusters in particular in the North West and North East. Probably the most influential factor in determining where the first concentrations developed was the existing investment by the Research and Funding Councils in such areas. The RDAs are now playing a very important role in developing clusters, particularly the emerging clusters.

  30.  The UK's biotechnology clusters are thriving. For example, in London there are now 74 biotech companies (an increase of 24 over the last 20 months). The UK's clusters have attracted the interest of some other EU Member States who have come over to find out more about them. The Government welcomes the efforts that have been made by the Regional Development Agencies (RDAs), the Devolved Administrations, and the regional biotechnology organisations to improve the environment for cluster growth. Most RDAs have identified biotechnology as a priority area, and DTI is working closely with them to develop regional strategies. In particular, funds from the "Harnessing Genomics" programme have been ear-marked for collaborative projects with RDAs and regional specialist networks to enhance the UK's clusters.


  31.  The biotechnology sector is becoming increasingly global in nature and UK clusters are increasingly in competition with those in European countries. Government and industry are working closely together to ensure that the UK clusters continue to offer world-class facilities. In particular, DTI is working with RDAs and regional biotechnology organisations on several projects intended to identify and develop new premises for biotechnology companies.

Q5.   Sources of finance and the means of securing soundly based risk finance in high-technology exploitations

  32.  The Government recognises the importance of appropriate finance for high-tech businesses. It has introduced a range of tailored support measures designed to meet the specific needs of the sector.

  33.  Recent Budgets have put in place taxation measures which have helped smaller biotechnology companies. The extension of the R&D Tax Credit to larger companies should provide relief for larger biotechnology and pharmaceutical companies. In addition, Britain's Corporation Tax has a starting rate of 10% for profits not exceeding £10,000, which is the lowest in the world. This eases the fiscal position for biotechnology SMEs. A new tax regime was also recently announced which will provide relief to companies for the costs of intellectual property, goodwill and other intangible assets. This will encourage businesses to take advantage of new opportunities in the emerging knowledge-based economy, and will provide an even more attractive environment for biotechnology companies to prosper.

  34.  Despite the difficulties that stock markets often present to high technology companies, the biotechnology sector has performed much better than other technologies and this is expected to continue. In the first half of 2001, the BioCentury London index of UK biotechnology shares fell just 10 per cent, compared with a 37% fall in the UK's FT Telecoms index. In the same period, two of the four biotechnology companies to successfully float on the public markets were UK-based.

  35.  The UK biotechnology venture capital market is the largest and most mature in Europe and is second only to the USA. The significant growth of the Germany biotechnology market has attracted increasing amounts of venture capital funding. However, although this means that the venture capital funding market is more competitive, there is no significant evidence to suggest that UK companies are finding it ore difficult to obtain funding. The fact that over half the new biotechnology drugs in late stage clinical trials in Europe are from UK companies strengthens their ability to attract investment. In the first half of 2001, almost 40% of the £425 million venture capital investment in biotechnology in Europe went to UK firms, as well as the three largest amounts (£34 million to Cyclacel, £31 million to Inpharmatica, £31 million to Strakan). For earlier rounds of funding, private investors and Business Agnels are important to the sector. A good example of interaction between the public and private sectors has been MRC's success in establishing the venture capital management company, MVM Ltd, which has raised £79 million to date from the private sector for investment in bioscience companies. It is hoped the Government's Regional and High-Technology Venture Capital Funds will provide biotechnology companies with further sources of finance.

  36.  To help companies obtain funding the Government set up the UK Biotechnology Finance Advisory Service (FAS) which provides free, independent advice on access to appropriate forms of finance. After five years in existence, the FAS has approximately 530 clients on its contact list of which over 77 are currently active. Approximately 10 new clients are added to the contract list per month, and there is general recognition that ht e FAS provides a valuable service. More recently the service has been active in assisting with identifying not only early stage funding but also first, second and third round funding.

  37.  Further DTRI support through the Biotechnology Mentoring and Incubator (BMI Challenge have provided access to £180 million of private finance (see Q6 for further details).

  38.  In the case of pharmaceutical companies, contract research organisations and larger biotechnology companies, the DTI's Regional Selective Assistance (RSA) Scheme remains an important source of finance. Approval for an RSA grant can influence the decision-making process of a company to favour the UK in locational decisions.

Q6.   The role of incubators and other means of growing businesses from a research base

  39.  The Government believes that business incubators provide a nuturing "hot-house" environment for new companies by supplying specialist premises on flexible terms with access to a network of mentors. Incubated companies are selected for their potential to grow and are normally expected to graduate from the incubator within three years. Incubators are effective contributors to the development of new companies.

  40.  A 1995 DTI-commissioned study identified inadequate investor support for biotechnology start-up, inadequate business skills, and the non-availability of appropriate specialist premises. Access to specialist advice on patenting, regulation, legal and finance issues was not readily available to new companies and was often too expensive for them. To address this market failure, DTI introduced the Biotechnology Mentoring and Incubator (BMI) Challenge in 1996. Its overall aim is to stimulate accelerated creation and growth of high quality biotechnology companies in the UK. The BMI Challenge has granted 12 awards over the last six years to intermediaries providing high quality managerial support and laboratory facilities to new and early stage bioscience companies. £4.9 million was made available across the UK, with each award winner receiving upto a maximum of £500,000. BMI in turn has catalysed 80 new biotechnology companies that employ over 500 staff and which have raised in excess of £180 million of external investment.

  41.  A UK Business Incubation report "UK Incubation Impact Assessment Study 1999-2000" identified that incubation is a process for supporting accelerated development and that there is evidence to suggest that incubators have a positive impact on survival rates of tenant and graduate businesses. For many firms the intangible benefits of incubation, including a prestige address, a supportive peer group environment, and access to markets and specialist advisors, are as important as the provision of basic services (office space/shared equipment and facilities etc. There are currently over 30 incubators offering space and facilities to bioscience companies in the UK

  42.  The OST, Research Councils and other Government Departments are also active in encouraging the transfer of know-how from research into business, in line with the Government's overarching policies set out in its White Papers and the Government's Response to the Baker Report [13] Measures include University Challenge, Science Enterprise Centres, the Higher Education Innovation Fund, Partnerships UK and the Small Business Research Initiative. Research Councils have actively sought licensing agreements for the use of new technologies. The time between discovery and economic production can be lengthy but humanised antibody technology developed in the 1980's has been licensed to over 40 companies and five products have been approved for clinical use. The DTI would be happy to provide the Committee with further details of progress with these and other initiatives

Q7.   The impact of the legislative and regulatory framework for science on industrial investment and location decision

  43.  Regulatory issues, as well as public acceptance of biotechnology, have a significant bearing on investment and location decision. The Government is committed to meeting the five principles of good regulation—that they are transparent, accountable, consistent, targeted and proportionate. The majority of legislation in place or in the pipeline is derived from Europe. The UK aims to ensure that regulations affecting the biotechnology sector are practical, enforceable and based on sound science. It is paramount that when assessing applications, human health and the environment are protected.

  44.  The UK's well-established regulatory framework ensures that it is well placed to implement sound legislation, which encourages innovation whilst protecting health and environmental concerns. The regulatory systems for products and processes is extensive, with a wide range of experts scrutinising specific biotechnology applications.

  45.  Although Biotechnology has the potential to provide completely novel solutions to pressing health needs, it is also clear that there is considerable public concern about genetic modification in particular, and by association, about biotechnology in general. There is also concern about areas of biotechnology relating to safety, animal research and ethics. There has been much public debate over the ethical and societal concerns of such research—both in Europe and internationally. As a result of the Government's review of the Advisory and Regulatory Framework for Biotechnology in May 1999, two new biotechnology-specific strategic advisory bodies were established in addition to the Food Standards Agency. The Human Genetics Commission (HGC) provides the Government with strategic advice on developments in human genetics, their likely impact on human health and healthcare and their social and ethical implications. The Agriculture and Environment Biotechnology Commission (AEBC) provides the Government with strategic advice on biotechnology issues affecting agriculture and the environment, taking into account social and ethical aspects. Both commissions operate openly and undertake public consultation.

  46.  The HGC will report to Ministers on the protection, storage and use of personal genetic information later this spring. During the remainder of 2002 it will review, and consult with the biotechnology industry and others, on the provision and regulation of genetic tests available direct to the public. In its relatively short life the HGC has built up a strong reputation for openness and transparency and effective consultation. It will continue to play an important role in the future in promoting a considered debate and dialogue about advances in human genetics. The HGC reports to Health and Science Ministers and is part-funded by all four health departments and OST.

  47.  The AEBC published its first and widely welcomed major report, "Crops on Trial" in September 2001 about the Government's Farm Scale Evaluations of genetically modified crops. AEBC will publish its second major report, on Animals and Biotechnology, this summer. AEBC reports to DTI and DEFRA Ministers and to Ministers in the three Devolved Administrations, and is funded by their Departments.

  48.  In the interest of transparency, DTI and its partners are also developing a website that will consolidate cross government information about biotechnology. Due to go live in the Autumn, this "BioPortal" will ultimately include a guide through the regulatory framework as well as a fast effective route into public sector work in biotechnology. Government also hopes to use this portal to extend awareness of this pivotal industry and to contribute to a positive view of its role in both industry and society.

  49.  The last year has seen more pro-active interest from both the European Commission and other Member States in developing biotechnology in Europe to ensure that European expertise is not lost—especially as we are facing in the next 10-20 years a more competitive global market. The UK has worked closely with the Commission and other Member States to raise the political profile of biotechnology and to gain clearer recognition of the economic potential it brings.

  50.  Whilst pan European action achieves a level of harmony, it can also lead to long delays and uncertainties, as differing views need to be reconciled. This and the need for informing the public and encouraging debate have been recognised by the Commission as issues impacting on the competitiveness of the European biotechnology sector, and were addressed in its January 2002 Strategic Vision for Life Sciences and Biotechnolog [14] which drew extensively on UK ideas. The Barcelona Council (15-16 March 2002) further acknowledged that biotechnology is a key factor for future economic growth. It tasked the "Council to examine before June 2002 the Commission's communication "Life Sciences and Biotechnology—a strategy for Europe". It asks the Council and the Commission to develop measures and a timetable which enable Community businesses to exploit the potential of biotechnology while taking due account of the precautionary principle and meeting ethical and social concerns. The Commission's is invited to report on progress in advance of the Spring European Council 2003".

  51.  In the UK, public perceptions of biotechnology vary widely according to the application. For example, the industry has had to face strong negative public opinion in relation to developments in GM foods and crops. Public perception of GM food and crops and the pressure for EC regulation in reaction to these public concerns has had the effect of stifling innovation and investment in the sector. Nevertheless, DEFRA has continued to fund appropriate risk assessment research, to ensure that the exploitation of GM crops proceeds on a safe and sound basis, and research aimed at providing the necessary underpinning science required for future developments. Another related area of public perception concerns the effects of animal rights extremists. Within the UK, the high profile targeting of Company Directors, scientists, investors and bankers by animal rights extremists has caused major concern within the sector. The formation of a special Ministerial Group chaired by the Home Secretary catalysed several rapid reactions, and was a major step forward to curtail the intimidation of all affected. The Government's position remains that properly regulated animal research is absolutely essential to the discovery of new treatments as well as to the assessment of the safety and efficacy of medicines. That of course includes biotechnology. And that is why the Government has acted to protect not only the companies that carry out this work for the pharmaceutical industry but also the establishments in the public sector that do similar vital research.

  52.  There are, however, applications of biotechnology which have been subject to more measured and balanced debate especially where there are key areas where competence lies with the UK. An example of how best to engage the public, opinion formers and parliamentarians in the issues raised by new scientific opportunities is in the field of embryonic stem cell research. The appropriate regulatory controls to help ensure that cutting edge research aimed at developing new treatments can proceed are in place under the Human Fertilisation and Embryology Act 1990 and the Human Fertilisation and Embryology (Research Purposes) Regulations 2001; managed by the Human Fertilisation and Embryology Authority (HFEA). Another area which has benefited from the UK's approach to the oversight of biotechnology is the area of gene therapy where the UK has moved to No. 1 in Europe and closed the gap on the USA in terms of new clinical trials over the last two years.

  53.  There is international recognition for the openness of the UK's ethical debates, and the pragmatic and open legislative path taken by the UK has given it a cutting edge in attracting scientists and demonstrating to the biotechnology and pharmaceutical industries that the UK remains a favourable location for science and investment.

DTI Bioscience Unit

15 April 2002

Annex 1

INTERNATIONAL COMPARISON OF BIOTECHNOLOGY SECTORS1
UKGermany FranceUSA Japan2Denmark
Revenue (£M)1,295 49347517,556
Employees18,40010,673 4,500174,000-7,000
No of companies310332 2401,379271 66
No of public companies-48 2083392 5
R&D Expenditure (£M)665 4519,691 2,689
IPOs*: January-June 20012 1043

Sources/Key

1 = Ernst & Young (2001)

2 = UK Embassy in Japan

3 = Biospace

*IPO = Initial Public Offering (Flotation)


7   Speech by the Prime Minister at the European Bioscience Conference (17 November 2000). Back

8   Excellence and Opportunity: a science and innovation policy for the 21st century (Cm 4814) July 2000 and Opportunity for All in a World of Change (Cm 5052) February 2001. Back

9   Estimate by the Association of the British Pharmaceutical Industry (ABPI). Back

10   Pharmaceutical Industry Competitiveness Task Force: Final Report. Department of Health (March 2001). Back

11   Pharmaceutical Industry Competitiveness Task Force: Clinical Research Report. Department of Health (March 2002). Back

12   Genome Valley Report: The Economic Potential and Strategic Importance of Biotechnology in the UK. DTI URN99/1174 (December 1999). Back

13   Creating Knowledge, Creating Wealth: Realising the economic potential of Public Sector Research Establishments (HMT/OST July 2000). Back

14   A Communication from the Commission "Life Sciences and biotechnology-A Strategy for Europe"-6415/02 COM(2002)27 final of which an Explanatory Memorandum was placed in the Library of the House on 20 March 2002. Back


 
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